Shell accused of strategy risking catastrophic climate change

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Royal Dutch Shell has been accused of pursuing a strategy that would lead to potentially catastrophic climate change after an internal document acknowledged a global temperature rise of 4C, twice the level considered safe for the planet. A paper used for guiding future business planning at the Anglo-Dutch multinational assumes that carbon dioxide emissions will fail to limit temperature increases to 2C, the internationally agreed threshold to prevent widespread flooding, famine and desertification.

The revelations come ahead of the annual general meeting of Shell shareholders in the Netherlands on Tuesday, where the group has accepted a shareholder resolution demanding more transparency about the group’s impact on climate change.

Hundreds of environmentalists took to the seas off Seattle in kayaks, canoes and paddleboards on Sunday to protest against the company’s’s controversial plans to drill in the Arctic Ocean. The “Shell No” protest was held close to where Shell’s Polar Pioneer drilling rig is docked. One banner read: “We can’t burn all the oil on the planet and still live on it.”

Ben van Beurden, the Shell chief executive, has repeatedly stated that the fossil fuel giant is a responsible company that fully accepts the need to counter manmade global warming, has campaigned for a tax on greenhouse gas emissions, and is moving its focus from oil to cleaner fuels such as gas.

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But an analysis of Shell’s New Lens planning document points to an acceptance that world temperatures will rise to a level that the Intergovernmental Panel on Climate Change argues would have a severe and widespread impact. A 4C global rise by 2100 would entail a sea level rise of between 52cm and 98cm, leading to widespread coastal flooding. There would be widespread risk of animal and plant extinctions and global agriculture would be severely hit. A 4C average would also mask more severe local impacts: the Arctic and western and southern Africa could experience warming up to 10C.

The Shell document says: “Both our (oceans and mountains) scenarios and the IEA New Policies scenario (and our base case energy demand and outlook) do not limit emissions to be consistent with the back-calculated 450 parts per million (Co2 in the atmosphere) 2 degrees C.”

It adds: “We also do not see governments taking steps now that are consistent with 2 degrees C scenario.”

Environmentalists said the presumptions undermine Shell’s ability to talk with authority on climate change.

Charlie Kronick, climate campaigner at campaign group Greenpeace, said Shell and IEA saw fossil fuels continuing to be burned, with the earth facing temperature rises of 3.7°C or 4°C in the short term, mounting to 6°C later on.

“What I don’t see is a realisation from Shell about what exactly would happen to its business if climate change escalated dramatically beyond what is safe with all the negative consequences in the world for food and water never mind energy,” said Kronick.

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Louise Rouse, an investor relations specialist and consultant to Greenpeace, said the New Lens document undermined Shell’s claim that ongoing oil and gas exploration helps raise living standards in the developing world by supplying the energy for rapidly expanding economies.

“There is an incoherence at best between oil companies on the one hand positioning themselves as being on the side of the world’s developing countries and while on the other actively pursuing strategies which will entail catastrophic climate change which we already know is having a significant impact on the global south,” she said.

Friends of the Earth in the Netherlands, which has carried out its own review of activities by the Anglo-Dutch oil group, said the company often argues that it is moving away from oil towards cleaner gas but has often concentrated on the most carbon intensive forms of gas such as liquefied natural gas. Shell’s carbon dioxide emissions have risen in 2014 and are set to increase further as it expands the business through a planned £47bn takeover of rival BG.

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Shell declined to comment formally on the New Lens scenarios but oil industry experts said they were not meant to be a business blueprint. Instead, they represent “plausible assumptions and quantification” designed to make executives consider events that may be only remotely possible. The expert added: “Scenarios are not intended to be predictions of likely future events or outcomes.”

The Guardian’s Keep it in the Ground campaign seeks to persuade the Wellcome Trust and the Gates Foundation to divest themselves of their shareholdings in fossil fuel companies. According to the latest figures, Wellcome held a stake of £142m in Shell as of September 2014. The Gates Foundation held £6m of Shell’s shares at the time of its latest tax filing in 2013.

The Anglo-Dutch group said the BG takeover would expand its presence in controversial deep-water activities – many of the planet’s untapped fossil fuel resources are now in ocean regions that are difficult to access – but said it would also increase its presence in liquefied natural gas, a cleaner fossil fuel than oil.

It added: “By combining BG’s portfolio and skills set with Shell’s capabilities, we can deliver a step change in the growth priorities for both of our companies. This means more deep water and more LNG, plays where we have strong profitability and capabilities.”

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An excerpt from ‘The Guardian’ article written by Terry Macalister, 17 May 2015

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The Scenario Planners

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A theater-loving Englishman, Bentham leads Shell’s legendary team of futurists, whose methods have been adopted by the Walt Disney Company and the Pentagon, among others.

The scenario planners, as they call themselves, are paid to think unconventional thoughts. They read fiction. They run models. They talk to hippies. They talk to scientists. They consult anyone who can imagine surprising, abrupt change. The competing versions of the future — the scenarios — that result from this process are packaged as stories and given evocative titles: “Belle Époque,” “Devolution,” “Prism.” Then the oil company readies itself, as best it can, for all of them.

