TCS Daily

Shell Game

By Herbert Inhaber - February 7, 2002 12:00 AM

Do retired oil executives go off the edge after they retire from their walnut-paneled board rooms and executive jets?

How else to explain Sir Mark Moody-Stuart, the former head of Royal Dutch Shell, the world's second largest oil company, recently saying, "The developed world needs to embrace renewable power in order to create volume of scale and the expertise to drive the cost of renewable energy down," He went on to say, "If renewables are to flourish we must look at methods of financing the high up-front cost of green energy. Governments from Northern countries need to remove inappropriate subsidies and switch to supporting renewable energy."

Sir Mark is a man of some stature. But his eminence doesn't mean he makes sense.

For a former oil baron to advocate renewables is unusual, to say the least. This is perhaps why he is lionized by the "greendustries," that army of consultants and jet-setting conference-goers.

Let's look at his words: "Embrace" -- while common in romance -- in this context means "subsidize." Those renewable energy systems that can't compete in the market place will get infusions of money, primarily from the government.

But now let's look at Sir Mark's record over the things he could control, to see whether the rhetoric matches the actions. While chairman, he did launch Shell Renewables in 1997. The firm is supposed to invest a half billion dollars in renewables over the next five years. It supplied solar cookers to South Africa, winning the plaudits of then President Nelson Mandela.

But half a billion dollars, while enormous to most of us, is a drop in the bucket in Shell's coffers. Over the next five years, they likely will have revenues, mostly from nasty oil and gas, of well over a hundred billion.

Besides, all of this has been tried before, with little success. In the 1970s, there were ads in National Geographic for solar rooftop systems. The ads were sponsored by some big oil companies (not Shell). But the ads soon disappeared, as the oil executives realized that government subsidies for solar were less profitable than drilling for oil.

In the 1970s, the idea behind renewables was more than just a new source of energy. Renewables would transform society. Gone would be the reliance on the greedy oil companies, immense and defective nuclear reactors, and the rest of the voracious energy suppliers. Instead, in parallel to the Biblical story of each man sitting by his vineyard in peace, the future would see each man sitting by his windmill or solar collector. The reign of the rapacious oil companies would be gone, and perhaps the entire structure of capitalism would be overthrown.

How the dreams have faded. Shell, one of the biggest companies in the world, is supposed to save the renewable vision of overthrowing capitalism?

It turns out that Sir Mark has not retired to his yachts, as most former chairmen of the Seven Sisters do, but is now head of Shell Transport and Energy Trading. This means that he is responsible for getting oil and gas from where it is found to consumers.

What has he done to boost renewables within his own company, as opposed to giving speeches and setting up subsidiaries? Most oil in remote fields is moved by tankers, which use petroleum products, and haven't changed much in decades. Some years ago, I read a proposal for a wind-powered tanker. The concept was that, with the advent of computers, the angle of the sails could be changed instantly to capture the wind's power. When the wind didn't blow, auxiliary conventional power would kick in. The concept seemed reasonable, since it doesn't really matter if an oil tanker is a day or two late. But silence from Sir Mark on this. In the same way, thousands of Shell trucks roll every day through Europe. Has Sir Mark changed them over to biomass? Not likely, since Europe has very little extra corn to supply the ethanol factories. Again, a massive credibility gap between rhetoric and action.

Sir Mark remains one of the most powerful men on the planet, although he is little known in the U.S. Until his actions match his words, he will be just another voice in the wilderness.

TCS Daily Archives