Royal Dutch Shell plc (ADR) (NYSE:RDS.A) has revealed plans to allocate approximately $1 billion annually to its New Energies unit as the world transitions towards a future where electric cars and renewable will be predominant. The opportunities that Shell is eyeing are in biofuels, liquefied natural gas and hydrogen fuel-cells for use in heavy freight, shipping and air travel. These are areas in transport where batteries would be inadequate.
Speaking in Istanbul the chief executive officer of Royal Dutch Shell, Ben Van Beurden, noted that electric vehicles were already gaining consumer acceptance in some markets. According to Beurden, solar and wind energy’s intermittent nature will ensure that power plants that use natural gas will continue to exist.
Despite statements from the chief executive officer of Saudi Arabian Oil, Amin Nasser, and Russia’s minister of energy, Alexander Novak, saying that natural gas and oil will still play a dominant role for decades, Beurden argued that the fastest-growing countries had the opportunity to immediately switch to a clean energy mix without having to experience a coal-driven system.
“When you consider the areas of the world where energy demand is still to expand, like Asia and sub-Saharan Africa … there is the potential for them to shift more directly onto a less energy-intensive pathway to development,” said Van Beurden.
Beurden also cautioned against focusing too much on the energy-transition policies of regions such as North America and Europe at the expense of what is happening in emerging and developing economies. Shell’s CEO also noted that despite the fact that developing and emerging economies could possibly switch to a clean-energy mix without having to experiment with energy sources such as coal, these economies would still require fossil fuels. This was especially in order to develop such industries as chemicals, cement and steal since they require a heat intensity which electricity alone cannot provide.
Beurden revealed Shell’s clean energy plans just as the oil giant was giving assurances that liquefied natural gas exports from Qatar had remained stable despite the diplomatic tensions in the Gulf.
On Monday shares of Royal Dutch Shell plc fell by 0.26% to close the day at $52.80.