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We caught up with Shell's UK chairman, James Smith, at the recent Shell Springboards awards, which reward the best green technologies developed by Britain's small businesses and garage entrepreneurs.
Until the end of 2003, Smith was on the global board of Shell Chemicals as head of technology, strategy and sustainable development. He's been head of resourcing, too, which principally involved ensuring there was a highly talented and diverse group of leaders for the top 200 jobs in Shell. Much of his early career -- he joined in 1983 -- was in upstream oil and gas production.
We talked to him about the role small businesses will play in climate change and about Shell's strategy for cleaning up fossil fuels and decarbonising the economy.
Anthony Plewes: How do you characterise the challenges we all face?
James Smith: Demographic and economic growth keeps driving the world forward. By the middle of century we may have a world economy four times the size of today. Is this tenable? Can we produce an energy system which is four times the size of today's or are we going to end up destroying the planet? The answer is there probably there won't be enough energy, and if we carry on as we are, we will do huge environmental damage.
AP: So in a nut shell, what do we need to do?
JS: If we can double our energy efficiency and cut energy's carbon intensity by more than a half, we may meet the demands of an economy four times the size. The US consumed 0.5 per cent less energy last year than it did the year before and it also emitted less carbon. China has some pretty ambitious goals for energy efficiencies as well. But if you look at what we still need to do we're going to have to make progress much quicker than we have over the last ten years.
AP: Where does the responsibility lie in finding solutions?
JS: There is so much that has to be done to tackle climate change. The need for energy efficiency, renewable energy generation and decarbonisation of fossil fuels means that we all have a role to play -- oil companies, electricity companies and so on. Small businesses also have a massive part to play, because they have the creativity and innovation.
AP: What can small businesses do that larger organisations can't?
JS: Tackling climate change will require a lot of new technologies across a broad range of fields. The small business sector is where a majority of those ideas are. Some of them will work, others won't. I believe small businesses are the incubator for ideas and they can move much more quickly than we can. We try to be innovative too, but big companies can't do everything.
AP: Is the Shell Springboard initiative an opportunity for you to find companies and technologies that Shell could invest in?
JS: We wanted to give a financial boost for small companies tackling climate change and ensure there were no strings attached. The money goes direct to small businesses and we don't want anything in return other than to know how they're getting on. Some applicants have said they want to talk to our technical people -- I'll arrange that, as long as they've got their IP covered and don't say anything to us they wouldn't say to anyone else. We're not looking for companies to take over and grow because we've got a huge amount of work to do in fossil fuels.
AP: So what role does Shell have in tackling climate change -- how do you ensure you're part of the solution rather than a cause of the problem?
JS: Fossil fuels will be an important part of the energy solution for many years to come. They will be two-thirds of the energy mix by the middle of the century. We want to make them much, much cleaner. We're also investing in clean coal technology and spending a lot on third and fourth generation biofuels. For instance, we have a joint venture in Hawaii investigating marine algae, which uses salt water rather than fresh water. With algae we might get as much as 15 times more biofuel per hectare than we would from traditional sources and it doesn't remove land from the food chain. We've invested around in £0.5 billion in green R&D in the last few years.
AP: What's the end goal for Shell?
JS: We want to keep improving the technology to the point where we can massively scale it up. Eventually we would like to have at least one renewable business comparable in size to our businesses today. If we can get the tech to the point when we can invest heavily, we will be ready to do so.
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