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Shell, two CEOs, two cultural shifts: Green transition to business-as-usual

Updated, October 27, 2023

New vison, clean tech acquisitions and fossil fuel divestments

Under the leadership of Shell CEO, Ben van Beurden, 2014 to 2022, it really seemed that Shell was taking climate change seriously.  In 2017, Ben van Beurden purported that the “biggest challenge” for the company was to acquire public acceptance.  He asserted “If we are not careful, broader public support for the sector will wane.”

Perhaps, the most astonishing component of the new orientation was the Ben van Beurden plan to divest of US$30 billion of assets.  Amazingly, Shell had decided to sell its US$8.5 billion in assets in Canada’s oil sands.

Likewise encouraging, Shell assured it would comply with the Paris Agreement; concluded peak oil would occur in the next few years; set a goal to cut its carbon emissions by 20% by 2035, 50% by 2050, issued a joint statement with lead investors for Climate Action 100+  representing US$32 trillion in assets, to deliver on the Paris Agreement; withdrew from the far right climate denial organization, the American Legislative Exchange Council; and advised the Canadian Association of Petroleum Producers (CAPP) that the CAPP climate and energy-transition-related policy positions constitute a “misalignment.”

The flip side to the disavowal of traditional paths was the awesome pro-active Shell clean tech firms investment spree, entailing clean tech acquisitions, mergers and partnerships.  Many on the lengthy list of new clean tech can be found in my 2019 article.

In 2018, Martin Westelaar, then head of Shell’s gas and new energy division, described Shell’s green transition as one of modestly beginning with a budget of US$1-2 billion year up to 2020, to prepare the case for shareholders to get on side for a doubling of such investments to US$4 billion annually after 2020.

In 2019, Westelaar gave reason to believe that the Shell acquisition of First Utility, the largest electricity supplier in the UK, was a steppingstone for entry into a global solar market, presuming solar would become the biggest source of low carbon energy.

Westelaar had exclaimed “electrification is the biggest trend in energy … it’s easier to grow in growing markets”.  And Shell wants to play a lead role in the new energy landscape to become “largest electricity power company in the world in the early 2030s.”

In April 2019, Brian Davis, formerly Global Vice President, Energy Solutions from 2016 to 2020, vaunted the Shell vision of a global transition to electrification, including electric vehicles, batteries, microgrids.   

February 11, 2021 press release officializes green transition

Boasting Shell’s new vision as an oil and gas industry energy transition leader, in a Shell February 11, 2021 media release, Ben van Beurden, is quoted as saying “Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society.”

This announcement indicated Shell that Shell’s corporate-wide carbon emissions peaked in 2018, its oil production peaked in 2019 and the firm would pursue divestments averaging US$4 billion a year.  Doing so, he portrayed Shell becoming less vulnerable to oil and gas prices.

Ben van Beurden, depicted the Shell makeover crystal clear in the dispatch: “We must give our customers the products and services they want and need – products that have the lowest environmental impact.  At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”

Accordingly, the communiqué implies the integration of environmental and social ambitions.

This integration proposal comprises linking 10% of the bonuses of directors to lowering carbon emissions; US$2-3 billion annually for Renewables and Energy Solutions to become a world leader in clean power as a service; and 500,000 charging stations by 2025.

New CEO, “ruthless” transition to oil and gas prioritization and clean tech fire sale

All changed when Wael Sawan became the CEO of Shell in January 2023.

Beginning June 2023, Wael Sawan implemented corporate reorganizational changes to put the emphasis on the “ruthless” approach to maximising value, specifically “absolutely committed to our upstream business.”  This new approach entailed a shift priorities in favour of oil and gas production and scaling back renewables.  Sawan prescribed a ‘fundamental cultural shift” critical to re-establish investor confidence.

That meant that only green power projects with high returns or in sync with the value chain of Shell would get corporate support.  Sawan even had the audacity to declare that these changes would benefit schoolchildren in countries like Pakistan!

To greenwash  the environmental consequences of the makeover, Shell announced it had not abandoned its goal to becoming a net-zero company by 2050.

