Shell Loves Green Energy – Until It Doesn’t


It should come as no surprise that oil companies are fair-weather friends to alternative energy, but it’s still interesting to watch them wriggle out of their erstwhile commitments once times get tough.

Look at Royal Dutch Shell (s RDS). The company that made $51 billion in pre-tax profit last year was delighted to wave the alternative-energy banner when oil prices were soaring. Now it’s backing away from investments in green energies such as wind and solar. Instead, it will focus more on biofuels.

Linda Cook, Shell’s executive director of gas and power, was quoted in the Guardian as saying:

“We are businessmen and women. If there were renewables [that could compete with its other investments] we would put money into it…. It’s now looking like bio­fuels is one which is closest to what we do in Shell. Wind and solar are interesting [but] we may continue to struggle with other investment opportunities in the portfolio even with big subsidies in many markets.”

Last year, Shell, which has 550 megawatts of wind power capacity, pulled out of a joint venture to build the world’s largest offshore wind farm in the Thames estuary, the 1,000 megawatt London Array project. The Guardian notes that Shell has said that 20 percent of its energy will come from alternative sources by 2025, although it’s only investing 1 percent of its budget in them.

Reuters estimates that Shell invested $1.25 billion in green energies such as wind and solar between 1993 and 2006. Meanwhile, it’s investing $32 billion in oil, natural gas and other non-renewable fuels in 2009 alone. That’s on top of $10 billion in dividends going to investors this year, a 5 percent bump over last year.

Shell’s backpedaling is reminiscent of British Petroleum (s BP), which earlier this decade rebranded itself as “Beyond Petroleum” before shifting its focus back to oil and gas. Only a year ago, Shell CEO Jeroen van der Veer was reportedly predicting that “after 2015 supplies of easy-to-access oil and gas will no longer keep up with demand.”

It’s worth re-reading Shell’s rhetoric from before the recession hit home, when it outlined dual scenarios for global energy. Both saw demand doubling by 2050, but the brighter of the two (inexplicably labeled the “Blueprints scenario”) envisioned businesses, investors and governments collaborating on a variety of different solutions even though “the diversity makes life difficult for investment.”

The darker future — it’s called the “Scramble scenario” — involved short-sighted decisions with severe long-term consequences.

“In the Scramble world, no one is prepared to change the status quo. Dealing with today’s problem takes priority… For the next 10 years, people from all walks of life join in the debate about energy and climate change. But no one seems truly wedded to action on a large scale.”

It looks like Shell has cast its lot with the Scramble world.

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