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Will Shell-funded Energy Transitions Commission help or hinder the low carbon economy?

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Screen Shot 2015-08-13 at 11.35.25By Jessica Shankleman  |  25 Sep 2015

Will Shell-funded Energy Transitions Commission help or hinder the low carbon economy?

Oil giant Shell is backing a new organisation that is being set up to lobby governments to step up their investments in low carbon technologies, with the twin aims of boosting economic growth and tackling climate change.

But the new Energy Transitions Commission, which is due to launch on Monday with €5m to €7m of funding, has already come under fire from some green groups who fear Shell may be using the initiative to further its own aims, particularly its controversial Arctic drilling programme.

The Commission, whose website launched today, is being touted as the sister organisation to the Global Commission on the Economy and Climate, whose research argues the world has an unprecedented opportunity to invest up to $90tr (£55.4tr) in clean technologies by 2030.

Shell has been a driving force behind the establishment of the new Commission, and it will also involve a number of other high profile companies and individuals, including Lord Stern, former President of Mexico Felipe Calderón, and Anita George, head of the World Bank’s global energy practice, a spokeswoman for the Commission told BusinessGreen.

Other commission members include BHP Billiton chief commercial officer Dean Dalla Valle, RWE chief executive Peter Terium, and Bjørn Otto Sverdrup, vice president of sustainability for Statoil, BusinessGreen understands.

The spokeswoman for the Commission added that the organisation would focus on turning existing research on energy policy into action. She added it would do “more than lobbying”, using experts to help politicians to take decisions that will help solve the energy trilemma of delivering economic growth and energy security, while tackling climate change.

The European Climate Foundation (ECF), which finances a wide range of environmental groups, including sustainable investment research body Carbon Tracker, is also considering funding the Energy Transitions Commission. A spokesman for the ECF said a formal decision will be taken at a board meeting next week. “If we take part, we will put money in, and we expect that to be £200,000 to £300,000,” he said.

A launch brochure for the ETC seen by BusinessGreen explains that the group aims to “inform and support” decision-makers “grappling with energy transition decisions” coming up over the next 15 years.

“They will focus on topics that are locally relevant and can affect real change. For instance, the initial research of the Commission has centred around two topics: (i) what does it take to scale solar power and (ii) what are the solution levers to the air pollution challenge,” the document states.

“The Commission has a bias towards action, and while it will produce short analytical reports, it aims to focus the majority of its efforts on speaking with public and private decision-makers and change agents on how to make recommendations come to life.”

The document adds that it will take a systems level approach, focusing on five key elements – enabling change, changing and reducing energy use, reshaping sources of energy, reducing greenhouse gases, and delivering economic growth.

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“Currently we do not have really any major company associated with the fossil fuel sector, who have what could credibly described as 2C business plans. That’s the conversation we’re interested in having,” a spokesman for the European Climate Foundation told BusinessGreen.

“We are talking about a radical shift in the way economies work in a short period.”

However, he said it remained to be seen whether the Commission’s industry members such as Shell would heed the advice of research if it argued that Arctic drilling was not compatible with a 2C world.

“They’ve brought together an interesting group of people into the Commission, but the outstanding question is whether there is significant debate happening in these companies,” he said.

However, other green groups, including Carbon Tracker and Greenpeace, have criticised the new Commission, arguing it will be used as a vehicle for fossil fuel companies to boost oil extraction.

Carbon Tracker’s own research argues many fossil fuel investors are exposed to the so-called “carbon bubble” risk, whereby billions of pounds of assets could prove massively overvalued if the world is successful in tackling climate change.

“We question the credibility and independence of any entity set up by energy incumbents with an interest in maintaining the status quo,” said Anthony Hobley, chief executive of Carbon Tracker. “Incumbents almost always fail to survive technological transitions because they rarely think outside the constraints of their historical business models.

“In this vein, oil companies are perpetual optimists on demand even in the face of a perfect storm of factors indicating the exact opposite. Just as the luddites were prevented from derailing the industrial revolution, we cannot let vested energy luddites derail the energy revolution with their slow transition.”

Greenpeace UK senior climate adviser Charlie Kronick said the Commission was unlikely to back Shell’s business strategy, which poses questions over its aims. “No matter how hard they try to spin it, the company has a clear business model,” he said. “It includes drilling for oil in the Arctic and a business plan betting on a massive increase in global average temperatures and dangerous climate change. Whatever else it does, their commission won’t deliver a prescription for change that sooner rather than later will wind up Shell’s core business. Turkeys don’t vote for Christmas.”

However, a spokeswoman for the new Commission defended Shell’s backing of the group, arguing oil companies engaging in the debate on climate change faced a “no-win situation”. “If they do get involved, they are criticised for trying to steer the conversation in their direction, if they don’t get involved they get criticised for having no interest,” she said.

With the group now due to launch on Monday, it remains to be seen whether it will make it easier for fossil fuel companies shift their investment priorities in order to help tackle climate change, or merely become an extension of previous attempts by the industry to water down governments’ attempts to deliver more ambitious carbon reduction policies.

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