Industry's 1997 watershed

At some point over the festive period, maybe with a mellowing glass in hand, it is traditional to reflect on the year past and look to the year ahead. For my money, 1997 was a momentous year for the oil industry, for reasons not directly connected with discovery and exploitation of oil reserves. I bet OGJ editors in 50 years will see one event in particular as a milestone: the demonstration by Shell and BP that they see profits in renewable energy sources. Shell reorganized to exploit this

Jan. 5, 1998

3 min read

David Knott
London
[email protected]

At some point over the festive period, maybe with a mellowing glass in hand, it is traditional to reflect on the year past and look to the year ahead.

For my money, 1997 was a momentous year for the oil industry, for reasons not directly connected with discovery and exploitation of oil reserves.

I bet OGJ editors in 50 years will see one event in particular as a milestone: the demonstration by Shell and BP that they see profits in renewable energy sources. Shell reorganized to exploit this opportunity, while BP boosted investment in solar power.

Acceptance

Shell's new five-business structure will enable it to follow the energy use trend from oil to gas to renewables (OGJ, Nov. 24, 1997, p. 29).

Phil Watts, group managing director of RD/Shell, recently outlined the company viewpoint to a conference in Caracas: "The companies of RD/Shell are taking steps on the long journey of sustainable development.

"They are committed to meeting the energy needs of the world's growing population in the decades to come while investing in cleaner energy sources-namely renewables and gas-and reducing the impact of fossil fuels.

"Going into the new century, there is no doubt that the energy industry will survive and develop. What is in question is the form that the industry will take."

What's ahead

My hunch is that, as consumers realize that "green" energy alternatives are available, they will choose them even if they have to pay more.

To understand this, and what underlies green thinking in general, I recommend oil executives who class sustainable development alongside UFOs read: Tomorrow's World: Britain's Share in a Sustainable Future.

The book was published recently by Earthscan Publications Ltd., London, and written by Friends of the Earth researchers Duncan McClaren, Simon Bullock, and Nusrat Yousuf.

The book is a well-written and comprehensive view of how Britain can achieve sustainable development-at least by the authors' definition of the term. Although it is directed to a U.K. readership, most of its data are global and its arguments are applicable anywhere.

The authors' targets would decimate unprepared industries, but demands like theirs are spreading: reducing carbon emissions 30% by 2010 and 90% by 2050; increasing car efficiency 50% by 2010; cutting traffic congestion 10% by 2010; and "ecologically" reforming tax structures to tax pollution and waste rather than jobs.

Shell and BP are beginning to evolve to handle the unforgiving market the authors envision. Because they have accepted the green challenge, Shell and BP will probably feature in OGJ 50 years from now. What about your company?