Page 48 - Energize April 2022

VIEWS AND OPINION

Ambition vs Reality

The large gap between ambition and reality is troubling

BY FEREIDOON SIOSHANSI, MENLO ENERGY ECONOMICS

he pressure is on to join everyone else by committing to net zero carbon by whatever
date seems remotely feasible. Companies, countries, and cities are setting ambitious
Ttargets. Net zero oil or shipping companies, airlines, etc. are now common. Saudi
Arabia says it will join the club by 2060. The investment community is offering green bonds
and carbon-friendly retirement plans. But how can any of these be possible? Does ambition
have any chance of becoming a reality?
It is estimated that every dollar of investment withdrawn from fossil fuels requires $25 or
more in renewables. If the oil sector, for example, begins to invest less in future exploration
and development, its reserves would begin to dwindle. That could result in potential supply
shortages and more price volatility.
The oil and gas majors as well as oil exporting countries warn that this is precisely what
is likely to happen as the pressure mounts on them to move away from their traditional
investment patterns. They argue that the world will need a lot more fossil fuels and for
quite a long time before it is time to cut back on investment. But if they – and the world
– continues to invest in fossil fuels, does that not prolong the time it takes to transition to
renewables? Does it not bind us in using more fossil fuels and for many more decades?
There is no easy answer to these questions – the global demand for energy is growing Fereidoon Sioshansi
and if we don’t want to invest more in fossil fuels, we must increase the investment in
renewables as well as efficient use of energy. The latest acquisition is clearly part
Most European oil majors appear convinced that it is not enough to set ambitious green of Shell’s plan to become a global leader
goals, but they must begin to deliver. Shell, previously Royal Dutch Shell, seems intent on in the supply of renewable electric power
showing how. It has begun to diversify away from exclusive reliance on oil and gas. Every and services – much of it through the
month, it makes more strategic acquisitions in non-fossil fuel businesses. acquisition of energy retailers and other
In mid Dec 2021, Shell New Energies US acquired Savion, a utility-scale solar and big key players such as the earlier acquisition
battery developer in the US from Macquarie’s Green Investment Group to “significantly of Sonnen, the big German battery
expand” its existing solar and storage assets. With the stroke of a pen, the deal transfers a manufacturer.
portfolio of more than 18 GW of solar and battery storage projects, including more than 100 The grand plan is for Shell to sell
projects under development in 26 American states to Shell. around 560 TWh of electricity a year,
Wael Sawan, director of integrated gas and renewables at Shell New Energies said, globally, by 2030 as part of its integrated
“Savion’s significant asset pipeline, highly experienced team, and proven success as a power business, and to serve more than
renewable energy project developer make it a compelling fit for Shell’s growing integrated 15 million retail and business customers
power business,” adding, “As one of the fastest-growing, lowest-cost renewable energy worldwide as a leading provider of clean
sources, solar power is a critical element of our renewables portfolio as we accelerate our power-as-a-service. In December 2021,
drive to net zero.” Shell converted one of its petrol stations
in central London to an electric vehicle
charging one. Step by step, it is moving in
the right direction.
At least for Shell, the ambition seems
to come with a pinch of reality.

Acknowledgement
This article was first published in the
January 2022 edition of Eenergy Informer
and is republished here with permission.

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rogerl@nowmedia.co.za

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