Are oil company–sponsored windmill ads about to disappear from our TV screens? Oil giant Shell has decided to abandon investments into renewable energy like wind and solar. A Shell executive told the Guardian that the company will no longer put money into investments that “struggle with other investment opportunities in [Shell’s] portfolio even with big subsidies” (see article).
Instead, Shell wants to focus its money on developing non-food biofuels and carbon capture and sequestration (CCS). The company has significant operations in the Alberta oilsands, and oilsands petroleum is already proscribed by one piece of U.S. legislation: section 526 of the U.S. Energy Independence and Security Act (see article).
George Monbiot, a strong supporter of renewable energy, claims Shell’s decision is in part because of the low carbon prices under the European Union’s Emission Trading Scheme (ETS). He’s absolutely right. Carbon prices would have to be in the punitive range for wind and solar to be anything close to competitive with coal and nuclear or even gas. As I have said many times, the whole idea of a cap and trade scheme as opposed to a carbon tax was to give politicians the wiggle room necessary to keep carbon prices low. That is the only way the ETS was politically salable.
Shell’s decision is the right one, for two main reasons. First, as Monbiot points out, “greenwash,” i.e., oil companies’ communications about how green they are, is just public relations (see article). When PR isn’t backed up with anything meaningful, people soon realize it’s just… PR. Even major investment in wind and solar won’t reduce carbon emissions from large-scale power systems. And since it’s not profitable anyway, Shell must have wondered why play the game at all.
Second, as I mentioned in “Guessing between the lines” and other posts, the only airy-fairy part of CCS is the S: sequestration. CCS will soon give way to CCR: carbon capture and recycle. In CCR, captured carbon is recycled into synthetic hydrocarbon fuels.
Shell understands, and for decades has been profiting from, the hydrocarbon fuel business. And, since carbon capture is the necessary prelude to CCR, Shell’s money will go in part to solving the technological part of that problem.
Does Shell’s abandoning of renewable electricity mean that those feel-good oil company ads featuring lovely music and impressive wind turbines will no longer grace the airwaves during the Sunday political talk shows? Probably not. As I said last week, the drive to renewables is at bottom a natural gas–industry ploy. The ploy has worked remarkably well in Ontario, and it seems to be working at the national level in the U.S.