Voser’s cautious view of alternatives

Royal Dutch/Shell doesn’t necessarily reject energy alternatives, its chief executive said in an Oct. 8 Washington address. Peter Voser simply would like more policymakers to consider the consequences of implementing alternative technologies.

“Peter Drucker once said: ‘The best way to predict the future is to create it.’ True, the most successful companies will be those that embrace new ways of thinking, take risks and anticipate evolving customer wants before others do,” he said in remarks on “The Energy Company of the Future” at the Woodrow Wilson International Center for Scholars. “Some of you may think: ‘If that’s true, oil and gas companies should switch to renewable energy immediately, since that is where future growth will be.’”

Voser doesn’t quite see it that way, he continued, since it historically has taken about 25 years for each new technology to gain about 1% of the global energy market. “That’s been true for liquefied natural gas in the past. Biofuels are reaching that mark about now. Wind could do so sometime in the next decade, 25 years after the first big wind farms were built here in the United States and in Denmark,” he observed.

Many raw materials on which renewable energy technologies depend come with supply constraints and environmental challenges, according to Voser. “For instance, the lithium that’s used in batteries in electric vehicles can currently only be produced easily in a very few places on Earth, often through the use of toxic chemicals. If we were to make a big shift to electric vehicles, the capacity for mining lithium, responsibly and sustainably, would also have to expand,” he said.

The wind industry needs neodymium, a rare earth metal, for magnets in turbines, Voser continued. While it’s abundant in the Earth’s crust, bigger concentrations are rare and difficult to produce in environmentally friendly ways. Rare earth metal mines in the USA were closed in the past for environmental and economic reasons. Today, more than 90% of the world’s neodymium comes from China, which recently indicated it might tighten export controls, the Shell official said.

“This underscores the importance of making responsible use of all of the Earth’s precious natural resources. It also serves as a reminder that countries are well-advised to spread their energy risks by increasing the diversity of their energy supplies,” he maintained.

Noting that complex problems rarely have simple solutions, Voser said that Shell is responding in many different ways: It develops scenarios and shares them with the outside world. It invests more in new energy projects than any other private company. It spends more on research and Development than any of its competitors. And it develops new businesses, including those in renewable energy.

“That said, we cannot innovate in all directions. We have to focus on our own skills and capabilities,” Voser said. “We are not a government. We are a business. The key is to be in the right segment of the right market at the right time.”