Shell urges business to participate in greenhouse gas discussions

Gerard Matthews, policy development advisor to Shell Oil Co., said business made a mistake being late to the greenhouse gas emissions discussion. 'Whatever gets set up we must be able to live with it,' he said. 'We were late. Our biggest fear is the discussions will result in command and control policies. That is just another advert for business to hurry up.'


Ann de Rouffignac
OGJ Online

Gerard Matthews, policy development advisor for Shell Oil Co., said business made a mistake being late to the greenhouse gas emissions discussion.

�Whatever gets set up we must be able to live with it,� he said. �We were late. Our biggest fear is the discussions will result in command and control policies. That is just another advert for business to hurry up.�

Matthews was referring to the ongoing international discussions on the Kyoto Protocol that will eventually set up legally binding quantitative constraints on individual country carbon dioxide (CO2) emissions. The Kyoto Protocol was introduced in 1997, but the discussion about greenhouse gases and climate change has been ongoing for 15 years. Sources familiar with the Kyoto discussions say the constraints are inevitable.

Matthews addressed the Arthur Andersen 21st Annual Energy Symposium in Houston on Tuesday.

Royal Dutch/Shell Group established a cross-business team in 1997 to look at the green house gas issue as a �business risk and business opportunity,� he said. When Shell moved away from a discussion about the science and towards a discussion of the impact on its business, that was an �epiphany."

Shell would have to reckon with the problem of greenhouse gases sooner rather than later, he said. The company is ranked tenth in the world as a carbon producer, emitting 2.5% of the world�s global greenhouse emissions.

Shell�s plan includes several broad objectives, including reducing emissions, using market solutions, raising public consciousness, having a seat at the negotiating table, helping customers reduce emissions, and just making better business decisions.

Concretely, this translates into an internal plan for Shell to eliminate venting of gas by 2003 and eliminate flaring of gas by 2008. So far, Shell has reduced its emissions to 104 tonnes of CO2 in 1998 from 116 tonnes in 1990. The goal is now to reduce emissions by 10% by 2002 through the Shell Tradable Emission Permit System initiated this year.

Going forward, Shell started including carbon risk in evaluating all new projects. The company includes a �shadow carbon price� as an additional cost to its projects to see if they are economic.

At first, by simply employing better design to lower the carbon costs associated with a project, Shell was able to reduce emissions by 27%, he said.

The next approach involved the internal emissions trading that Matthews described as a �slow train gathering speed.� At this point, 30% of the worldwide Royal Dutch/Shell Group�s emissions are involved in trading.

Despite the internal efforts by Shell, Williams worries that business and particularly oil and gas companies lack consensus on what to do about greenhouse gas.

�We will get regrettable policy decisions,� he said. �We need to develop a policy that will manage our future, rather than have that policy imposed.�

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