Shell has quietly shed most of its solar power, while BP is buying into dirty tar sands
Terry Macalister
Tuesday December 11 2007
Shell, the oil company that recently trumpeted its commitment to a low carbon future by signing a pre-Bali conference communique, has quietly sold off most of its solar business.
The move, taken with rival BP’s decision last week to invest in the world’s dirtiest oil production in Canada’s tar sands, indicates that Big Oil might be giving up its flirtation with renewables and going back to its roots.
Shell and BP are among the biggest producers of greenhouse gases in the world, but both have been keen to paint themselves green through a series of clean fuel initiatives.
BP, under its former chief executive, John Browne, promised to go “beyond petroleum” while Shell has spent millions advertising its serious interest in the future of the environment.
But at a time when interest in solar power is greater than ever, with the world’s first “solar city” being built at Phoenix, Arizona, a small announcement from Environ Energy Global of Singapore revealed that it had bought Shell’s photovoltaic operations in India and Sri Lanka, with more than 260 staff and 28 offices, for an undisclosed sum.
The sell-off, to be followed by similar ones in the Philippines and Indonesia, comes after another major disposal executed in a low-key way last year, when Shell hived off its solar module production business. The division, with 600 staff and manufacturing plants in the US, Canada and Germany, went to Munich-based SolarWorld. Shell has however formed a manufacturing link, with Saint-Gobain, and promised to build one plant in Germany.
The Anglo-Dutch oil group confirmed yesterday that it had pulled out of its rural business in India and Sri Lanka, saying it was not making enough money.
“It was not bringing in any profit for us there so we transferred it to another operator. The buyer will be able to take it to the next level,” said a spokeswoman at Shell headquarters in London.
The oil group said it was continuing to move its renewables interests into a mainstream business and hoped to find one new power source that would “achieve materiality” for it. Shell continues to invest in a number of wind farm schemes, such as the London Array offshore scheme, which has government approval. Shell has also been concentrating its efforts on biofuels, but declined to say whether it had given up on solar power even though many smaller rivals continue to believe the technology has a bright future.
Environmental groups have always accused Shell of using clean energy initiatives as “greenwash” to deflect criticism from its core carbon operations, especially tar sands. The latest pull-out has annoyed rival business leaders at London-based Solar Century and local Indian operation, Orb Energy, who fear the impact of a high-profile company selling off solar business. Jeremy Leggett, chief executive of Solarcentury and a leading voice in renewable energy circles, said Shell was undermining the credibility of the business world in its fight against global warming.
“Shell and Solar Century were among the 150 companies that recently signed up to the hard-hitting Bali Declaration. It is vital that companies act consistently with the rhetoric in such declarations, and as I have told Shell senior management on several occasions, an all-out assault on the Canadian tar sands and extracting oil from coal is completely inconsistent with climate protection.
“This latest evidence of half-heartedness or worse in Shell’s renewables activities leaves me even more disappointed. Unless fossil-fuel energy companies evolve their core activities meaningfully, we are in deep trouble,” he said.
Damian Miller, former director of Shell Solar’s rural operations and now chief executive of Orb Energy, said Shell was missing an opportunity by pulling out at a time when renewables markets were starting to mature in the developing world. He alleged some customers were complaining of being abandoned by Shell and worried about the servicing of equipment they could expect from Environ. “We see former Shell customers who are highly disappointed not to be receiving proper service for the solar systems they have invested in. These customers have often invested 20-30% of their annual income in a system to ensure they have some minimum amount of lighting and access to radio, TV, or a fan,” said Miller.
He added that the oil majors, including Shell, had invested time and energy in promoting their plans for renewable energy in the press and on TV, but were not able to lead the transformation the world needs towards renewable energy and energy efficient solutions.
Shell declined to comment on these criticisms or talk about where its priorities lay. But the chief executive, Jeroen van der Veer, did make a number of comments last summer which could have paved the way for a change in policy. Alternative energy sources such as renewables will not fill the gap, he argued, forecasting that even with technological breakthroughs they could give supply only 30% of global energy by the middle of the century. “Contrary to public perceptions, renewable energy is not the silver bullet that will soon solve all our problems,” he said.
Meanwhile, BP has been accused by Greenpeace Canada of lining itself up to help commit “the biggest environmental crime in history”. This follows its decision to swap assets with Husky Oil, giving it an entrance ticket to the Alberta tar sands, which are said to be five times more energy-intensive to extract compared to traditional oil.
John Browne, the group’s former chief executive, had said BP would not follow Shell into tar sands as he established an alternative energy division and pledged to take the group “beyond petroleum.” The new boss, Tony Hayward, has pointed the corporate supertanker in a new direction although his public relations minders insist BP remains committed to exploring the potential of renewables.
“Tony Hayward has been part of the management team at BP for many years and has endorsed the low-carbon strategy that involved BP creating its alternative energy business late in 2005. We are spending $8bn (£4bn) over ten years and are pressing ahead with 450 megawatts of wind production capacity in the US,” said a spokesman. “The tar sands deal in Canada does not represent a change in direction, it was just a very good opportunity which represents a broadening of the portfolio.”
