The chief executive of Shell has provoked the ire of campaigners and climate scientists by claiming that cutting the world’s oil and gas production would be “dangerous and irresponsible”.
In an interview with the BBC, Wael Sawan said reducing production could worsen the cost of living crisis while disadvantaging poorer countries. His comments have been called cynical and described as “gaslighting” by critics of the oil company.
But is there any truth to what Sawan is saying? Here we interrogate his main claims.
The world still ‘desperately needs oil and gas’
This argument is central to Sawan’s argument in favour of oil and gas production continuing at the present level. He posits that “before we are able to let go” of fossil fuels, we need to develop the new energy systems of the future, and we are not yet moving at the pace required.
He’s not entirely wrong. Recently, a report from the Energy Institute (EI) found that fossil fuels accounted for 82% of the world’s total energy consumption last year, despite record growth in renewable sources. This represents a huge challenge for the global climate agenda.
Energy economists say the solution is more clean energy, not oil and gas. Simon Virley, the UK head of energy and natural resources at KPMG, said the EI report’s findings should act as “a clarion call for governments to inject more urgency” into transitioning to clean power.
In stark contrast, a recent investigation by the NGO Global Witness found that Shell spent only 1.5% of its capital expenditure on renewable energy such as solar and wind.
Cutting oil and gas would be ‘dangerous and irresponsible’
Environmental campaigners argue that the really risky thing would be to do the opposite. Reuters reported that Simon Stiell, the head of the UN climate change body, told an Opec meeting on Thursday that what Sawan had said was “neither true, but … also an irresponsible statement at this time within the broader context of what we are trying to achieve”.
Scientific consensus is clear that producing and burning fossil fuels is heating the planet to levels that could bring catastrophic changes to the climate.
The Shell boss has argued an economic case – that a shortfall of energy would reignite the record high energy prices that stoked the cost of living crisis – but even on this point fossil fuels are not the answer. The International Energy Agency has called on governments to learn from the energy crisis by relying more on cheap, homegrown renewable sources to avoid future cost shocks in the global fossil fuel market.
Alice Harrison, a campaign leader at Global Witness, said: “Following a year of record-breaking £33bn profits, the only ‘danger’ Shell would see in cutting production is to their eye-watering profits.”
Oil and gas cuts would leave children ‘to study by the light of candles’
Sawan pointed to last year’s blackouts in Bangladesh and Pakistan, after Europe’s surge in demand for gas shipments to replace those from Russia, as evidence that cutting fossil fuels production would unfairly punish the developing world.
While it was true that people in those countries were forced to get by without electricity because of the global squeeze on gas supplies, the answer is again not more fossil fuels but more renewables. By deploying green power sources alongside energy-efficiency measures, developing countries will reduce their dependence on fossil fuel imports and in the longer term reduce the harm they face from rising temperatures.
The real threat to developing countries is the climate crisis, and south Asia is firmly on the frontline. Last year, an estimated 20.6 million people, including 9.6 million children, in Pakistan, were left homeless, with no safe water or sanitation, as a result of flooding, which was made 50% more probable because of global heating.
The UK must decide on ‘imported v domestic production’
Sawan urged the British government to “make a call as to their views on imported versus domestic production” and consider support for fossil fuel investments.
It’s true that domestic North Sea oil and gas would carry a far smaller carbon impact than importing fossil fuels via tanker. But the government’s official climate adviser, the Committee on Climate Change (CCC), has said that while UK will continue to need some oil and gas until it reaches its net zero climate goals, this does not in itself justify the development of further North Sea fields.
The CCC said any impact on prices from further North Sea exploration would be minimal and the many options to reduce the UK’s demand for fossil fuels had not been exhausted. This could mean replacing combustion engines with electric ones in cars, swapping gas heating systems for electric heat pumps and making large investments to reduce energy waste.
This would require billions of investment in the electricity system, and it would not be easy. But the outcome would be a sustainable energy future rather than a continuing addiction to fossil fuels.
