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Shell CEO says climate change is real, but energy demand growth is ‘unstoppable’

The threat of climate change is real and action is needed, says Ben van Beurden, the chief executive of Royal Dutch Shell.

Ben van Beurden also touched on the oil giant’s transformation, millennials, the new Trump administration and more in a May 17 interview with The Washington Post.

It’s been a turbulent couple of years for the Shell chief executive. With the roller coaster in crude oil prices, the company’s stock has lurched from a high of $83.12 a share six months after he took charge to a low of $36.87 a share. The stock has climbed back, but revenues have plunged by a third since 2013. The shareholders’ annual meeting is Tuesday at The Hague.

Along the way, van Beurden has been reorienting Shell, placing more emphasis on natural gas and less on oil, based on the theory that as climate concerns grow companies will favor gas because of its lower carbon dioxide emissions.

Last year Shell made a $53 billion acquisition of BG Group, which is big in the growing liquefied natural gas market. At the same time, van Beurden has abandoned some of Royal Dutch Shell’s high-profile oil ventures. He halted the unsuccessful $7 billion quest to find oil off Alaska’s Chukchi Sea coast; he sold the company’s oil, or tar, sands holdings in Alberta; and he sold some older oil fields in the North Sea. Eager to reduce debt after purchasing BG, van Beurden has sold about $30 billion worth of assets.

Q: You’ve said that Royal Dutch Shell was making a transition toward becoming more of a natural gas company. How is that going?

A: It is not a just a single-minded transition from oil to gas. It is, actually, making investment choices and evolving our portfolio into what we think is very competitive but also very resilient portfolio.

We’ve always seen that gas was going to be the fastest growing hydrocarbon, twice as fast as oil. And within the gas family, (liquefied natural gas) is growing twice as fast as the average gas. Therefore, making a bet on that part of the hydrocarbon segment is a sensible choice.

Q: How do you view President Trump and his administration and the prospect of changes in policies?

A: It will take some time before the policy contours become very clear. More philosophically what you could say is that this administration is clearly keen to improve the investment climate in the United States, certainly for energy.

The United States is the single most important country in our portfolio by whatever metric you choose. There is no country in which we invest as much as in the United States.

Q: He wants to revive the Keystone XL pipeline in which you had originally reserved space for oil from Alberta’s oil sands.

A: We basically sold down our oil sands position. We don’t see ourselves investing more in oil sands. We now have basically gotten out of it. To have evacuation infrastructure may still be needed but not for us.

Q: How do you see future oil and gas demand amid political pressure over carbon emissions and the changing driving habits of millennials? Will these political and demographic changes constrain the oil and gas industry?

A: I believe what has changed most is the acceptance by ever more people that this energy transition – driven by climate change and the actions of governments, or the attitudes of millennials and their lifestyle changes – all that has pointed more and more toward an energy transition that is unstoppable. At same time, it is clear that the growth in energy demand is also unstoppable. And the demographics or megatrends there are that more people and more people aspire to the lifestyle of the western developed world and that also has to be accommodated.

What hasn’t quite registered in people’s minds is that these two forces that compete and collide with each other and make up an exquisitely complex puzzle that we have to solve as a society. Therefore the relatively simplistic narrative that more renewables will take care of everything or that we just need to leave it in ground and everything will be fine is in my mind an impossible story to believe in.

In Western society, people say if I can have an electric car everybody can. If I can insulate my house everybody can. And my son doesn’t have driver’s license nobody will anymore. But the big global trend is a different story altogether.

It’s unfortunate. I would love for society to finally grasp the magnitude of the challenge that we are really dealing with.

Q: Many members of the Trump administration don’t believe in climate change. What are your views?

A: We believe that climate change is real. We believe that the threat of climate change is real. And we believe that action is needed.

It doesn’t mean we have to kiss hydrocarbons goodbye. In fact, we can’t. But it does mean that we have to make more intelligent choices.


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