Greenpeace climate campaigner Joss Garman said: “If Shell is to survive the climate change age… it needs to become not just an oil company but an energy company. One wonders if Shell’s executives have noticed what’s happening in Bali or if we’ll see slick adverts on TV boasting about their retreat from renewables. Probably not.”
http://www.guardian.co.uk/business/2007/dec/11/oil.bp
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
MORE DETAILS:
A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
This report should not come as a surprise to anyone who knows Shell well. Over the past thirty years or so Shell has tried a variety of diversifications but failed to make any of them work:
Minerals: Billiton …………..……SOLD
Nuclear: General Atomic…..……SOLD
Coal: Shell Coal…………….……SOLD
Power Generation: Intergen……SOLD
Agrochemicals:………………….SOLD
Forestry…………………………..SOLD
Solar………………………………SOLD
The reasons for these failures are not particularly complex. At the top in Shell there is a culture which is really only comfortable with the familiar – not for them the challenge of “unknown unknowns”. There is a bias for the scientific, technological and the quantifiable and an aversion to uncertainty. So the people who rise to the top are not original thinkers or creative – they are the apparatchiks who play the corporate games most successfully. As these top executives have rewarded themselves more in more in recent times there has been an increase in the safety first mindset. The huge remuneration and pension packages that are on offer do not encourage originality or risk taking – they cause retreat to the familiar where income streams can be more accurately predicted. This sheer lack of imagination is well illustrated by the share buyback schemes which continue – essentially Shell is saying that it has no capital investment, acquisition or diversification opportunities so the only thing it can think of doing with the windfall earnings from $90 oil is to buy its own shares.
The other force in play at Shell at the moment is the continued centralisation of decision making. The traditional upstream oil and gas businesses do need central decision making but other areas (Renewables is one) are substantially local in character and far smaller in scale. Shell does not have the processes in place to manage decentralised businesses any more. In the past strong and independent country based “operating companies” often stepped out into non traditional activities where they saw a local opportunity. Since the power of these local companies has been curtailed there is no longer the organisation in place to encourage such experiments.
The changing Shell culture is placing one of its historically traditional businesses at risk – the huge network of petrol stations around the world. There is no more local business than retailing as any retail professional will tell you – the great retailers (McDonalds for example) really do “think global and act global”. There is always hands-on local management in every country or region in which McDonalds operates with globally developed products, services and offers being tailored to the local market. Shell used to do that in the past when the operating company structure was in place. But since its demise “Retail” (that most local of businesses) has been centralised and now has to kow-tow to the ridiculous nostrum that it is really a “global business”. Shell is gradually walking away from hands-on Retail in many markets and it would be no surprise if the business is not disposed of entirely in time.
The irony of all of these changes is that the centralisation of decision-making and the narrowing focus has not brought better corporate governance. There was nobody more adverse to risk and to delegation that Phil Watts – a hands-on manager if ever there was one – but the facts now emerging about the reserves scandal over which Watts presided showed that this centralisation was one of the causes of the problems. How ironic that in the post Watts era the centralising trends have continued with so-called “global businesses” now existing across the board. One of the reasons for this is the fear of legal actions and the presumption that the risk of these is reduced by not delegating or placing trust in subordinates. There are now far more lawyers in Shell than there ever were in the past and there is hardly a business decision made without the lawyers being consulted. So whilst the executive directors of Shell richly reward themselves this is not in recognition that these rewards are partly a compensation for the directors for having to take greater personal risk. How close Phil Watts has been to following the Enron directors, the Nat West three and Conrad Black into the criminal courts we don’t know – but you can be sure that the current Shell board will be very conscious of the need to avoid personal liability. Again this means that they are reluctant to move away from the very familiar.
The one area where Shell has been willing to go public and try and differentiate itself has been in its corporate communications and its green posturing. As Terry Macalister rightly points out Shell has “trumpeted its commitment to a low carbon future by signing a pre-Bali conference communiqué” – in my opinion an astonishing act of hubris. There can be little doubt that Shell is only in Renewables at all because they believe that this will paint them greener than in reality they are. Let’s be clear about this – the whole business imperative of Shell is to exploit hydrocarbon resources. That is what they do. Every hydrocarbon molecule that they find, produce, refine, transport or market contributes to global warming and climate change. My view is that there is nothing immoral in this – oil and gas are the main drivers of economic growth and prosperity and will remain so for the foreseeable future. Shell’s considerable skills in this business, combined with their good track record in reducing there own carbon emissions at refineries etc., should be a source of pride. There is really no need to be apologetic about Shell’s strong position as a global player in the oil and gas exploration and production world and Greenpeace’s suggestion that Shell “…needs to become not just an oil company but an energy company” with a strong commitment to Renewables is wishful thinking. Shell has neither the competences nor the inclination to move away from its traditional businesses – on the contrary all the signs are that they are retreating back to familiar ground rather than being creative or genuinely diversifying in their investments.