A few miles north of Rotterdam, in a region the Dutch
call "glass city" for its thousands of greenhouses,
gardeners like Frank van Os are part of an
unconventional experiment by Royal Dutch Shell to curb
carbon emissions.
Mr. Frank van Os produces four million roses each
year, flooding the atmosphere inside his vast glass
canopy with pure carbon dioxide to bolster his crop.
What is unusual is that he now gets the carbon dioxide
piped in directly from Pernis, a Shell refinery that
is Europes largest and typically discharges tons of
the gas into the atmosphere every year.
"You can just hear it," said Mr. van Os, as carbon
dioxide hissed through small plastic pipes, feeding
the long-stemmed red roses all around. "It goes pshh."
Shell s modest effort in this corner of Europe —
aiming to cut the refinery s emissions by 8 percent by
diverting it to about 500 greenhouses — is not
going to solve the global warming challenge, of
course. But the experiment to limit emissions of
carbon dioxide, the main greenhouse gas blamed for
climate change, illustrates a fundamental shift in the
oil industry that offers glimmers of hope for the
future.
With energy consumption expected to increase over the
next few decades, a number of leading oil executives
now say that how their industry manages carbon
emissions will become as important to their business
prospects as replenishing energy reserves.
"The debate about CO2 is changing," Jeroen van der
Veer, the chief executive of Shell, said in a recent
interview. "You can either fight it — which is
useless — or you can see it as a business
opportunity."
The rising alarm over global warming has prompted some
oil executives — particularly those based in
Europe like Shell and BP — to promote their
efforts to develop alternative energy sources that
release less carbon dioxide, like wind, solar power
and hydrogen from renewable sources.
But the more important industry effort turns on the
ability to manage emissions from petroleum itself,
based on a self-interested recognition that, if
nothing is done, the future costs of carbon emissions
may threaten the core of their business, the
production of fossil fuels.
The industry s involvement in the debate is clouded by
suspicions that oil companies, even as they seek to
develop alternative and renewable sources of energy,
are also heavily investing in resources that are
dirtier and more polluting than crude oil.
While some environmentalists continue to question the
industry s motives, many oil executives say that they
now recognize that to sustain the industry over the
long run they need to help mitigate carbon emissions
and other harmful pollutants from their operations.
For years, oil companies would not talk about the
impact of their business on the environment. That many
are even acknowledging the link between fossil fuels
and climate change is a measure of how far they have
come over the last decade.
"It is urgent to act," Thierry Desmarest, the chief
executive of Total, the French oil company, said
during a recent breakfast at the Four Seasons Hotel in
Manhattan. "Carbon is what poses the biggest problem."
Climate experts estimate that overall carbon emissions
from fossil fuels must be cut at least in half by 2050
to stabilize their effect on global warming. It is a
monumental task.
Emissions of carbon dioxide from the burning of
hydrocarbons — oil, natural gas and coal —
may grow by 70 percent in the next 25 years if nothing
is done to contain them. They reached 25 billion
metric tons in 2003, up 4.5 percent from the previous
year, according to the most recent estimates by the
Energy Department. Since the Kyoto Protocol was signed
in 1997, emissions have risen by 20 percent.
"People at the top of the oil business are beginning
to realize that there is a problem with climate change
and they are looking for ways to compete in a
carbon-constrained world," said David Keith, an energy
and climate specialist at the University of Calgary.
"Most of that elite now admits the problem is real."
At the Pernis refinery near here, the stakes are clear
and the search for how to compete is under way. Two
700-foot high stacks spew six million tons of carbon
dioxide a year into the atmosphere, or 3 percent of
the total emissions in the Netherlands.
Business Opportunity
Every day, the refinery processes about 412,000
barrels of crude oil that are shipped from distant
places like Nigeria, Kuwait and Norway, and converts
that oil into gasoline and dozens of other petroleum
products.
