Features
28 Aug 17

Shell CEO's next company car is... electric

To get a sense of the enormity of the powertrain revolution sweeping the automotive industry, ask the CEO of Shell about his next company car. “It will be an electric”, says Ben van Beurden – the head of Europe's largest listed oil company – without hesitation or doubt. On Bloomberg TV, he expounded upon the rapidly approaching post-fossil future.

 

Your local butcher announcing he's a vegetarian: that would be a fitting equivalent to Van Beurden's announcement on Bloomberg. A spokesman for the oil company has confirmed that the CEO (pictured) will switch from a diesel car to a plug-in Mercedes-Benz S500e in September. He's not the first Shell top exec to make the change: Jessica Uhl, Chief Financial Officer for the energy multinational, already drives a BMW i3. 

Numbered days

To be fair, both cars are hybrids – i.e. with both combustible-fuel engines and electrical motors - so neither represents a complete break with hydrocarbons. But the symbolism of oil executives choosing to drive at least partially electric cars is telling. In practical terms, it demonstrates t that (even) they realise the days of fossil fuels are numbered.

“The move to electrify the economy in Northwest Europe, North America and even China is a good thing,” Van Beurden told Bloomberg TV. “We need a much higher degree of electric-vehicle penetration – or hydrogen vehicles, or gas vehicles – if we are to stay with the 2-degree-Celsius outcome”, referring to the climate goal set by the 2015 Paris Agreement to eliminate enough greenhouse gas emissions to limit the rise of global average temperature to 2°C or less.

2040 ban

It certainly seems that the automotive industry is going to be a big part of that effort, considering the flurry of announcements in the last weeks: from Volvo saying it would build only electric and hybrid vehicles from 2019 to both France and the UK announcing that they would ban the sale of diesel and petrol cars by 2040. 

However, electric mobility can only be a part of the solution, which needs to go much further, said Van Beurden: “It won't be enough. Even if you went 100% electric, even if everyone in the Western world would ban anything other than electric cars, we would still see a very significant growth in liquid mobility fuels. If policies and innovation work really well, I can see liquids peaking in demand in the early 2030s, and maybe oil will peak a little bit earlier if there are a lot of biofuels coming into the mix as well”. 

Demand shift

“That means basically that we have to adjust to that. Firstly, there is a huge opportunity in new mobility forms. So you see our retail footprint and our ambitions changing. We are investing more in gas, which is a much longer-lived hydrocarbon. We are also going more into renewables and petrochemicals. We have to continue to reinvent the company”. 

Shell has already done so in the wake of the recent oil-price crash, by acquiring UK-based natural gas specialists BG Group – counting on a shift to demand in gas, as the world gradually moves towards cleaner fuels. Shell calls this the “lower forever” mindset: ready for a world in which demand for oil will only continue to decrease.

This is quite a change from the Peak Oil scenario that was popular until recently: it assumed demand for oil would keep rising until it would no longer be able to be met by a dwindling supply. The thinking now is that demand will peak, eventually leaving considerable reserves of hydrocarbon in the ground. 

8 million barrels

According to Bloomberg New Energy Finance, rapidly falling battery prices mean that electric cars will outsell fossil-fuel cars within two decades. By 2040, plug-in cars will account for a third of the global auto fleet. They will displace about 8 million barrels of oil a day - more than the 7 million barrels Saudi Arabia exported by Saudi Arabia every day. 

As the transition towards electric vehicles and renewable power accelerates, Shell is investing up to $1 billion a year on its New Energies division, exploring opportunities in hydrogen and next-generation biofuels, especially for areas of transport where batteries are inadequate, such as air travel, shipping and heavy freight transport.

 

Image: Shell

Authored by: Frank Jacobs