U.S.News & World Report: Shell CEO Says Conservation Isn’t Enough

Shell gasoline station in Philadelphia (Jim Lo Scalzo for USN&WR)

By Alex Markels
Posted 7/5/07

You might expect the chief executive of the world’s second-largest oil company to pooh-pooh the recent surge of interest in renewable energy. But despite Royal Dutch Shell CEO Jeroen van der Veer’s recent contention that the public has placed too much faith in the potential for solar and wind energy, the 59-year-old Dutchman raised some eyebrows when he simultaneously argued that the world can meet its demand for energy and control greenhouse gases over the next half-century while still relying on fossil fuels to supply 70 percent of the world’s energy needs. 

Well, the first priority is conservation, because more than half of the energy we generate today is wasted. Take the average car, which uses about 20 percent of the gas to move it forward; the rest is lost to heat. We can help by making better, cleaner-burning fuels, and the car companies can help by making more fuel-efficient cars.

So what are you doing to conserve energy?

Well, you won’t see me in an SUV. And I’ve just installed solar electricity panels on my roof, although I’d have to live a long time to get payback.

Speaking of payback, one way Europe has increased energy efficiency is by imposing big taxes on gasoline. Should we have higher gas taxes in the United States, too?

We can make good estimates of what would happen if you increased gas taxes: People will buy less fuel, and they’ll use it more conservatively. So I can see the logic that says “tax gas.” But in the end, this is for government to decide.

OK, say the government increases the gas tax, and we all buy hybrid cars. Can we get to where we need to be through conservation alone?

It’s extremely important but, no, conservation isn’t enough. The biggest reason is that energy demand is accelerating; even with conservation, it will double by the year 2050. At exactly the moment that demand for energy is surging, more and more of the world’s conventional oil fields are going into decline. So supplies of oil and gas that are easy to extract will struggle to keep up with demand, which means increasing use of unconventional fossil fuels, such as oil sands, including and especially coal. Coal is more than twice as CO2 intensive as natural gas, and abundantly available. Coal forms 70 percent of China’s current primary energy mix today, and 50 percent of the electricity in the U.S.A. is generated with coal.

So you also need to take the [carbon dioxide] out of fossil fuels, especially coal. If you capture the CO2, then you can store it in the ground, especially where you have gas fields. That’s something we already know about because we use CO2 to enhance oil recovery. And at our big refinery in Rotterdam, we capture CO2 and feed it to greenhouses so the tomatoes grow faster.

If you have the technology to capture and store CO2, then what’s stopping you?

We’re doing it in demonstration projects now, but we still need to see if we can do it on a larger scale. And it will take a decade to test the carbon-capture technology. Then we have to work things out with governments so we can make it [economically] worthwhile, because right now if you capture CO2, you don’t get credit for it, which just isn’t logical. A unit stored should be the same as a unit saved.

Even if you can take the CO2 out of fossil fuels, you’re still dealing with a limited resource, one that’s more and more expensive to get out of the ground, not to mention all the political issues involved in doing so. Isn’t there a role for more renewable sources…like ethanol?

Yes, in fact, I believe we’re the world’s largest distributor of first-generation transport biofuels [which are made primarily from corn and sugar], selling over 3.5 billion liters, mainly in the U.S. and Brazil. But if you start to calculate how to make a real dent in demand, you will get huge competition with food that will push up prices. So that’s not a real solution. Our strategy now is to focus on second-generation biofuels, which are made out of the nonfood parts of crops. We’ve invested in companies that are working to produce ethanol from cellulose and raw materials like wood chips, but the challenge is still to make biofuels cheaper and make production more energy efficient.

And what about hydrogen fuel? Isn’t Shell involved in that, too?

We were very early to start with hydrogen—in the mid-’90s—but it’s gone slower than we expected at the time. To make it successful, we still need innovation in two industries: We need cars, and we need a system of hydro stations. And even then, you need to find a way to make the hydrogen without emitting a lot of CO2 in the process. This is technically possible, but it’s still a long way out.

OK, so if all the hype about hydrogen and ethanol is just that, and renewables like solar and wind won’t do the trick either, then what is the long, long-run solution?

In order to become a society that produces less CO2, there has to be a new mind-set. All the recent hype about renewables and about being “carbon neutral” doesn’t change the reality of what we face, but it does help with short-term awareness. That’s how it starts.

http://www.usnews.com/usnews/biztech/articles/070705/5shell.htm