Shelly and Beepy

The other evening, I had a very interesting and enlightening chat in the pub with a couple of people I know, one from BP and one from Shell.  I’ll not name either here, although I’m not sure they’d mind if I did.  The conversations shed light on the attitudes of the big oil companies towards climate change.

They are both involved in the strategic side of their respective businesses, although I’m not sure how much influence they each have on policy.

They each have quite different attitudes to people who push for meaningful action on climate change.  The guy from BP described “environmentalists” as loonies, the other I’d be tempted to describe as an environmentalists himself, in his own way.

I can’t carry on describing these people as the “guy from BP” and the “guy from Shell” – I’ll call them Beepy and Shelly from now on in.
I don’t know whether he meant it, but Beepy definitely seemed to be trying to antogonise.  I managed to suppress the rising anger, and calmly asked him why he thought environmentalists were loonies.  Unsurprisingly it was because of money.  Because of the upfront costs of renewable energy and nuclear, he is under the impression that we simply cannot afford to stop the climate changing.  There followed a deep discussion about the meaning of money, with me trying in vain to convince that most money is artificially created and directly into swelling house prices and other relatively fixed assets, and could much more usefully fund an energy revolution.

The upshot of the discussion were differing views on what the target for parts per million (ppm) of carbon dioxide in the atmosphere should be.  The international target for temperature rise since pre-industrial times is 2 degrees Celsius – the political point at which we reach catastrophic climate change.  The general view is that we need to limit carbon dioxide concentrations to 450ppm to have a 50% chance of hitting that target, and we are almost certain to miss it if we reach 550ppm.  This is a gross simplification of course, as there are ranges on all of these figures – 1 degree Celsius could be catastrophic; it might be 550ppm where we have the 50% chance of avoiding 2 degrees.  And these figures ignore other greenhouse gases, such as methane or soot.  You may have heard that we are on 400ppm at the moment, which is growing at an accelerating 2.3ppm per year.

Shelly asked me what level I thought we’d get to at the peak concentrations of CO2.  When I said 550ppm, he looked concerned.

“Would you take that if it were offered now?” he asked.

“No, of course not.  Opt for near certain catastrophic climate change?  You must be joking” I replied incredulously.

Shelly kept me informed that according to a large investor, the predominant view among those in the field, from Al Gore to people in the oil industry, is that we’ll end up with 600-700ppm at the end of the century.

But does that mean we should accept it?  Of course we bloody shouldn’t.

“Yes, we should.  I reckon we should aim for a target of 620ppm” Beepy announced.  “That wouldn’t require a huge cost, so it would be more publicly and politically acceptable”.

This brings me on to the real insight of the evening.  Both Shelly and Beepy volunteered that their respective companies are not leading on climate change.  They are waiting for an international policy shift – then they’ll change their policies [I assume on alternative fossil fuel extraction, exploration, Carbon Capture and Storage and nuclear and renewables].

If Beepy and Shelly are right about their companies attitudes, or if they embody in some way the corporation culture, then it is abundantly clear that they (I mean the companies, not Beepy and Shelly themselves) feel no responsibility for the fossil fuel emissions.  It’s not them, it’s the government.  I can hardly bloody believe it as I type.  How irresponsible can you get?

Beepy did say that he thinks coal should be phased out.  Shelly did say that they want to get moving on Carbon Capture and Storage (held up “by the government”, of course).

But if coal should be phased out, why exploit tar sands?  If it’s up to the government, why lobby the government to avoid the introduction of measures to help curb emissions?

If this is representative of the view of the decision makers in BP and Shell, then it is not merely irresponsible, it is criminal.  I am not accusing of Beepy and Shelly here at all.  It is not them that are deciding that BP and Shell will go with the flow and not lead on efforts to reduce emissions – it is the decision makers within BP and Shell that are doing that.

Meeting at a human level, we discussed the differing attitude to risk.  Beepy clearly thought that the costs of climate change were relatively low, certainly as compared with the costs of introducing mitigating measures.  I certainly think the opposite.  When it comes down to it, I suspect the difference in our opinion comes down to me including a wider set of impacts on the cost side – I’m including the impacts in the wider economy and beyond, in nature and in our own ability to sustain the global population.

BP and Shell need to start including the wider costs in their policy making and strategy.  The only ways that is going to happen is one or more of the governments changing international law; markets, organisations and individuals realising the risk and moving investments away from fossil fuels; or those in the fossil fuel industry taking responsibility.

Any bets as to which of these will happen?  Will the governments, markets or fossil fuel industry be the first out of the block?  And hence who will be the winners, and who the losers?

Or should we take matters into our own hands?

John Bell,

Ordinary bloke


Is Carbon Capture & Storage the Silver Bullet?

Can Carbon Capture and Storage technology (or CCS for short) allow us to deal with climate change without damaging oil company share prices? Many hope that CCS will allow us to mitigate against climate risk without first going through a major global economic transition with the demise of the big oil and coal companies.

CCS, as I’m sure you know, is the process of extracting the carbon dioxide at the point that fossil fuels are turned into energy, and taking that carbon dioxide and storing it safely away under ground for long enough for it to decompose.