But the bluffing in that message became obvious in September 2023 when news broke out that Shell aimed to divest its majority or all shares in Sonnen, a major competitor with Tesla in the energy storage sector.

Just prior to the revelations on Sonnen, Shell sold Octopus Energy, a German and UK retail energy business, meaning 1,800 employees were no longer with Shell. 

Flurry of resignations

In June 2023, Thomas Brostrom, who had been the Shell, VP for renewable generation, and head of offshore wind, quit after his position was downgraded to a new regional role.  Brostrom had been Ørsetd North America wind chief until joining Shell in 2021.  The Danish Ørsetd is the world leader in offshore wind development.

Also in June 2023, Shell’s power trader, Steffen Krutzinna resigned over what for him was “heart-breaking,” to the effect that Shell was putting short-term profits over social and environmental responsibilities.  He posted on LinkedIn “I perceive that as a pivotal shift in corporate values.” “I don’t want to be part of that, so I’m out.”

Not long after in July 2023, Melissa Reid, who had been Shell’s UK offshore wind manager chief, left too.  She had led Shell’s successful bid for the ScotWind seabed license.

A year earlier, Caroline Dennett, a consultant for an independent agency Cloutt, terminated her working relationship with Shell with an open letter to Shell executives and its 14,000 employees regarding Shell’s “double-talk on climate.”  Expressing her disgust, “…they are not winding down on oil and gas but planning to explore and extract much more.”

Aside from the aforementioned resignations, anxieties of Shell staff still with the company were reflected in posts by employees.

Virtual “A Conversation with Wael”: Staff pacification

Responding to internal anxiety over Shell’s recentering Shell’s goals, Wael Sawan planned a virtual meeting with staff,  “A Conversation with Wael” for October 17, 2023.  The advance promotion advised the meeting would “deepen our conversation on the opportunities and dilemmas we face as we position Shell to win in the energy transition.”

The Wael Sawan October 17, 2023 message confirmed Shell believes in “urgent climate action” notwithstanding the about-face.

Sawan assured Shell staff that Shell is simply modifying the strategy delivery.

He explained this second cultural shift as the challenge of the affordability of clean tech.

These are lies.

Major job cuts in low carbon unit, not strategy tweaking

The Wael “conversation” sequel on tweaking the strategy, came quickly, on October 25, 2023, when Shell announced that it will cut 200 jobs in its low carbon solutions unit, originally known as Shell New Energies.  Some of these jobs will be transferred to other corporate divisions, and an additional 130 position roles are “under review” in 2024.  Ergo, anxieties among employees will go up many notches.

Ideological shift, not clean tech affordability or potential, nor belief in urgent climate action

Renewables are now the least expensive sources of power and 90% of the sources of global annual newly installed electrical generation capacity has been renewables since 2022.

Sawan conveniently ignored the growth curve of electric vehicle (EV) sales to-date, EVs having reached an inflection point.  EV sales in China and EU may reach 50% of the market in 2025.  In North America, there is an ongoing tsunami of investments in EV and battery production facilities because EV demand exceeds supply.

Most automakers are committed to a full transition of their respective lineups to electrification.

This is the backdrop for the year 2022 being an historic year.  For the first time ever, investments in the green transition, US$1.7 trillion, exceeded those unabated fossil fuel supply and power at US$1 trillion.

Since 2021, the growth of investments in clean tech have outpaced those of fossil fuels three-to-one

The greenwashing is self-evident.

The takeaway

1) It is possible for a fossil fuel company to become a diversified energy company committed to the Paris Agreement.

2) The old guard fundamentalists remain in denial and, guided by the rearview mirror, believe the future must be like the past.

3) Powerful shareholders having the characteristics described in item #2, plus addiction to quarterly reports, are among the biggest hurdles to a fossil fuel firm migration to clean tech.

Ukraine green reconstruction: Global model opportunity

Updated July 20, 2023

Many stakeholders from Ukraine, the European Union and around the globe, including just-in-time working groups, international financing institutions and the private sector, are currently engaged in “Made in Ukraine” green reconstruction agenda.  The challenges are colossal.

