Shell Is Looking Forward: The Fossil-Fuel Companies Expect to Profit from Climate Change. I Went to a Private Planning Meeting and Took Notes.

March 04, 2020

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by Malcolm Harris (Vox Media Intelligencer/New York Magazine) ... I asked Fries (Steven Fries, Shell’s chief economist) if Shell is serious about transition, then couldn’t it voluntarily speed it up by leaving some of its wells fallow, constraining oil output and thereby driving the price relative to renewables higher, faster? Sure, it would have to take some losses in the short term, but we’re talking about the future of the planet here. He dismissed the idea, telling me it’s important not to artificially withhold supply, which would introduce price shocks that could turn public opinion against environmentalist policy. Besides, it would only end up sending money to the Saudis anyway.

“We’re going to get as much out of [oil and gas] for as long as we can,” he said.

“That’s an extremely frightening thing for you to say,” I said.

“It doesn’t mean every drop,” he said, failing to reassure me.

Shell would apparently prefer us not to think about how to reduce carbon emissions by raising the costs of fossil-fuel development. Which makes sense: No matter their green branding, fossil-fuel companies do not want their projects rendered uneconomic. Instead, they want to talk about how their new projects can be rendered economic faster. Even planned production from existing fossil-fuel infrastructure, it’s been estimated, will push the planet past the Paris targets, and Shell is still “exploring” for new oil deposits to exploit. “In terms of emissions, it’s one of the cleanest ways to go,” a Shell employee in deepwater strategy seated across from me explained about deepwater drilling as compared with other kinds of drilling. “Of course, when you put it in your car and burn it, it’s oil, but,” he said, trailing off. Although the slice of revenue energy firms derive from fossil fuels is by all accounts scheduled to shrink, Shell foresees a sizable enduring demand. No one has viable plans for a battery-powered container ship, and the world’s militaries aren’t about to give up jet fighters pending the development of an electric model. Not to mention that all this clean technology requires a lot of energy in advance for manufacturing.

Deepwater wells operate on a ten-year schedule, I’m told, so my dinner companion doesn’t expect the ones he’s looking at now off the coast of Brazil to even yield product until the 2030s, at which point it will take more time just to earn back the initial investment and even longer to turn a profit.

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During the cocktail hour before dinner, I met a geoscientist who has been attempting his own transition (to the finance side of the business), preparing to move from the declining subsurface field to clean tech. I asked how he got involved in oil exploration in the first place. A little embarrassed, he told me he liked rocks as a kid. When he graduated from college, he saw two career paths: the energy sector or academia, where he would just be training others for the energy sector anyway. He said he was worried about the next generation of Earth-science students, who are graduating into a shrinking industry. Maybe they’ll be mining asteroids, suggested the deepwater strategist.

According to the geoscientist, one of the ways Shell incorporates climate change into its calculations is that when it looks to develop a new fuel source, it tries to figure out how much it’ll be able to sell it off for when the company transitions out of fossil energy — when the reputational costs start to exceed the returns. Whoever buys it will almost certainly continue extracting but at a lower cost of production, maybe because it has better technology or, more likely, because it cuts corners on labor and safety. What this means: Unregulated fossil-fuel production might come to look a lot like the narcotics trade, with its brutal criminal organizations that thrive in conjunction with corrupt state elements regardless of international agreements. The problem is that once reserves are discovered, there’s no way to undiscover them. “We don’t plan to lose money,” the geoscientist turned finance analyst said, and he meant it in the most general way.

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One of the session’s recurring themes was that millennials and Gen-Zers have a stronger moral and ethical drive than their elders, and they expect us to use our values to help force companies to do the right thing. But Shell doesn’t seem to fear attacks on its brand from consumers, since most of its business is with other companies, and even when it comes to customers, most people don’t make choices about where to buy gas based on the relative climate villainy of the respective oil companies. On top of which, its product is not very recognizably branded. “Jet fuel is jet fuel,” I was told. Instead, it’s worried about being left behind by the curve of social change, that if it doesn’t become more than an oil company, it’ll stagnate, wither, and eventually die.

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Shell strategists used the phrase “long march through the institutions” — coined by the German communist Rudi Dutschke for the ’60s student movement — to describe the way they expect left-wing climate radicals to become part of the Establishment.