The refinery, near the mouth of the Rotterdam ship
canal by the North Sea, sprawls across 1,700 acres
with a dizzying array of stacks and chimneys, amid
noise and vapor. There are 100,000 miles of pipeline,
enough to go four times around the globe.
Graeme Sweeney is head of renewable energy at Shell,
which is diverting carbon emissions to greenhouses.
Shell aims to sell 500,000 tons of carbon dioxide a
year. While a lot of the gas still ends up in the
atmosphere, the reduction is a net gain for the
environment: gardeners like Mr. van Os have stopped
producing an equivalent amount of carbon dioxide to
grow their crops.
"Climate will shape our business," said Chris
Mottershead, an adviser on climate policy to the chief
executive of BP, Lord Browne. Some of the largest oil
companies, including BP, Shell and Chevron, are
already planning multibillion-dollar investments in
energy sources that emit little or no carbon, like
wind and solar power, biofuels or hydrogen from
renewable sources.
Part of the motivation is a mounting anxiety about
their basic business.
As access to easily produced oil diminishes,
executives realize that tomorrows fuels are likely to
be manufactured from a variety of sources that are
much dirtier than todays conventional oil. Many
researchers say this trend toward unconventional
carbon-rich sources — heavy oil, tar sands,
shale oil, or processes that turn natural gas or even
coal into transportation fuel — will worsen
global warming unless technologies are developed to
curb emissions.
Global energy consumption is expected to rise by 50
percent by 2030, driven by population growth and
rising economic prosperity in developing nations,
according to the International Energy Agency. Most of
that demand will be met with fossil fuels, like
natural gas and oil, which all emit carbon when they
burn.
"Either we manage these upstream carbon dioxide
emissions," said Alexander E. Farrell, an associate
professor at the University of California, Berkeley,
who specializes in energy and climate issues, "or we
re willing to accept very severe climate change."
Exxon Mobil has long stood out in its insistence that
global warming was not a serious concern. Unlike its
European rivals, its executives are still skeptical,
even dismissive, about the industry s ability to
reduce carbon emissions. Its preferred solution is to
focus on long-run research into new energy sources.
"The world is going to continue to consume a lot of
fossil fuels," Rex W. Tillerson, chairman of Exxon,
said in an interview in March. "Let s do it
efficiently, lets do it in the least harmful way we
can, and look for the breakthrough option that will
take us some place different in the decades ahead.
"But there are no shortcuts. People are looking for
shortcuts that simply don t exist."
David Friedman, research director at the Union of
Concerned Scientists, argues that some oil companies
fear losing control over the most profitable part of
the business, oil extraction and production. "Some see
alternative fuels as a threat to their business
because they don t control the resources," he said.
Executives at several other oil companies, however,
are more active in addressing the issue, if only
because they see it as the best way to extend the use
of hydrocarbons in coming decades.
"If we can solve the CO2 problem," Mr. van der Veer,
of Shell, told an industry conference in Paris last
year, "we can, in fact, produce green fossil fuels."
Green or not, the industrys future is still firmly
tied to fossil fuels.
Lord Browne of BP stunned his peers in 1997 by openly
acknowledging the link between rising carbon emissions
and global warming. Once a lone voice, he now relishes
his role as a pioneer.
But Lord Browne certainly does not see a world free of
hydrocarbons anytime soon. Despite BP s marketing
campaign and credentials with many environmental
groups, the bulk of its $15 billion in investments
this year will still go into its oil and gas business.
Compared with that, its efforts at renewable energy
seem relatively modest. The company plans to invest
about $800 million each year over the next decade to
develop alternative and low-carbon sources of energy.
During that same period, it expects to generate $6
billion a year in revenue from alternative energies.
That would be substantial in any other industry, but
BP made that much in profits in the last quarter
alone.
BP s new alternative energy business will focus mainly
on the power sector, which accounts for 40 percent of
the world s carbon emissions. By 2015, the company
expects it will be able to reduce carbon dioxide
emissions by 24 million tons a year in absolute
terms.
