Friday, November 05, 2021

Politicians Face Political Reality

 India is cutting the taxes on petrol and diesel to "further spur the overall economic cycle", the government said. However, the move is also expected to boost demand for fuel as countries try to curb fossil fuel consumption. The tax cuts are also expected to increase consumption of petrol and diesel even as global leaders, including Mr Modi, have been gathering for the COP26 climate change conference to tackle the global economy's reliance on fossil fuels.

Ben van Beurden, the boss of oil giant Shell has insisted it can transition to net zero by 2050, but it will need the cash from its oil and gas business to pay for it. He said the company's plans for greener energy could only be funded by oil and gas.

"If we have to build a hydrogen plant from a wind farm that we build in the North Sea for a billion dollars that is not going to be funded by a hydrogen business - it will be funded by the oil and gas business," he said.

Shell wants to develop new oilfields including Cambo in the North Sea which it hopes will produce 170 million barrels of oil. 

It plans to spend four times as much on oil and gas development as on renewables next year. This is why some doubt that Shell can hit either its own targets and those imposed by a Dutch court which require it to halve its own net emissions by 2030 and eliminate them entirely by 2050. 

Shell currently has a global carbon footprint the size of Russia's if you include the emissions from customers using Shell products.

Shu Ling Liauw from research firm Global Climate Insights has analysed the oil firm's spending plans and estimates that Shell will be producing more emissions by 2030 than it is now as it intends to grow its gas business.

"Even if you're very generous, and assume they get all the amounts of carbon capture and storage and offsets that they need, they might just miss their 2030 targets, and they will not be able to deliver on 2050. In fact, they will be increasing emissions until 2030, and still be producing significant amounts of emissions in 2050," she says.

Others point out that if Shell itself were to sell its oil and gas business, those assets would be hoovered up by companies that might be less transparent and less inclined to make the effort to decarbonise.

 The world is still hugely reliant on fossil fuel. That reliance needs to be managed down over time according to Mr van Beurden otherwise we will see price shocks in the future that will be counterproductive.

"I think this energy transition can be done but it will require a lot of orchestration and a lot of faith of society that it can be done. If you want to destroy the faith by driving up energy prices, by creating shortages or market failures, I think politicians are going to lose societal acceptance that this is actually doable."

Oil giant Shell says it needs oil to pay for green shift - BBC News

Capitalism cannot be shoe-horned into making policy decisions that go against economic growth

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