Shell CEO's oil-centric view on energy, climate change

The days of easy oil are vanishing quickly, says Shell's head, who predicts an industrial shift to low-carbon energy technologies.

Jeroen van der Veer, the CEO of oil giant Royal Dutch Shell, sees easy oil coming to an end and a potential worldwide "scramble" to mitigate climate change.

Van der Veer outlined to potential scenarios for energy usage and extraction over the coming century in a speech published Friday on the company's Web site.

Regardless of whether countries "scramble" or take in a more orderly approach to adopting low-carbon fuels and renewable energies, getting oil and gasoline will not be as easy as it once was, he said.

"We are experiencing a step-change in the growth rate of energy demand due to rising population and economic development," he said in the speech.

"After 2015, easily accessible supplies of oil and gas probably will no longer keep up with demand."

There is an ongoing "peak oil" debate in which some people argue that global oil reserves has reached its pinnacle and will start declining. Van der Veer holds the view that oil will be more certainly be more difficult and expensive to extract in the future, a case outlined in this recent Wall Street Journal article.

In Shell's "blueprint" scenario in which government policies favor low-carbon technologies, there will be widespread use of carbon capture at coal-fired power plants--90 percent by 2050. Currently, there are only a handful of experimental sites.

In this scenario, carbon cap and trade regulations also are adopted worldwide, and there is a sharp uptick in the use of home-grown biofuels and local coal.

Like many others, van der Veer compares the quest for low-carbon energy technologies to the sense of mission attached to putting humans on the moon.

"The world faces a long voyage before it reaches a low-carbon energy system. Companies can suggest possible routes to get there, but governments are in the driver's seat. And governments will determine whether we should prepare for bitter competition or a true team effort," he concluded.

There is a divergence among the giant global oil companies and their commitment to funding alternatives to oil.

Shell has already diversified into biofuels including investments in cellulosic ethanol ventures. It is also partnered with small technology companies to make by a diesel from algae and other nonfood sources.

Research company New Energy Finance has released a report echoing van der Veer's view that the pace of investments in energy efficiency and low-carbon energy technology needs to increase.

New Energy Finance said Friday in a press release that investments will need to triple in the next five years if climate change abatement targets are to be met. Last week, the European Union set out targets for 20 percent of the energy in its 27 member states to come from renewable sources by 2020.

More discussion of Shell and peak oil are available at the Oil Drum.

 

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