Shell Creates Green Energy Division To Invest In Wind Power

Shell Creates Green Energy Division  To Invest In Wind Power

Shell, Europe’s largest oil company, has established a separate division, New Energies, to invest in renewable and low-carbon power. The move emerged days after experts at Chatham House warned international oil companies they must transform their business or face a “short, brutal” end within
10 years.

Shell’s new division brings together its existing hydrogen, biofuels and electrical activities but will also be used as a base for a new drive into wind power. With $1.7bn of capital investment currently attached to it and annual capital expenditure of $200m, New Energies will be run alongside the Integrated Gas division, The Guardian reported.

Shell is playing 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. It is unlikely Greenpeace and others will be impressed by New Energies, given that the division’s annual spending level is less than 1% of the total $30bn Shell pumps into oil and gas. Shell had announced it would be bidding in a partnership to build two windfarms off the Dutch coast that will be big enough to power 825,000 households.

Shell already holds interests in nine other wind projects in North America and Europe, although spending on wind, solar and hydrogen projects was suspended by former chief executive Jeroen van der Veer in 2009. A substantial solar operation had been largely sold off three years before that.

The Guardian quoted Paul Stevens, a fellow at the Chatham House think tank, who said in a research paper that the oil majors were no longer fit for purpose – hit by low crude prices, tightening climate change regulations and wrong-headed strategies. He argued that the only way forward for the companies lay in diversifying into green energy, drastically reducing their operations or consolidating through mega-mergers.

“The prognosis for the IOCs [international oil companies] was already grim before governments became serious about climate change and the oil price collapsed … their old business model is dying,” said Stevens, a visiting professor at University College London.

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