A green future for oil and gas companies

The company Shell has announced plans to reach net-zero by 2050. As the world’s third-largest company, Shell is active in every part of the oil and gas industry.  However, the company’s chief executive Ben van Beurden has stated that Shell ‘needs to go further with our own ambitions.’ Its current target is to reduce carbon intensity by 50% within 30 years and 65% within 50 years.

The change will not be easy for Shell as its entire business model will have to change. Instead of relying on oil and gas, the company will use green energy sources such as biofuels. The change was welcomed by Adam Matthews, a director on the Church of England Pensions Board. He stated that ‘net-zero pathways’ like those being followed by Shell were crucial for fulfilling the requirements of the Paris Agreement. Methods such as planting trees are essential for reducing the amount of carbon dioxide in the atmosphere alongside companies structurally altering their production.

The company Shell has announced plans to reach net-zero by 2050

The environmental policies of the Shell corporation differ from other oil and gas companies, including BP. According to the Guardian, instead of selling fewer oil and gas products, BP has declared an absolute reduction in emissions. Richard George, the head of Greenpeace UK’s climate campaign,  has stated that ‘new oil and gas’ must not be drilled.  Nonetheless, major investors have called the move a step in the right direction, arguing there is some reason for hope.

There may be more pressing reasons for Shell to move away from oil. The price of oil fell by $16 per barrel for the first time this century as a result of the coronavirus outbreak.  According to Bjørnar Tonhaugen, the head of oil markets at Rystad Energy, oil prices would be unprecedentedly low with ‘storage capacity’ being exceeded. Companies, therefore, must pay suppliers to remove their oil and free up space for future barrels.

The price of oil fell by $16 per barrel for the first time this century as a result of the coronavirus outbreak

In the US especially, oil prices fell to almost $40 per barrel, the lowest demand for fuel and oil in a quarter of a century. For consumers, this will most likely mean cheaper petrol prices, but the effect of this will only be felt in the short term.  In June, prices are likely to rise. When the world eventually comes out of lockdown, the profits of the Shell corporation will reach a state of equilibrium.

Governments and businesses are beginning to recognise the importance of a sustainable future. Countries inevitably want to invest in long term energy sources that provide energy security and sustainability at a reasonable price. Fossil fuels are clearly unsustainable both economically and environmentally. According to Brett Fleishman from the climate campaign group 350.org, the collapse of oil prices was part of ‘how fossil fuels were too volatile to be the basis of a resilient economy.’ He suggests that the best place for fossil fuels is in ‘the ground.’ Debates over future energy sources, including nuclear fusion, will of course continue as the world looks to find sustainable, safe forms of energy.

The future of our planet depends on renewable energy sources

Peak oil – the global production of oil reaching its maximum amount – is a term that has long been discussed as the international amount decreases. Ultimately, this is unsustainable. The future of our planet depends on renewable energy sources. The announcements made by Shell are one step in the right direction.