As described previously, if we burn the declared resources upon which the big fossil fuel companies share prices rest we will emit 5 times as much CO2 than we can afford to in order to avoid an average global temperature increase of 2° Celsius. And the oil companies are still looking for more – e.g. shale gas, searching the Arctic and so on.

Carbon capture and storage is seen by many as the way through that.

All of the individual elements of the technology exist and are in use. In fact, there are already 8 fully integrated schemes in operation with a commercially viable capability and another 64 in the pipeline (Global CCS Institute, Jan 2013 survey). We are already capturing 20 megatons of CO2 per annum.

Come on, this sounds great. Could it really do the trick? Let’s do some sums.

At the moment, we emit 33 gigatons of CO2 each year. In their scenarios, Shell forecast that will continue to increase to over 40 gigatons per annum by 2040, and will decrease thereafter.

The Global CCS Institute survey reports that they expect us to be able to capture more than 120 megatons of CO2 per annum by 2020. Oh dear, that was megatons wasn’t it? That means we will be capturing about 1 in every 300 tons of CO2 by 2020. A drop in the ever rising ocean.

We must be able to do better than that, surely? Shell scenarios help again, as one of the scenarios they evaluate (Mountains) describes a future where we go all out for CCS, starting in a realistic time frame. It is a little optimistic possibly on that front as the rate of deployment of that CCS outstrips even the most grandiose historic achievements (Kramer-Haigh, Nature 462, Dec 2009). In this scenario, we capture 30%  of CO2 by 2050, and all by the end of the century. We miss the 2° C target by miles.

If not CCS, maybe this?

If not CCS, maybe this?

So, we need to get a move on now rather than later. Unfortunately, the number of potential projects is going down rather than up (is 72 now and was 75 in October 2012). The UK competition (UK CCS Commercialisation Programme) has been held up at the Department for Energy and Climate Change as they are concerned about getting their numbers right following the UK Department for Transport being burned in the evaluation of the West Coast rail franchise competition. The European Commission’s NER300 competition awarded funding to zero CCS projects (out of an expected 12).

Clearly, this needs regulation and vastly quicker progress if this is to be the silver bullet. Let’s not pin our hopes in it just yet.

Thoughts below as always.

John Bell,

Ordinary bloke

The Future According to Shell

The long-awaited new scenarios from Shell were published yesterday. For 40 years Shell have foregone the typical Western convention of extrapolated forecasts to predict the future impacts of decisions. Instead they have regularly developed a small number of scenarios, where the most unpredictable elements of the future are varied to depict a few possible futures. The last set were in 2008, where two scenarios were created, Scramble and Blueprints – the distinctive difference between the two being that the latter allowed for unilateral, co-ordinated action to curb greenhouse gas emissions. These scenarios were unusual in that for the first time Shell announced a strong preference for one scenario over another*.

This time, Shell have really pushed the boat out and have ordained to attempt to predict the future to the end of the century. They are are great pains to point out that these forecasts are illustrations to help decision making now, not an augur into the unknowable future. The two scenarios they present are named Mountains and Oceans.

Mountains concerns a future where the concentration of power remains with the traditional few. In this world Shell foresee that economic growth will be constrained. They place relatively speedy introduction of Carbon Capture and Storage (CCS) in this scenario, due to a desire to maintain the status quo. This combination of lower growth and introduction of CCS means that the CO2 emissions for the Mountains scenario are relatively low, but still far exceed the trajectory needed for a 2 degree future.

It should be noted that the rate of deployment of CCS in this scenario outstrips the rate of deployment of any large-scale change to the energy industry in the past. This point is not evident from the report, but I am reliably informed that it is the case.

The other scenario is Oceans. Here, there is wider political reform, and the balance of power moves to less traditional places. The turbulence caused by this transition means that the strong policies needed to incentivise and bring in CCS and reduce greenhouse gas emissions are delayed.  In Oceans there is strong economic growth given this market freedom, and the overall emissions of this scenario are higher than in Mountains.

The report highlights that the individual components of each scenario are in some cases interchangeable. It would be possible, they say, for the faster introduction of CCS and other technologies and policies to limit greenhouse gas emissions to occur in Oceans as well as Mountains. They therefore also depict what they call a sensitivity with a more green Oceans outlook – which is still way off the 2 degree trajectory.

They also remark that the scenarios are interconnected; that the seeds of the political upheaval in Oceans lie in the stagnation of Mountains, and vice versa.

Shell - cropped

When discussing the sustainability of these projections, they make two very important points about greenhouse gas emissions. Firstly, they state that it is through leadership and policy making, rather than the markets, that the necessary changes to allow the curbing of emissions to happen can be brought through.

They also state that the projections do not include, as they put it, the climate turbulence that would result from their emissions trajectories. They state that this would severely damage the economy, dramatically lower energy demand and reduce emissions, albeit by a negative route.

They describe a possible future where in the 2020s the effects of climate change are so severe that rich and poor alike demand that the root cause of climate change be addressed, namely to dramatically reduce CO2 emissions within a generation.

Remember, this is Shell talking.

Thoughts below as always.

John Bell,

Ordinary bloke
* Blueprints, by the way, in case you were wondering