Do oil companies deserve support?
The chemical industry plays a major role in our lives. Companies such as Shell, ExxonMobile, BP and others supply our energy needs and our ever-growing demand for all kinds of products. They fulfill our desire for freedom, luxury and mobility. We ask, they make it happen. So why the growing anger and hatred towards companies like Shell? Shouldn't we be tackling the climate crisis together?
Recently Milieudefensie brought a Lawsuit against Shell for causing global climate damage and won. People hate or despise Shell and similar companies because they are destroying the climate, and because they have known for years that what they were doing was harmful. But isn't mistrust highly undesirable when you are in a crisis together?
Ask yourself the question: 'Who is responsible for the climate crisis?' You could say that the customer is responsible. They ask for products and buy things. In fact, they determine what is put on the market and therefore should bear some responsibility for the impact this has on the climate.
You could also argue that business is responsible. The primary goal of a company is to make profit. They will therefore do everything in their power to achieve this and let people consume as much as possible. Companies such as Shell are guided by and bound to their shareholders, who want to make money. They determine the company's course to a large extent. Large shareholders in big oil include our pension funds. As citizens, we want to be well-off when we retire, and there is a lot of money to be made in the chemical industry.
Or is the government responsible? Governments can impose restrictions on companies, they can set a framework, they can stand up for the common good. They can make investments in sustainability. A government is elected by and serves the citizen. But the composition of that government, and thus the interests it pursues, usually changes every four years in the Netherlands.
Conclusion: everyone is responsible to a certain extent, but everybody likes to point the finger at others. The climate crisis is a crisis of responsibility. I very much understand and support that Milieudefensie has filed a lawsuit against Shell, a company which in accounts for three per cent of global CO₂ emissions. Someone has to take responsibility. But a fun fact: of all the CO₂ that Shell emits, 90% is emitted through direct consumer use of Shell products (burning gasoline, your package delivery… and the energy cost to produce it). But it is a bit difficult to take all 500 million customers of his Shell to court. I very much recommend the television film ‘De Zaak Shell’ (The case: Shell) by Milieudefensie. Go and watch it, because the responsibility crisis is made very clear in there.
I don’t think it’s wrong to put pressure on companies like Shell. However, it is important that this pressure is applied carefully and that it has the desired effect. Therefore, I would like to take you through the example of Shell. What can happen if the pressure on Shell is wrongly applied? And how does this relate to the development of sustainable alternatives by an oil company like Shell?
What happens if you tell Shell to pump less oil and gas? Simple, another party will do it. The demand for oil and gas will continue to grow well beyond 2050. If businesses are discouraged to pump less oil and gas, big state oil companies of Russia, China and the Middle East will do it. They already control 50% of total oil production.
At the end of the day, oil production and emissions will not be reduced, but production will shift from Western companies bound by Western regulations to companies that belong to countries with far less transparency and less of a commitment to sustainability. There are already numerous examples of large oil fields that were not exploited by companies such as Shell, under pressure from activists, but were nevertheless exploited by a state oil company in the country where the oil field was located.
But Shell is a company that wants to get away from oil and gas. In their recently published energy transition strategie, they present a plan to become carbon neutral by 2050. In doing so, they are on the progressive side of the big oil companies. Shell and other companies are working very hard on alternative technologies, also in cooperation with TU/e, TU Delft and Groningen University. For instance, they recently succeeded in making fivehundred liters of kerosine from CO₂ and have developed and built the largest green hydrogen plant to date. And now they are going to build a similar plant in the port of Rotterdam, but twenty times bigger. This hydrogen will be much more expensive than grey hydrogen. There are no customers for this expensive hydrogen yet, and yet they are building this factory. But these are big steps in the right way!
It will surprise you that Shell is the largest investor in the energy transition in the Netherlands. "We need Shell precisely to solve the climate crisis," Groningen professor Ben Feringa, Nobel prize winner in chemistry, recently confirmed in the Dutch TV-programme ‘De Vooravond’. The company would like to invest even more and faster in the energy transition. Maarten Wetselaar, member of Shell's Executive Board, recently told this in Buitenhof. But if you go too fast, you make losses, lose shareholders and less ambitious (state-owned) oil companies take over the field of play. And then the energy transition will slow down for sure. The fact is that Shell's sustainable investments are still financed by profits from pumping oil and gas. You have to keep making those profits for a while.
Reward and invest
So there is a limit to the resources that an oil company can put into sustainability because of market forces and shareholders. Only at an international political level, real guidance can be given to make the chemical industry and more sustainable in my opinion. Reward and invest more in companies that are willing to invest in sustainable solutions themselves. Otherwise, Russian, Chinese or other state-owned companies, with little ambition to become more sustainable, will take over the playing field and the development and large scale implementation of sustainable solutions will decrease. Again; this will really slow down the energy transition.
If we want to get out of the climate crisis faster, it is essential to investigate which actions will actually lead to the desired effect: CO₂ reduction. The gas and oil world is perhaps one of the most complex and largest markets in the world. Consumers, business and the government are all connected, and history shows that distrust from one of these three groups towards one of the others results in creating a distance, while all three really need each other to move forward.
Through hatred and actions that are not constructive, you only make the climate problem worse. So think carefully and read up before you comment on the position of Shell or any other company, the government, the consumer, or any other pawn in the climate crisis.