Over the course of almost half a century, Bentham’s predecessors in the scenario-planning group helped Shell foresee and prepare for events like the fall of the Soviet Union, the rise of Islamic extremism and the birth of the anti-globalization movement. More recently — before California’s historic drought — the team focused on water scarcity. And long before most other oil companies, Shell’s scenario planners helped the company understand that climate change was a strategic and scientific reality.

In early 2008, weeks before Shell bid a record-breaking $2.1 billion on oil leases in the melting Arctic Ocean — the basis for the newly approved drilling plan — the company’s futurists released a new pair of scenarios describing the next 40 years on Earth. They were based on what Bentham called “three hard truths”: That energy demand, thanks in part to booming China and India, would only rise; that supply would struggle to keep up; and that climate change was dangerously real. Shell’s internal research showed that alternative energy systems — wind, solar, carbon capture — would take decades to make just a 1-percent dent in our massive global energy system, even if they grew at 25 percent a year. “It takes them 30 years to just begin to start becoming material,” Bentham explained to me.

One scenario, called “Blueprints,” painted a moderately hopeful vision of green energy and concerted action within the constraints of technological change, of a swiftly rising price on carbon emissions as the world comes together to remake its energy systems. In this vision of the future, there is active carbon trading. There is a strong global climate treaty. There is still far more warming than society can easily bear — approaching 7 degrees Fahrenheit — but the world still averts the very worst of climate change.

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The second scenario, called “Scramble,” envisioned a future in which countries fail to do much of anything to reduce emissions, and instead race to secure oil and coal deposits. Only when climatic chaos breaks out does society take it seriously, and by then great damage has already been done. Drilling in the Arctic, thought to hold up to a quarter of the world’s untapped oil and gas, has a role in both scenarios — but under “Scramble,” it is irresistible.

In 2008, Shell surprised observers by announcing that it had a preferred scenario. The company would prepare for both outcomes, but for the good of the world and the good of Shell itself, it hoped for the carbon-constrained future of “Blueprints.” The oil giant awaited government action: a market signal in the form of a carbon price. But when I interviewed him four years later, Bentham admitted to me that the future, so far, was looking a lot more like the chaos of “Scramble.” We had no working international climate agreement and no real price on carbon. Instead, we had a global race for gas, coal and the last drops of conventional oil.

When I talked to Bentham, it was early December 2012. Three weeks later, on New Year’s Eve, Shell’s Arctic drill rig, the Kulluk, crashed into an island off the Alaskan coastline in a violent winter storm — a disaster I wrote about in this magazine. After the accident, political and economic circumstances seemed to turn decisively against Shell’s Arctic aspirations. The Obama administration began talking tough: “Shell screwed up,” said Ken Salazar, the interior secretary at the time. ConocoPhillips and Statoil, Shell’s rivals in the Alaskan Arctic, delayed their own offshore-drilling plans. Global oil prices soon dropped precipitously, making expensive plays in the high north even riskier.

Yet the drilling plan that the Obama administration approved on May 11 is not much different from the one that ran aground along with the Kulluk two and a half years ago. One of company’s drill ships will be the same as before: the Noble Discoverer, a 49-year-old converted log carrier that was previously at the center of eight felony pollution charges. Last month, the vessel failed another Coast Guard inspection in Hawaii. In place of the Kulluk, Shell will use a squarish, 319-foot-tall behemoth called the Polar Pioneer. This replacement rig flies the same Marshall Islands flag of convenience as the Kulluk and will be towed along the same general route to and from the Chukchi Sea from Seattle — a 2,000-mile voyage by tugboat. The Discoverer and the Pioneer will cross the same churning waters in the Gulf of Alaska. They’ll begin drilling in the same assuredly oil-rich patch of seabed in the Chukchi, some 70 miles from shore and a thousand miles from the nearest permanent Coast Guard base from which help could be dispatched if something goes wrong.

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The fact that so fundamentally little has changed since the debacle of 2012 is shocking — unless you understand that our leaders have long shared the oil company’s worldview. Drilling the Chukchi is not a choice, say the adults in the room; it’s an inevitability. When the federal government auctioned off the Chukchi leases in 2008, Randall Luthi, a Bush appointee who was then the head of the agency then called the Minerals Management Service, gave a speech in Alaska in which he stumbled repeatedly over the word Inupiat — the name of the Alaska Native people whose villages dot the Chukchi coastline — but managed to present this argument perfectly.

“Our demand for energy is going to increase by approximately 1.1 percent a year over the next generation,” he declared. “U.S. production is not expected to keep pace. Now, it doesn’t take too much to realize that when you’re demanding more than you’re producing, there’s a shortfall.” One of Luthi’s successors under the Obama administration, Tommy Beaudreau, underscored the “tremendous” size of the prize. Estimates held that “the Chukchi Sea contains more than 15 billion barrels of undiscovered recoverable oil,” Beaudreau told the Senate, “which is second only to the central Gulf of Mexico.”

For me, living in Seattle as Shell’s Arctic fleet again gathers in Puget Sound and activists in kayaks try to stop it with a blockade, it’s hard not to think of the arc of the president who just signed off on another drilling mission. In his 2008 campaign, President Obama seemed to plan for an optimistic vision of the future, only to have the opposing scenario unfold. Four years later, his campaign’s energy slogan — reiterated in his 2014 State of the Union address — might as well have been written by Shell: All of the above.

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Excerpt from an article written by McKenzie Funk for ‘The New York Times Magazine’ May 18 2015