Leading article: In search of some wind in their sails

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The Independent Online

Shell's decision to pull out of Britain's largest wind farm project leaves our national renewable energy sector looking decidedly deflated this morning. The "London Array" was intended to be the world's biggest wind farm, with its 341 turbines planned for the Thames Estuary. The scheme's designers hoped it would be capable of generating 1,000 megawatts, enough to power a quarter of the capital's homes. Shell had an equal share in the project with E.on and Denmark's DONG Energy. Now the oil conglomerate has put its stake on the market, the entire project is in jeopardy.

This is not merely bad news for investors. The sale threatens to derail Britain's entire renewable energy strategy. The Government has signed up to the European Union-wide target of generating 20 per cent of our energy from renewable sources by the end of the next decade. John Hutton, the Business Secretary, announced plans last year to build the equivalent of 33 London Arrays by 2020. With the prototype itself now in doubt, that is all looking decidedly unrealistic.

Shell has not given detailed reasons for its decision, but says that rising costs were an important factor. It is true that the estimated cost of offshore wind construction is rising, as companies scramble for turbines, creating supply bottlenecks and pushing the price up. It is also the case that offshore wind farms are more expensive than onshore projects. But given the threat of climate change and the growing demand for renewable energy, this cannot be interpreted as anything but a short-sighted decision by Shell. It is a further sign that energy companies are still in state of denial about the challenges facing their sector.

Yesterday ExxonMobil announced that it made $10.9bn (£6bn) in profits for the first three months of this year. It was one of the biggest quarterly profit reports in American corporate history. The US oil giant has achieved the remarkable feat of making earnings from Shell and BP, announced earlier this week, look modest. But as descendants of John D Rockefeller, America's original oil magnate, are vociferously pointing out, obsolescence beckons for ExxonMobil and other energy groups if they do not step up their search for alternative fuels and cleaner technologies.

The Rockefeller family, still major shareholders in Exxon, are backing resolutions calling for the company to fund research into how climate change will affect developing nations. They are also demanding targets from the company for reducing carbon emissions from its output. They hope this will compel Exxon's management to bring less-polluting products than oil and gas to market. But it looks as though the family are fighting an uphill battle. Exxon has at least ceased to deny a link between fossil fuel emissions and climate change. But it has still invested no serious effort in cleaner energy technologies, even though this is the area into which the oil majors should manifestly be ploughing those vast profits.

The evidence of this week suggests the energy producers need considerably firmer incentives from governments to make the strategic shift away from environmentally destructive fossil fuels towards renewable, clean power generation. Shell may have been concerned by the rising price of offshore wind, but it is seriously misguided if it thinks that concentrating its efforts on extracting the remaining fossil fuels is a better bet than renewables in the medium or long term.

If the conservative-minded energy conglomerates do not stump up the necessary investment, then governments will have to intervene to see that they do. The stakes are too high for a business-as-usual approach to the challenge of meeting the world's energy needs.

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