COVID recovery is a unique moment for the world to address climate, Shell’s Holliday says

As countries around the world emerge from COVID-related slowdowns, the next twelve months will be critical to ensure that new infrastructure investments do not sacrifice the climate in the name of cheap energy, said Chad Holliday, chair of the board of Royal Dutch Shell plc.

If India or China invest in coal-fired power, for example, that would be a “big turn in the wrong direction.”

We are in a unique moment, according to Holliday. The world must address energy access issues and climate change without telling emerging economies what to do, he said July 7 as part of Stanford University’s Global Energy Dialogues series. Holliday also discussed the need for oil and gas companies to transform into sustainable energy companies, as well as some critical technologies for the massive energy transition and the need to depoliticize climate change.

Shell got its start “selling seashells and transporting them around the world. If you can make the transformation from seashells to a major oil and gas energy company, I think we could do this one,” Holliday explained.

The golden thread

Holliday characterized energy as the “golden thread” to meeting U.N. sustainable development goals while addressing the dual challenge of energy equity and climate change.  “If we just go to renewables and we just go efficiency in the developed world, we will miss the point,” Holliday said.

Access to energy is an important piece of this puzzle. There are three billion people worldwide who cannot afford or do not have consistent access to cooling, for example. We must find a way for them to cool food and medicine, and to have air conditioning so “they don’t perish from the heat,” Holliday said. Rising temperatures due to global warming create something of a catch-22 here, as extreme heat will result in more need for cooling, and thus more demand for energy.

Developed nations and energy companies have a role to play in developing economies, but they should not overstep. “It’s not very helpful for outsiders to come in and tell other countries what to do,” said Holliday. A more successful approach is to provide information and data. He also stressed the need for country-specific, investable plans that can attract funders to climate investment opportunities in developing countries.

From oil and gas to sustainable energy

Shell’s recent energy system models examine what the world must do to limit global warming to less than 2 degrees Celsius and the effort needed to transform oil and gas companies into sustainable energy companies. The big takeaway, according to Holliday, is the “massive amount of change that has to take place.”

Shell alone would need to provide “reforestation for a space the size of Spain” in addition to significantly increasing its wind, natural gas, biofuel and carbon capture storage capacities by 2050, he said, adding that Shell accounts for a small fraction—about 1.5 percent—of total energy production.

Energy companies need to “move fast and take real steps now,” said Holliday. He thinks that energy companies will need a nudge, and that a price on carbon is therefore a critical component. “I don’t think we will move as fast as we must if we don’t have that incentive.”

The energy transformation must be profitable for oil and gas companies, said Holliday. “This cannot be charity."

Technological Innovation

The Stanford Global Energy Dialogues series is organized by Stanford’s Precourt Institute for Energy. Holliday was interviewed by Precourt Institute co-directors Sally Benson and Arun Majumdar, who asked him about technologies that could be developed to facilitate the energy transition.

More carbon capture and storage is key to meeting our climate goals and needs to be scaled up, according to Holliday. Electric vehicles will also be critical, he said, though the jury is still out on whether they will be powered by batteries or hydrogen fuel cells.

Benson asked Holliday if Shell is pursuing nuclear power. “There are very few things in Shell that there's a one-word answer to,” Holliday answered, “I've learned that when you ask that question, the answer is always ‘no.’" Nuclear is not Shell’s core area of expertise, he explained, but that does not mean that it should not be part of the energy mix.

Asked by a student about the role of hydrogen in the clean energy transition, Holliday responded that hydrogen is a good way to store excess solar and wind power, but the infrastructure to transport and store hydrogen as a major energy resource does not exist. To overcome this, he said, we need to just go do it, and get actual projects up and running.

More broadly, while technological breakthroughs absolutely will enable the energy transition, nobody knows for sure what the big breakthroughs will be, and the world must invest much more on research, development and deployment of promising solutions, Holliday said.

Depoliticizing climate action

How do we decrease political polarization when it comes to climate action? Sharing information with stakeholders on both sides of the issue is important, according to Holliday. 

“The proof is in the action,” said Holliday to climate activists skeptical of climate pledges from oil companies. Companies like Shell must redouble their efforts to explain the concrete actions they are taking on climate.

Similarly, “when you turn off the TV camera and you sit down and talk about facts,” elected leaders from both parties agree much more about climate actions than voters might imagine. Holliday would like to see more forums to provide elected officials with unfiltered information and the opportunity for discussion. 

Tackling climate change will require the world to coalesce around a common focus, and Holliday thinks that the efforts to address COVID-19 serve as a hopeful example of the world quickly aligning around a goal.

“Everybody understands that we are all in this together,” Holliday said. "I'm very optimistic we're going to find people stepping up like we haven't before.”

The next Global Energy Dialogues session will feature Colette Honorable, partner and a member of Reed Smith’s Energy and Natural Resources Group, on July 21. Honorable is also a non-resident senior fellow at the Brookings Institution, a former commissioner of the Federal Energy Regulatory Commission and past President of the National Association of Regulatory Utility Commissioners. Global Energy Dialogues are free and open to all. Registration is required.

The Global Energy Dialogues are funded by the Stanford Global Energy Forum.