Shell boss claims world still ‘desperately needs oil and gas’ despite worsening climate change
Wael Sawan says he thinks the world still ‘desperately needs oil and gas’
The boss of oil and gas giant Shell has claimed that cutting down production would be “dangerous and irresponsible”, citing economic concerns, even as the world continues to see devastating impacts of the climate crisis.
Wael Sawan, the chief executive officer of Shell, told the BBC in an interview that he thinks the world still “desperately needs oil and gas”, claiming that the switch to renewable energy is not happening fast enough to replace it.
Mr Sawan said that cutting down the production of oil and gas right now could send energy bills soaring back towards last year’s highs following increased demand from China and a cold winter in Europe.
“What would be dangerous and irresponsible is cutting oil and gas production so that the cost of living, as we saw last year, starts to shoot up again,” Mr Sawan told the BBC.
Mr Sawan was responding to calls from researchers and United Nations chief António Guterres who said investments in oil and gas in the face of continued climate catastrophe is an “economic and moral madness”.
While the Shell chief cited rising demand for energy in China, researchers say the record-shattering heat driven by worsening global heating is responsible for this increase.
The statement comes as the world just witnessed the highest average temperatures on record this week, with Monday declared the hottest day on Earth and Wednesday again matching the record.
Climate scientists say worsened global heat, coupled with the El Nino phenomenon in the Pacific Ocean, will drive more temperature extremes in the coming months.
The world has already warmed up by 1.2C since the industrial times in the 1800s due to planet-heating greenhouse gas emissions from fossil fuels.
There’s an increasing global push to phase out fossil fuel production globally with countries setting targets to achieve net-zero before 2050 in order to prevent the world from heating over 1.5C.
Mr Sawan claimed poorer countries were at risk of being left behind in the transition to renewable energy, as they do not have the infrastructure to support it.
He gave the example of countries such as Pakistan and Bangladesh, both of which have suffered devastating floods, who were unable to afford Liquid Natural Gas (LNG) shipments in the bidding war for gas in last year’s crunch.
“They took away LNG from those countries and children had to work and study by candlelight,” he said. “If we’re going to have a transition it needs to be a just transition that doesn’t just work for one part of the world.”
Campaigners have slammed this comparison calling it “a gross misrepresentation of reality”.
Claire Fyson, co-head of climate policy at Climate Analytics, a global science and policy institute, told the BBC: “The idea that it’s a choice between our addiction to fossil fuels or working by candlelight is a gross misrepresentation of reality, when we know renewables are cleaner, cheaper and better for public health.”
According to forecasts from the International Energy Agency, “renewables are set to dominate global capacity additions” accounting for 75-80 per cent of all new capacity by 2050.
The agency says that overall demand for oil and gas may rise in the short term, but is set to see its peak by 2028 and start declining.
“Oil producers need to pay careful attention to the gathering pace of change and calibrate their investment decisions to ensure an orderly transition,” IEA executive director Fatih Birol warned in a statement earlier.
IEA also called out planned drilling by companies like Shell saying it exceeds “the amount that would be needed in a world that gets on track for net zero emissions”.
Shell has been under fire after Mr Sawan, who took office in January, announced a scaleback of the company’s energy transition plans despite the global push to move away from planet-warming fossil fuels.
The company earlier said it will not cut down on its oil production by 1-2 per cent each year as it committed in 2021 despite its net-zero pledge. The company’s head of renewable generation Thomas Brostrom also left in June after the scaleback was announced.
Climate campaigners have slammed the oil giant calling the move “utterly destructive” and accusing the company of prioritising its profits over the planet’s future.
In a statement to The Independent, Shell spokesperson said the company remains “ absolutely committed” to becoming net-zero by 2050 and has reduced its production more than it announced.
“Shell has already reduced its liquids production by 21 per cent since 2019, and once we hit the stable production level we recently outlined, it will have fallen by 26 per cent,” the Shell spokesperson said.
“That represents a greater reduction than the initial 1-2 per cent per year cuts we set out in 2021 would have achieved by 2030.”
Shell’s boss also said the higher taxes on profits made by oil and gas firms in the UK and the lack of clarity on energy policy risked making it a less attractive country in which to invest.
“When you do not have the stability you require in these long-term investments, that raises questions when we compare that to other countries where there is very clear support for those investments,” he said.
He said the option of moving the company’s headquarters to the US, where oil firms have far higher valuations for their shares, was not ruled out.
“There are many who question whether that valuation gap can only be bridged if we move to the US. A move of headquarters is not a priority for the next three years.”
“I would never rule out anything that could potentially create the right circumstances for the company and its shareholders. Ultimately, I am in the service of shareholder value,” he said.
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