Shell has established a separate division, New Energies, to invest in renewable and low-carbon power, the Guardian reported on Sunday. Citing an internal announcement to company staff, the new division will consolidate Shell’s existing hydrogen, biofuels, and electrical activities, and will also be used as a base for a new drive into wind power.
Company insiders claimed Shell wants to play down the importance of New Energies for fear it will be written off as a “greenwash” exercise by environmentalists, but said the company believes the new business could become very big – although not for a decade or more, the Guardian wrote.
New Energies starts off with $1.7 billion of capital investment, and it plans annual capital expenditure of $200 million. That might sound substantial, but it is less than 1% of the $30 billion per year that Shell pumps into oil and gas. Nevertheless, establishing the new division is a welcome first step.
At the 2015 BCLS, Peter deMenocal described how more and more firms are incorporating climate change into their business decisions. Indeed, Shell’s move follows on the heels of French oil major Total’s latest foray into the renewable energy industry. Last Monday Total said it had agreed to acquire high-tech battery maker Saft in a deal valuing it at about $1.1 billion. That was the largest renewables investment for Total since 2011 when it bought a controlling stake of solar firm SunPower for $1.4 billion. And earlier this month Blouin News reported on ExxonMobil stepping up investment in carbon capture and sequestration.
Rather than fighting renewables and any climate change mitigation efforts — which would be a waste of money — the oil majors’ investments in the clean energy sector are prudent strategic decisions. They won’t simply go bankrupt as CO2 regulations kick in globally, so these moves hedge their futures.