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But Shell doesn’t seem to see the climate movement as the enemy or even necessarily contrary to the company’s interests. If Alexandria Ocasio-Cortez is going to rally millennials around Green New Deal legislation, then it’s a good time to become a green-energy company — or at least buy a few of those and rebrand that way. Climate protesters are just another market reality, one that can be profitable when apprehended correctly, even for a big, old oil and gas firm. The question was how to see that generational conflict coming, how to meet it and harness it and ride it into the future.

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One of my fellow shivering demonstrators (ten years ago) was Shana Rappaport, who recently reflected on how her thinking has changed:

As I stood on the hill in my fuzzy winter hat … protest sign in hand, trained and prepared for the prospect of getting arrested, I believed wholeheartedly in the message we were chanting: “The enemy is profit. Together, we will stop it! Climate devastation will not be solved by corporations!”

I never would have imagined that, a decade later, my perspective would have shifted so significantly. Specifically, my belief that we have a better chance to build a sustainable future by engaging with as many companies, industries, and individuals as possible. And that includes oil companies.

After all, accelerating the transition to a clean economy requires all hands on deck, including the hands of those that have contributed most significantly to the problems we are working to address.

Rappaport is now the vice-president and executive director of VERGE from GreenBiz, which is, according to her LinkedIn, “the leading global event series focused on accelerating the clean economy and solutions to the climate crisis.”

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If we rapidly expand nuclear-energy production, we’re probably going to see more nuclear accidents, right? I was thinking about the recently deceased French philosopher Paul Virilio, who liked to point out that with every new technology, we also invent new ways for things to go wrong. “Oh, China is due for a big nuclear accident,” said Wim Thomas, Shell’s genial Dutch chief energy adviser. The China expert — also in my group — suggested waste was a huge, unexamined issue. Where are we going to put all the solar panels when they break? Bloomberg has reported on the massive used wind-turbine blades that are so durable they end up in landfills. We talked about corruption, how governments in the global South buy certain pieces of expensive industrial equipment because manufacturers know whom to bribe, a practice that’s bound to increase when there’s all sorts of miracle decarbonization tech floating around. Land use is a big problem, whether it’s for wind or biofuel. We also have to figure that, no matter what metrics we end up using to gauge progress, there’s likely to be some fraud. That’s what ProPublica found when it went looking for the forests that all those “carbon offsets” were supposed to pay for — basically none were working the way they had been sold to guilty Western liberals and greenwashing corporations, as a method of keeping carbon in the ground.

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I tried to get Fries, the economist, to answer some of the article’s questions: How can we move to clean energy without intensifying resource extraction in certain parts of the world? Where are we going to get the lithium for all these new batteries? Won’t Shell’s plans still mean creating ecological dead zones, in effect writing off whole regions of the Earth? And what will happen to the people who live there? I told him that, in June, a couple of miles from where I live in Philadelphia, an oil refinery exploded, releasing 3,271 pounds of toxic hydrofluoric acid into the atmosphere and launching a truck-size piece of shrapnel to the far bank of the Schuylkill River, over 2,000 feet away.

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Maybe it’ll even make some incidental progress along the way, depending on where the subsidies are, but there’s no comprehensive vision for a livable future here, no ethical imagination, no morality to speak of. READ MORE

GOP LAWMAKERS PITCH FOSSIL FUELS: (Politico's Morning Energy)

U.S. oil boom vs Europe's renewables focus? Big Oil's gap widens -- in words (Reuters)

There's more oil and gas than ever — and the industry is tanking (Axios)

Shell makes renewables key to net-zero vision (RENews.biz)

Shell Sets Net-Zero Target for 2050, Emphasizing Power and Renewables (GreenTechMedia)

Shell unveils plans to become net-zero carbon company by 2050: Firm to cut carbon intensity by selling more green energy but critics say first step must be to stop new drilling (The Guardian)

Excerpt from Politico's Morning Energy: GOP LAWMAKERS PITCH FOSSIL FUELS: House GOP leadership and committee ranking members urged the Trump administration to pursue "international recognition of the environmental benefits of utilizing U.S. natural resources" in a letter to National Economic Council Director Larry Kudlow and national security adviser Robert O'Brien. They argued that U.S. fossil fuels produce fewer greenhouse gas emissions on a life-cycle basis and are extracted in accordance with stronger environmental rules than competing suppliers follow in China, Russia and Iran. READ MORE