How Shell Is Shifting Towards Clean Energy

One of the world’s largest oil producers is looking to clean up its act

Dylan Hughes
Oct 20, 2020 · 4 min read
Shell’s plan to become net-zero emissions
Shell’s plan to become net-zero emissions
Photo by Elmar Theurer on Flickr

With climate concerns growing worldwide, some of the world’s largest companies are developing and committing to plans of becoming emission-free within the next few decades. For some of these companies, it’s as simple as finding a cleaner energy source for production plants and delivery fleets — significantly reducing or eliminating their uses of oil and natural gas altogether.

There is one industry, though, that will have a much tougher time cleaning up its act: oil.

The world is ever-changing and the companies that last are the ones that adapt. Companies die but industries don’t. Industries adapt and the companies that don’t follow suit get left behind.

Oil is a small subset of the overarching energy industry. A useful analogy on this point comes from Kenneth Davis’s Business Writing and Communication.

Davis discusses a large tool manufacturer that once brought in a consulting team to evaluate the company’s operation. After spending time with the company, the consulting team left them with this takeaway: “Ladies and gentlemen, the most important thing you need to remember is that you’re not in the business of making drills. You’re in the business of making holes.”

This mindset can apply to any industry. In today’s climate, literally and figuratively, oil companies need to remember that they’re in the business of producing energy, not producing oil.

At this current point in time, oil offers the best balance of efficiency and price and still serves as the most useful form of energy for much of the world. With climate change becoming more concerning, however, there are a handful of clean energy sources receiving lots of attention and seeing more innovation.

The odds are in favor of one of these clean energy sources outpacing oil in efficiency and price in the not-too-distant future, meaning oil producers need to get proactive and adjust their approach.

Royal Dutch Shell, better known simply as “Shell,” has long been one of the world’s largest oil producers. They see what’s coming, though, and are dramatically reshaping their operation to prepare for an oil-less future.

As reported by Reuters in September, Shell plans to cut costs this year in order to reshape its operation towards clean energy. The project has been deemed “Project Reshape.”

Shell recognizes that clean energy offers little financial margin for error and is OK with that. To survive cash-wise, though, the company will need to save cash to offset losses in profit from a turn away from oil.

Some of the cost-cutting measures include shutting down or selling oil refineries, lowering operating costs on new oil projects, and cutting up to 10% of its workforce over the next couple of years.

The company wants to reduce spending on oil and gas by 30-to-40% with a goal of becoming net-zero by 2050. Though the company does plan on selling oil and gas in 2050, it will be “predominantly low-carbon electricity, low-carbon biofuels, it will be hydrogen and it will be all sorts of other solutions too.”

Shell is not alone in this clean energy pursuit, however, as fellow European producers BP and Eni have similar goals with better-defined plans. While these large oil producers will compete to own the next generation of energy, the world and its citizens will benefit from the overall shift away from oil and gas production.

Shell’s CEO Ben van Beurden has been the company’s leading voice on this shift in the public eye, but another organizational leader is silently leading its charge: executive vice president of new energies Elisabeth Brinton.

Brinton stepped into the role in April when Shell announced its net-zero plans, the largest oil producer to do so to date.

Before joining Shell in 2018, Brinton headed AGL Energy’s new energy movement, helping the company become the largest in integrated energy in Australia. She also worked for PG&E Corporation, a U.S. utility company that specializes in new energies.

With a background in forward-thinking software development, Brinton is now pairing her love of people, nature, and product development with tech, energy, and climate. Her unbreakable optimism and backing from Shell makes the oil — err, energy — company’s mission all but guaranteed to succeed.

“This type of change work is not for everyone,” Brinton said. “But it is so, so worth it because strong and healthy corporations are essential actors for meaningful change in society.”

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