Former Shell Chairman Criticizes Industry Inaction on Climate

James Smith, as the former chair of Shell U.K. and current chair of the consultancy Carbon Trust, is a man who has looked at the questions of fossil fuel consumption and climate change, in Joni Mitchell’s words, “from both sides now.” Not surprisingly, he has much to say on the subject, informed as he is by his background as both a physicist and a chartered accountant, as well as his experience.

Clearly no climate denier, he told Business Green that, "Climate change is a problem that absolutely must be tackled, and it is a very urgent problem and the longer we leave it the more and more urgent it becomes."

Blending ecological sensitivity with the pragmatism of an oilman, he points out that, "It is going to be hard to kick the fossil fuel habit, because the phenomenal density of fossil fuels is what brought us the industrial revolution."

Smith talks about the “trillionth ton” of carbon emitted into the atmosphere, which is projected to occur by 2040. We need to stop emitting before we get there, but that won’t be easy. Says Smith: "It is an order of magnitude problem. What we need is a unit of economic output for one-third of the energy input and a unit of energy for one-third of the carbon-output. That is the scale of the challenge."

He points out that there are three things that need to be done to address the crisis. "Firstly,” he says, "is energy efficiency in every nook and cranny of the economy -- every device, every building, every piece of equipment we use in industrial processes. Secondly, we have to progress as rapidly as we can on renewable energy – the right kind of renewable energy for the right kind of circumstances.”

But as others have pointed out, these two things might not be enough. And while some have said we need to stick with coal, others look to natural gas and tar sands oil as bridge fuels, and some claim that nuclear power is the only way to fill the gap, Smith has another approach. “We've got to progress on carbon capture and storage. My concern is that understandably there is a lot of excitement and endeavour on the first two of those, less so on the third. But it is the third part that seems to me to be a crucial component of the totality of this."

Because our modern economy was built on fossil fuels and is set up to run on them, the idea of continuing to use them while stripping out the carbon could be the path of least resistance, at least for the short term, if we can figure out how to do it, effectively, efficiently, affordably and safely. The IPCC agrees with his assessment, claiming that it could be the most cost-effective way to bridge the gap.

Is there a way to reduce the gap to zero? Amory Lovins said three years ago that we could get to an 82 percent carbon reduction, without nuclear, while reducing our natural gas consumption by a third. His approach focuses on systemic efficiency. The National Renewable Energy Laboratory (NREL) also said we could produce 80 percent of our electricity from renewables by 2050. In both cases there is still a gap, but technology continues to advance at a dramatic pace with advances in solar efficiency, wind capacity, storage capacity and cost, biofuels (including algae), vehicle fuel economy, and smart and connected cities. The race is on. Meanwhile the ice caps continue to melt, and millions more people around the world are climbing up into the middle class and discovering appetites for energy they never knew they had.

Smith continues to criticize his former colleagues for their reluctance to move on this critical area, calling progress in the area, “unacceptably slow.”

Of course, as a former accountant, he recognizes the financial risk here. The industry could spend billions on this only to find that another approach has emerged to handle the problem. A price on carbon would certainly help make the case. Referring to Shell’s scenarios, he says, “They paint a picture that says what we're doing now is unacceptable.”

What the oil and gas industry should do, he says, is to say that, “There is an unacceptable risk to the environment that has to be dealt with; and saying there is a market failure in the absence of a price of carbon, and that market failure needs to be corrected urgently."

From a technology perspective, the geological carbon storage is first proposed in conjunction with coal-fired electricity. As the FutureGen program continues to move slowly toward a demonstration plant in Meredosia, Illinois, at a cost of $1.65 billion for 200 megawatts, a number of other approaches have been proposed. Just this week, an announcement was made of a collaboration between CO2 Solutions Partners and Neumann Systems to demonstrate a new carbon capture process based on enzymes and utilizing industrial waste heat.

There was also news on a possible financing deal for carbon capture and storage (CCS) in Europe, where concern over energy security has grown after the recent Russian annexation of Crimea. While this could end up being attached to a coal plant in Poland, not all carbon capture efforts are aimed at propping up the dying coal industry. The Peterhead Project, which is, somewhat ironically, being pursued by Shell U.K., is the first application of carbon capture and storage to a natural gas fired power plant. The plant, which is on the Scottish coast, will transport the CO2 by pipeline to a depleted gas reservoir beneath the North Sea.

Image credit: Donna: Flickr Creative Commons

RP Siegel, PE, is an author, inventor and consultant. He has written for numerous publications ranging from Huffington Post to Mechanical Engineering. He and Roger Saillant co-wrote the eco-thriller Vapor Trails. RP sees it as his mission to help articulate and clarify the problems and challenges confronting our planet at this time, as well as the steadily emerging  list of proposed solutions. His uniquely combined engineering and humanities background help to bring both global perspective and analytical detail to bear on the questions at hand.

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