Climate Denial Crock of the Week

Time:

As oil flirts with the prospect of decline, energy executives are at odds over what to do. Some firms, like ExxonMobil, are positioning themselves to squeeze the last lucrative years from the oil economy while arguing to shareholders that they will be able to sell all their oil. Shell and a handful of others are beginning to adapt.

Under (CEO Ben) van Beurden’s leadership, Shell is charting a path that will allow it to continue to profit from oil and gas while simultaneously expanding its plastics business and diversifying into electrical power. By the 2030s, the 112-year-old fossil-fuel giant wants to become the world’s largest power company. As part of this strategy, Shell has worked to present itself as environmentally friendly. Last year, it committed to reduce its emissions by as much as 3% by 2021, and by around 50% by 2050, tying its executives’ compensation to the cuts.

Shell’s moves earned some applause among environmentalists, but the Intergovernmental Panel on Climate Change, the U.N.’s climate-science body, concluded in 2018 that to keep temperatures from rising to levels that would bring a wide range of catastrophes, countries must halve their greenhouse-gas emissions by 2030 and hit net-zero emissions by 2050. That would mean more than incrementally reducing emissions; it means keeping vast reserves of oil already discovered in the ground.

Van Beurden’s strategic response shows that years of political and economic pressure–especially from governments and investors responding to a sustained public outcry–can push even the most powerful interests to change. Whether climate activists can harness this mounting pressure to compel Shell and other oil companies to transform the global energy economy may be the weightiest question of our time.

Executives at Shell knew decades ago that burning fossil fuels would cause the planet to warm, and that once climate change became a global issue, their firm would need to change. Last year, I sat down with van Beurden for a wide-ranging interview and asked him how he felt about “Shell knew,” the activist mantra that accuses the company of failing to act on climate change despite knowing the consequences. He was sanguine: “Yeah, we knew. Everybody knew,” he said. “And somehow we all ignored it.”

In the 1990s, he explained, Shell publicly acknowledged climate science and said the world needed to act to combat the problem. But at the time, neither governments nor consumers seemed too concerned about emissions, and the demand for oil was growing like gangbusters to fuel a global economic expansion. So the company dutifully responded to market demands: it produced and sold oil to turn a profit.

Nearly three decades later, Shell’s business model is shifting by the same market-driven calculus. Despite advertising that depicts the oil giant as environmentally friendly, its decision to reduce reliance on oil is not born of benevolence. It’s reacting to market forces. A 2019 McKinsey report predicts that declining gas consumption in the transport sector, because of factors like fuel efficiency and electrification, could lead oil demand to begin decreasing in the early 2030s. “The future of energy needs to evolve as something else,” van Beurden says. “And we find a role for ourselves in it.”