The Real Reason Why Shell Aims for 'Net-Zero'

When Shell reported that its oil production had peaked back in February, the more optimistic among us were tempted to celebrate it as a promising sign of the times. Sure, the oil giant was still aiming to keep selling oil and gas for many decades to come, but it was also promising shifts into cleaner-sounding technologies like electric vehicle charging, electricity sales, and bioethanol. 

As activists and journalists told us at the time, however, the real test would be in how fast the company would wind down its fossil fuel sales, and how quickly it would ramp up the alternatives. The answers to those questions are now coming into focus with Shell’s newly published Energy Transition Strategy, which is due to be voted on by shareholders at the company’s AGM today. The details are not exactly pretty. 

In a deep dive for ACCR Lobby Watch that sometimes feels like a masterclass in sarcastic commentary delivered in chart form, Australian renewable energy expert Ketan Joshi took a look at exactly why the Energy Transition Strategy really is no such thing. Probably the single biggest trick Shell is trying to pull, says Joshi, is to encourage us to focus on emissions intensity, not absolute emissions.

Joshi wrote on Medium: “They are freezing their fossil fuel business, not winding it down. And as we know, emissions are cumulative. If you freeze at a high level, you are actively deciding to worsen climate harm. The only way out: pulling with all our might on this system to bring it down to zero ASAP. Anything less is causing avoidable harm.”

The basic math behind this strategy is revealed in one of Joshi’s terrific charts that he shared on Twitter: 

It gets worse. Not only is the company trying to cloak a continuation of oil sales in an illusion of decline, but they are also using growth in cleaner tech businesses to "water down" the impact of their core business. Now, the eternal optimist in me has often pointed out that a serious investment from fossil fuel giants could help kickstart certain green technologies.

So if Shell really succeeded in scaling up electric vehicle charging or its renewables business, for example, there would be some benefits for the climate overall. It’s just that those benefits would be vastly overshadowed by their continued investment in business-as-usual. 

There is also, as Joshi also points out, a fairly big "if" in terms of whether Shell’s promises will ever truly materialize into action. Take its somewhat ambitious promises on Carbon Capture and Storage (CCS) for example:

You get the idea. 

Joshi is far from the only person concerned that Shell’s greenwashing is really an effort to derail, distract or delay the push for government-level interventions like bans on the internal combustion engine, or restrictions on the sale or production of fossil fuels. 

In a paper published in the journal Energy Research & Social Science, authors Dario Kenner and Richard Heede argue that companies like Shell and BP—which are seen as slightly more "progressive" than Exxon or Chevron—are further into a process of disruption and diversification. As such, they are desperate to delay the transition. Pointing out that governments have taken an active role in all previous energy transitions, the authors frame the oil major’s net-zero efforts as a clear and transparent attempt to stave off policy-level interference from the state: 

“These companies are trying to prevent the shift to phase four where they are adapting to survive, which could be done via technology and a shift in mission and identity, because they know that if decisions are made that take them on that pathway there might be no way back. If the boards of these companies were to do what is required by climate science (end exploration, wind down extraction, invest in low-carbon energy), their companies would likely be smaller and generate lower revenue, and would also face fierce competition in the low-carbon energy space.”

Not only does this make sense from an institutional survival standpoint, say Kenner and Heede, but it also makes sense in terms of the immediate financial interests of those currently in charge—whose compensation is closely tied to the market valuation of their companies. 

So yes, we are likely to be hearing a lot more about oil companies and net-zero in the coming days, weeks, months, and years. Yes, some elements of the plans we hear about may even be good—when taken in isolation. But we are going to have to keep our eyes on the bigger picture. And that means shrinking the fossil fuel pie as fast as we possibly can. 

I’ll leave the last words to something Treehugger design editor Lloyd Alter said to me when I was researching my upcoming book: 

“You are who you are and you are good at what you are good at. Kodak was unrecognizable after the switch to digital photography. And oil companies won’t survive the low-carbon transition. At very least, they’ll be smaller and very, very different. Sure, if we were still talking about resource efficiency and a gradual transition they might stand a chance. But it’s increasingly clear we need a rapid shift and a fundamental break with the past. ‘Keep it in the ground’ is a much different idea than ‘use what you have wisely.’”