THE CARBON WAR

Not responsible 27
der Veer has to sit and listen to me for three quarters of an hour. It cannot be
a comfortable experience for him.
I elect to major on carbon-bubble risk, and the vast amounts of capital
the fossil fuel industries will have to raise if they are to keep the world where
they want, mostly reliant on fossil fuels for decades to come. In our 2007 debate,
I majored on the moral case: burn all the fossil fuel you are set on burning,
I argued, and you will lead the way in the slow cooking of our planet. At the
climax of the debate then, I managed to tease from him a revealing oil-industry
argument that I heard a lot in private, but rarely in public. Shell is not
ultimately responsible for the energy used in the world, van der Veer said. We
just meet the demand.
Drug pushers deploy the same case.
Drug pushers also fight hard and dirty to keep their demand in place.
Today I ignore ethics and morality and focus on dollars. I argue that
Carbon Tracker and other organisations working on pressuring oil-and-gas
capex, or arguing for divestment, or both, are together posing a danger of
removing financial licence from the fossil fuel companies. Without access to
the trillions held in pension funds and suchlike, I tell the oil-and-gas executives,
you are not going to be able to explore, drill, and add to your reserves. You
are not going to be able to grow. You are going to lose your business model.
I have plenty of time to lay out my case, as logically as I can. I couch it
all in terms of risk. The march of events seems to be handing me increasingly
potent ammunition. Many companies are struggling to make money in shale
oil, including Shell, even with the oil price as high as it is today. For two and
a half years now the price has been in the $90 to 120 per barrel range, and
mostly well over $100. Yet Shell announced in August that it is writing down
$2.1 billion of assets in its quarterly results, mostly as a result of poor results
in shale-oil drilling.
Peter Voser, the man who took over from Jeroen van der Veer as CEO, is
retiring. He has told the Financial Times that he regrets the company’s huge
bet on US shale. “Unconventionals did not exactly play out as planned,” he said.
“We expected higher flow rates and therefore more scalability.” He ventures that
projections of the US shale boom being exported to other countries are “hyped”.
The rest of the world should steel itself for “negative surprises”, he warns.
I remind the audience of this, as diplomatically as I can. I’m not saying
you are sure to lose your business model, I say, I’m saying there is risk that
you might – much of it wilfully unrecognised by the energy industry, shielded
from investors.