Interview by David Resillas Olguin & Gwenael Podesta – Authors : Heloise Pichot & Gwenael Podesta
In Bonn, the Subsidiary Body for Scientific and Technological Advice (SBSTA) examined the dispositions related to the article 6 of the Agreement, that deals (among others) with carbon pricing.
Concurrently, a spontaneous movement, started in 2015, called Break Free, culminated with a 2 week-action in May 2016 gathering more than 30,000 people on all 6 continents, asking businesses and policymakers to “break free”¹ from all fossil fuels.
David Hone is Shell’s Chief Climate Change Advisor and also board member of the International Emission Trading Association (IETA). CliMates delegates had the opportunity to meet him to get his outlook ‘from the other side’.
[CliMates] How does one go from oil trader to Climate Change Advisor at Shell… Can you tell us about your background?
[David Hone] I am a chemical engineer. I joined Shell early in my career working in a refinery for about 10 years. Then I switched to oil trading and shipping for about 12 years. All these experiences in different parts of the organisation gave me a good overview of the mechanisms of oil economics. The only thing I felt I missed then was energy economics. Indeed the price of energy really drives the world, it is quite fundamental for development.
This is why I decided to delve into the field of climate economics; I wanted to get involved in the definition of oil companies’ long-term strategies.
The climate issue made its first appearance in Shell´s CEO agenda after the signature of the Kyoto Protocol. That is when the need for a climate advisor really started to be felt at Shell. I was the second climate advisor when I was hired in 2001. At the time, my mission was to help the company better understand the issue. The expertise within Shell was very limited so it was really a capacity-building job. We had to answer questions such as: what is a carbon price? What is an internal emissions trading system? Etc. By then, carbon pricing was far from being implemented so “It was real but yet it was a game”. Still, the years 2000’s were also marked by the implementation of an internal carbon price. We now have to take into account risk management of future external carbon price into our project decisions. In the early days, this represented a few dollars, today it averages 40$, a bit above the coal/gas transition, but still not high enough to always privilege carbon capture and storage technologies (CCS).
Many environmental NGOs condemned the presence of fossil fuel lobbies in the negotiations at COP21. What was your purpose in the talks as Shell Climate Advisor?
My main objective was to have something like article 6² happening. It took us 2 or 3 years to make the case but we believe it is crucial for the process to be able to scale to the necessary level. In addition, the oil and gas industry is very market driven, competes in a very effective way and is capable to reinvent itself quickly, as we have seen after the crash in oil price.
Interesting. This casts a new light on this moment at COP 21 when the Presidency just released a new text in which carbon pricing was re-introduced, and when the delegate from Venezuela lashed out at “these people in the room, that want carbon pricing back in the text. I don´t know who they are, but I know that they are very, very powerful”. Now we know who that was! Was article 6 your only goal?
Basically yes. There was a certain level of inevitability regarding the 1.5/2°C target, about the ambition mechanism, etc. If you look at Shell’s scenarios that were updated in 2013, you can see that a net zero emissions world is possible. I actually foresee an achievable future in which we are able to manage climate change, and cap the temperature increase close to 2°C although not below.
Tell us more about these scenarios.
I do not believe in renewable energy to solve the challenge. Indeed according to our models, it is the least favorable solution to a 2°C world outcome. The configuration with renewable energy, and in particular photovoltaic, would take us closer to 2.7°C, due to the delay in implementing carbon capture and storage solutions³. CCS is the only viable alternative since 85% of the world energy comes from fossil sources today. As regarding the so-called dangers, the way CCS works imitates the way nature created natural gas. If it had leaked out, it would be gone by now. Eventually, there should be sufficient economic incentive to upscale, it but we are not there yet.
Still very far from 2°C then, and even more from 1.5°C… As you know, your views are not shared by most of the environmental NGOs. You must have heard of the Break Free From Fossil Fuels international campaign. What do you think about it?
I think we need to be more pragmatic regarding fossil fuels. The world depends on this source of energy and you can’t do anything without fossil fuels. Hence the focus should really be on the transition and not on the disruption.
Speaking of disruption, Shell decided to withdraw from the Arctic last year. Was it the result of your lobbying inside Shell?
Shell withdrawal from the Arctic was a decision made by the upstream side, from the very top of the organisation. It was a big decision to take and that was influenced by public concerns, acceptance, etc.
About the authors: Héloïse Pichot is a young French economist specialized in sustainable development. Her passion for the environment and people brought her to CliMates. She uses her travels around the world as an inspiration for her blog pieces. She is currently attending her first Intersessions at Bonn and she hopes it will not be the last.
²“Within the Paris Agreement sits Article 6, a carefully crafted set of provisions to foster cooperative approaches. This includes a provision for cross border transfer of mitigation outcomes and a mechanism to contribute to the mitigation of greenhouse gas emissions and support sustainable development” David Hone Vision for Article 6 of the Paris Agreement, The Energy Collective May 16, 2016