"It s a progressive change," Lord Browne said during a
recent interview in his London office overlooking St.
James Square. "Do we have enough time to do it? Are
there other things that will need to be done? We will
never know. But all I would say is that it s better to
do this than not at all."
While oil companies are talking about green energy,
hundreds of miles north of the border between the
United States and Canada, they are also making a
costly, dirty bet on future supplies that has created
a boom in the frontier town of Fort McMurray, in
Canada s western Alberta province.
Companies like Shell, Chevron, Exxon, and Total are
investing billions of dollars to unlock oil from
Canada s underground rock formations. These oil sand
reserves are huge, potentially rivaling oil reserves
found in Saudi Arabia, according to some optimistic
estimates.
Oil sands production in Canada is expected to triple
to three million barrels a day by 2015, according to
Canada s National Energy Board.
A Costly Process
The problem is that Canada s reserves do not flow
freely out of the ground. They are packed so tightly
that they must first be melted out of the rocks before
they can seep out. This process is much more costly
than extracting conventional oil out of the ground.
Because it takes a lot of energy to produce, it also
releases many more carbon emissions.
A gallon of gasoline produced from conventional oil
emits 11 kilograms carbon, from the day it is pumped
out of the ground to the day it is burned by a car.
That amounts to a little less than one pound of carbon
a mile. The bulk of that, 80 percent, is emitted when
gasoline is burned by the engine; the rest comes from
oil companies when they pump, transport and refine the
fuel.
In contrast, a gallon of gas from oil sands, because
of the energy-intensive production methods, releases
three times as much carbon over all as conventionally
produced gasoline, even though it produces the same
amount of carbon during combustion. Over all, Canada s
oil sands are as much as 39 percent more
carbon-intensive than gasoline from crude oil, said
Mr. Farrell of the University of California, Berkeley.
The issue is even worse for other types of
unconventional fuels. Transportation liquids derived
from either oil shale in Colorado or manufactured from
coal can emit 90 percent to 150 percent more carbon
than gasoline from oil, Mr. Farrell figures.
While they are encouraging interest in alternative
energy sources from clean sources, high oil prices are
also spurring lots of dirtier ones, too.
"Some people have this notion that high oil prices are
going to solve the climate problem," said Joseph J.
Romm, an analyst at the Center for Energy and Climate
Solutions, "when in fact they encourage forms of
unconventional oils that are really bad for global
warming."
Alternative Projects
In hopes of countering such developments, BP s most
ambitious alternative project is to build a new type
of power plant that runs on hydrogen, captures the
carbon dioxide, and injects it back into a nearby
field to help flush out either oil or natural gas. The
company is planning such projects, each costing about
$1 billion, in California and in Scotland.Few
companies have invested much into that technology, but
with many countries mandating lower carbon emissions,
that attitude may change.
"The oil industry has the know-how to do geological
storage," said Stephen Bachu, a senior adviser for the
Alberta Energy and Utilities Board. "If you ask why it
is not done, that is because there is no reason to do
it. Either the oil industry will make a profit, and
that is why you see carbon dioxide in enhanced oil
recovery projects, or the oil companies will do it to
avoid paying a penalty." In the end, experts say, the
oil industry may respond only when governments force
change. For now, governments are relying mostly on
subsidies, but the ultimate answer, they say, probably
lies in some form of taxation of carbon emissions that
puts a system of carrots and sticks to work to limit
global warming.
In the Netherlands, a government goal to derive 9
percent of electricity from renewable sources has led
Shell to build an offshore wind farm that will produce
108 megawatts of power. Public subsidies over the next
decade will defray more than half the projects cost
of 200 million euros ($253 million).
Graeme Sweeney, who is in charge of renewable energy
at Shell, and is the companys "Mr. CO2," in charge of
the carbon management strategy, said it mattered
little to him what kind of energy source Shell was
selling.
"We see ourselves," he said, "as being in the energy
business."
(Por Jad Mouawad,
The NY Times, 30/06/2006)