Half of Ukraine’s power generation infrastructure has been destroyed or badly damaged.  It makes little sense to reconstruct a tangled web of centralized energy distribution networks.  Rather the emerging consensus among key players is for decentralized area-specific clean energy solutions that can be built quickly, secure energy independence and offer less vulnerability to attacks by aggressors.

Equally important, energy inefficient buildings have been destroyed beyond repair in many entire cities and/or districts.  Interdisciplinary international groups are in place to plan the rebuilding of communities respecting circular economy and energy efficient criteria and Ukrainian architectural history.  These strategies call for using up to 90% of the rubble to minimize emissions during the construction process and the manufacturing of building materials.

Regarding farming equipment and practices, drones conceived, manufactured and precision operated in Ukraine, along with imports, positions Ukraine to be a world leader in applying drones for agricultural tasks without the need for heavy equipment and airplane dust spraying.

As well, green steelmaking, critical minerals and many other possibilities will be integrated into the transition.

No guarantees, but all pertinent players are readying in sync for the humongous tasks ahead.

Perfect storm for the green economy and fossil fuels alike

perfect storm: updated July 7, 2023

Investments in clean tech deployment in 2022, US$1.1 trillion, were for the first time ever, equivalent to that spent on fossil fuel production.  The story behind these historic stats is that of a current perfect storm and circumstances leading up to the present.

The combination of the Ukraine war; high fuel prices; European Union energy independence and electric vehicle (EV) strategies; the U.S Inflation Reduction Act and Bipartisan Infrastructure Law; China’s new 5-year plan; and tectonic changes in other countries have created the perfect storm for:

  • Renewables to overtake coal by 2027;
  • Strong EV sales in China and Europe while the North American new “normal” EV wait times for delivery ranging from 6 months to 2 years or more; and
  • Intensified climate action plans around the globe.

Paradoxically, the same perfect storm has given rise to the oil and gas industry’s 195 fossil fuel carbon bombs underway and planned, many of them in Canada.

Electric vehicles and equipment for mining decarbonization

MacLean Engineering Transmixer electric vehicle

As with most environmental solutions, electric mining equipment (EME) offers opportunities for reducing capital and operating expenditures, while providing a host of solutions to address risks. These lower risks include decarbonization; curtailment of colossal ventilation expenses to evacuate fumes, particulate matter and heat from diesel engines; and improved employee health and working conditions.  Higher profits, diminished risks and enhanced social acceptability associated with EME, are hard to beat.

Critical minerals: Global and Canadian portraits

Updated May 1, 2023, Pure lithium

Global developments in a nutshell

For the rest of this century, most of the world’s needs for critical minerals can be accommodated from mined resources in democratic countries and 95% recycling of battery content.  China and the European Union have policies in place to optimize electric vehicle (EV) battery recycling.

Australia towers above the rest as a source of half of global lithium resources.

Canada and the U.S. provide financial support for advancing critical minerals activities.

Howbeit, China’s critical mineral importation practices are admittingly problematic.  The antidotes are critical mineral deposits and policies of democratic counties plus EV manufacturers being sensitive to such concerns as integral parts of their public DNA image.

Too, South American lithium extraction practices pose large-scale unresolved environmental perils.

Big Oil, renewables, electric vehicles + clean tech: Fossil fuel windfalls

Wind, solar, storage + electric vehicle

Prior to the Russian barbaric invasion in Ukraine, announcements made by the oil and gas majors seemed to imply they were engaged in energy diversification.  This diversification has been typically presented as that of increasing the proportion of their assets in clean technologies while reducing the exploitation of fossil fuel reserves.

Now, with the oil and gas companies earning windfall profits linked to the Ukraine war, inflation and European urgent short-term requirements for fossil fuel sources substitutes, the real truth is coming out.  High fuel prices have revealed opportunist short term thinking prevails over lofty long-term goals.

China: Largest emitter to green gamechanger, but…

China climate emergency global influence

China is several years ahead of other developed countries on the migration to a green economy, in clean technology production capacity, massive market penetration and green investments. China already has an extraordinary global green export potential. China leads in renewables, electric vehicles and battery production, incrementally regulating plastic solutions, high-speed rail, private clean tech investment, government environmental support and green bonds.  China’s concurrent climate actions are gamechangers destined to have huge global competition impacts on energy, economic, transportation, industrial and other paradigms, perhaps more so than the climate crisis.  But there are simultaneous contradictions. China is the world’s largest liquified natural gas importer, once again ramping up coal production and certainly not a leader on human rights.

