The CEO of Royal Dutch Shell PLC (NYSE:RDS.A) berated Washington on Monday for spurning the United Nations Kyoto agreement on global warming, saying U.S. backing for a global regulatory framework would create incentives for oil companies to reduce carbon dioxide emissions. "For us as a company, the debate about CO2 is over. We've entered a debate about what we can do about it," Jeroen Van Der Veer told a gathering of hundreds of political and business leaders from the Middle East and elsewhere. Van Der Veer was asked by an American attending the Arab Strategy Forum whether the energy company s business plans were being hurt by the global backlash against global warming, and the carbon dioxide emissions from burning oil-based fuels considered the prime cause.

Van Der Veer said energy companies would be ready to work with governments to solve the carbon problem if there was a worldwide framework to bind governments to the same standards. He said Kyoto protocol, which focuses on 35 industrial countries, was a good start. "You are from the United States. Why don't you join the Kyoto agreement?" Van Der Veer asked the American. "You see an initial framework there and you can build on that for our future." The Bush administration pulled out of the Kyoto accords shortly after taking office in 2001. The preceding Clinton administration signed the agreement in 1997, along with European Union members and Japan.

Likewise, Canada s Conservative government has backed away from Kyoto and come up with revised commitments to fight global warming. Kyoto requires industrialized countries to curb emissions of carbon dioxide and five other gases that act like a greenhouse, trapping heat in the atmosphere.

The urgency of reducing carbon dioxide emissions appears set to grow. The Shell chief executive said energy use will rise by 50 per cent over the next 25 years, mainly from increased demand for oil and natural gas in China and India, but also in the West. The United States produces about a quarter of the world s greenhouse gases, the largest amount of any country. But searing economic growth and rapid industrialization are boosting emissions in China and India, developing countries not bound by the Kyoto accords.

America counts the world s highest level of automobile ownership, at more than 1,000 cars per 1,000 residents, with India at 11 per 1,000 and China at just nine, said Daniel Yergin, director of Cambridge Energy Research Associates. "China is not going to stay at nine cars per thousand people, you can be sure about that," Yergin said. "People aren't going to be denied a higher standard of living."

Van Der Veer said there needed to be a "level playing field" of environmental ground rules that all countries followed, otherwise companies like Shell have little incentive to invest in expensive emissions-reducing strategies in one country, when they could move operations to a neighboring country that has no such restrictions. Shell is looking for ways to cut carbon dioxide emissions by trapping and perhaps injecting the gas undeground, where it might be useful in increasing pressure in depleted oil fields that could enhance recovery of oil, Van Der Veer said.

"I think a better approach to it is to see it as an opportunity," Van Der Veer said. "Can we catch it? Can we use it for enhanced oil recovery? Where can we sequester it?" The Middle East, with 60 per cent of the world s crude oil reserves and 40 per cent of its gas, will remain the world's most important source of energy, Van Der Veer said. Remaining oil is growing ever more expensive to extract, requiring Shell and other oil companies to make larger investments in a business already saddled with huge costs, he said.

"Countries accuse us of making too much profit," Van Der Veer said. "But those investments have to come from somewhere." Shell has made an effort to at least appear green, though critics would say the company is more about propaganda than anything else, given that Shell's main product is oil. Not many people outside the company are praising Shell's green record.That said, they're aware of the issues. Shell was early with "sustainability reporting" (their first annual sustainability report was published in 1998).

They currently have a goal to have their (self-reported) greenhouse gas emissions five per cent below 1990 levels by 2010, similar to the Kyoto Protocols. The company is using the Global Reporting Initiative guidelines, the best known international standard for reporting on GHG emissions. So Shell is also more transparent than some. Shell claims to have invested $1 billion in renewables since 2000, notably in a major offshore wind project in the North Sea.
(Por Jim Krane, CNews, 04/12/2006)