Europe’s largest oil company starts renewable energy division

Europe’s largest oil company starts renewable energy division

renewable energy division

Shell has created a new division specifically for renewable energy, so they can invest in wind, solar and low-carbon power.
The company will be investing $1.7bn of capital investment into ‘New Energies’ with an annual capital expenditure of $200m (less than 1% of the $30bn the company currently spends a year on oil and gas).
This announcement came not long after Paul Stephens, a fellow at Chatham House, had been warning oil companies through his research paper: “The prognosis for the IOCs [international oil companies] was already grim before governments became serious about climate change and the oil price collapsed … their old business model is dying.”
Another excerpt states: “This requires a major change in the corporate culture of the IOCs. It remains to be seen whether their senior management can manage such a fundamental shift. If they can, then the IOCs will be able to slip into a gentle decline but ultimately survive, albeit on a much smaller scale. If they do not change their business model, what remains of their existence will be nasty, brutish and short.”
The head of Shell told investors at a recent meeting in London, ““The big challenge, both for society and for a company like Shell is how to provide much more energy, while at the same time significantly reducing carbon dioxide emissions”.
Stephens suggests the following ‘options that might allow the IOCs to improve their situation, namely’:

  • Squeezing costs in the hope oil prices will revive
  • More mega-mergers
  • Playing vultures with remnants of the US shale gas revolution
  • Reshuffling their portfolios
  • Diversification
  • Becoming a purely OECD operation
  • Rebuilding in-house technology

Hopefully more oil companies internationally will heed this advice!

Posted By Sally on May 16, 2016 | 0 Comment

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