Electric vehicle battery recycling: Competing with mined materials

electric vehicle battery recycling facility

The environmental footprint of an electric vehicle represents a sectorial industrial revolution, including the first lifecycle end of an EV battery.  With existing technologies, 95% of an EV battery can be recycled for inclusion in a new EV battery and/or energy storage.  The remaining 5% can be handled by third party recyclers.  Because the price of mined lithium is rising exponentially, recycled EV battery materials are set to compete with mined content.  With high recycled content, the emissions of a new battery can be reduced by 64%. The result is massive battery recycling investments and recycling agreements with EV manufacturers are underway and planned, especially in China, Europe and the U.S.  In the U.S., the Inflation Reduction Act (IRA) offers tax credits that can be stacked on top of each other for the EV battery supply chain.  An IRA proviso is that the raw materials, including materials derived from battery recycling, be sourced in the U.S.  In addition, the U.S. Bipartisan Infrastructure Act allots US$7 billion for all battery supply chain stages, including battery recycling.  To counterbalance the IRA, the Canadian 2022 Fall Economic Update includes a 30% Investment Tax Credit covering clean technologies.  But the Canadian tax credits may fall short compared to the cumulative eligibility criteria impacts of the two U.S legislative initiatives. The U.S. initiatives, alongside the monumental head start in China and Europe, auger for a colossal challenge for the Canadian national and provincial governments to assure Canada is a major battery recycling player, despite two prominent existing Canadian recycling firms.

Green hydrogen, no panacea: Deep dive

Green hydrogen offshore wind powered

Green hydrogen, produced with electrolysers to separate hydrogen from water, uses clean energy as a power source.  Green hydrogen will not be with cost competitive with grey hydrogen for some time, perhaps not until 2030.  Grey hydrogen, derived from steam reformation of natural gas, represents 98 percent of global hydrogen consumption, and is primarily used for industrial processes.  To replace grey hydrogen with green hydrogen would require a doubling of global electricity generation with primarily solar and wind sources.  This would pre-empt the use of renewables for electrical power, with energy losses totaling up to 75% when green hydrogen is reconverted into electricity!  The result would be more use of natural gas for power production.  And there are extraordinary inefficiencies and technological challenges for green hydrogen use, while there is no shortage of affordable and efficient clean technologies alternatives.  Nevertheless, US$30 billion has been committed to-date for green hydrogen through government stimulus packages.  Is green hydrogen a fossil fuel industry trojan horse for gas derived hydrogen and the use of gas for electrical power?

Renewables, not gas, for Southeast Asia: Vietnam

Rooftop solar surge

The global natural gas industry, including that of Canada, has high hopes for weaning Southeast Asia from coal dependency.  Concurrently, low-cost renewables are swiftly changing the electrical power landscape in this part of the world.  Vietnam, caught in the squeeze between the two competing types of power sources, is favouring a clean energy metamorphosis.  The country now has the greatest installed solar energy capacity in Southeast Asia.  Government policies are both supportive and handicaps.  Grid infrastructure is woefully insufficient.  International support is critical to solidify the transition to clean energy.

Trudeau’s climate greenwashing mayhem

Justin Trudeau announced another of his Liberal government’s green plans in December. I have lost track of how many green plans we have had, but not a single one has met its targets. With the prime minister set to officially meet with the new U.S. president Tuesday, the Liberals’ environmental agenda looks embarrassingly unambitious by comparison.

Raising the price of carbon is one of the pillars of the government’s latest plan to reduce greenhouse gas emissions. But there are no magic bullets and piecemeal measures don’t work.

The new U.S. administration has announced plans for an international climate conference led by President Biden on April 22, which is Earth Day.

In other regions that have carbon pricing mechanisms, such as the European Union and China (with its pilot schemes), climate change abatement plans consist of many complementary measures, including stringent legislation.