10
Jun

Shell’s Australia boss says Big Oil faces a push for faster change

The Australian boss of global energy giant Shell says society’s growing determination to speed up the shift to cleaner energy has driven a sharp escalation of climate pressure engulfing oil and gas producers this year.

In his first public comments since a Dutch court ordered Shell to set deeper and faster emissions cuts targeting a 45 per cent reduction by 2030, Shell Australia chairman Tony Nunan said he believed industry, governments and the public were becoming increasingly aligned on the need to achieve net-zero emissions by the middle of the century.

“What we are really debating now is not so much where do we need to be but it’s how quickly can we get there,” he told the Credit Suisse 8th Australian Energy Conference on Wednesday.

“What I see, in the last couple of weeks, are an example of the sentiment which is asking us to push the boundaries of how quickly we can do it.”

Last month’s ruling against Royal Dutch Shell, which industry experts say may serve as a precedent for other European oil majors, came the same day as ExxonMobil was dealt a blow with a small hedge fund unseating three board members in a bid to force the US company to diversify beyond fossil fuels and fight climate change.

It also followed a landmark report by the International Energy Agency that said investors should avoid funding any new oil and gas fields if the world is to achieve the Paris agreement’s aspirational target of limiting global temperature rises to 1.5 degrees above pre-industrial levels.

Ratings agency S&P says the multiple climate shocks may serve as a wake-up call for an industry perceived by many to be slow to adjust to global warming.

“This is a turning point in history,” Friends of the Earth lawyer Roger Cox said after the Shell verdict. “This case is unique because it is the first time a judge has ordered a large polluting company to comply with the Paris climate agreement.”

Mr Nunan on Wednesday said the debate around the ongoing use of fossil fuels was often defined by the extremes. “On the one side, there is a view that the fastest way to do it is stop producing oil and gas today; the other side of the debate is at the end of the day, we are just supplying what customers need,” he said. “My view is the solution sits between the two.”

Mr Nunan said Shell believed its global oil production hit a peak in 2019 and was now likely to gradually decline. However, the company holds a brighter outlook for its liquefied natural gas (LNG) assets including those in Queensland and off Western Australia. “We see gas and LNG as part of the transition,” he said.

LNG, a fuel widely used in heating, power and manufacturing, accounts for $50 billion of Australia’s export earnings a year. It is regularly touted as a vital “transition fuel” in the shift to a greener power grid because it burns with fewer greenhouse gas emissions than coal, but is still capable of dispatching on-demand energy to support weather-dependent wind and solar generators.

However, LNG’s role in the transition is increasingly under question, with scientists and investors voicing concerns around emissions released in drilling and shipping, and ever-growing advances in renewable technology. Climate advocates say gas remains a heavy source of emissions and its role must be limited if the world is to achieve the Paris climate accord’s goals of limiting global warming to well below two degrees.

Woodside Petroleum, Australia’s largest independent oil and gas producer, this week dismissed suggestions that the multiple climate upheavals across the sector marked a turning point for the industry and darkened the outlook for new long-term supply projects.

“I don’t see it as a watershed moment,” Woodside interim CEO Meg O’Neill said. “But I do see it just as a significant continuation of the trend that the industry has been on, which is [that] we as investors in this space need to be doing our part to decarbonise.”

Extracted from The Sydney Morning Herald