4 unexpected insights from recent Shell CEO speech about energy transition.

This week Shell CEO Ben van Beurden gave a speech at the Offshore Northern Seas convention in Stavanger, Norway. His main message was that the oil and gas industry should not shy away from ‘being the contrarian in the room’.

By being so combative, Van Beurden actually gave us some insight in how the energy transition is being perceived by the oil regime, and how precarious the position of the oil industry giant has become.

Here are 4 insights from his speech that show how quickly the tables have turned on the fossil fuel industry:

1. The oil industry is losing the public debate

Oil companies like Shell hold incredible influence and power on national governments, local businesses and local communities. They are, without a doubt, the dominant regime. Yet Van Beurden feels he has to be ‘the contrarian in the room’.

This is a neat feat of reversing the frame. For over 50 years there have been many contrarians arguing that our oil addiction is a problem and that the externalities of the fossil industry are not properly accounted for. They have been mocked for being tree-huggers and worse.

Finally common sense is prevailing and people are exploring ‘doing more good’ alternatives, instead of trying to find ways of ‘being less bad’. So actually, the original contrarians are winning the debate. Van Beurden, noticing how the authority Shell once held is not taken for granted anymore, feels left out and grumbles.

2. Their long term prospects in existential danger, the oil industry is reverting to short term ‘realism’

Van Beurden states: “Realism is absolutely crucial to achieving an effective and efficient energy transition,” which is – sort of – true. What’s missing here is Steve Job’s famous ‘reality distortion field’. To succeed in a worldwide energy transition before climate change becomes truly damaging, we need to make a giant technological leap.

Realism is the best approach for execution. Not for strategy. For strategy you need vision. And a strong ambition to make things otherwise. Clearly Van Beurden is not interested in a transition strategy.

3. The oil industry is engaging in wishful thinking of its own by relying on CCS as ‘a practical solution’

The truth is that CCS is already factored in by many countries to achieve their Paris Agreement commitments. It is currently the only way to achieve CO2 reductions on a large scale. Without CCS only a radical worldwide acceleration of climate-friendly energy alternatives would bring us close to the necessary CO2 reductions.

However, there are many problems with CCS, and assuming this solution ‘will shape the energy transition’ is just as much wishful thinking on the part of Van Beurden as the way more optimistic belief that we can develop and scale up alternative energy sources before climate effects become truly damaging.

4. The oil industry feels threatened because it is losing relevance

Van Beurden ends his speech with “Together we must show the world that our industry is an invaluable part of that future.” The argument seems to be that the energy transition debate is between unrealistic dreamers and clear eyed realists. So naturally, in his thinking, all that is needed is a concerted effort of the fossil-based industry to show the world how necessary they are.

In other words, now that alternative climate-friendly energy sources become more mainstream, his main concern is how this might diminish the position of his industry. His call to action is not to stay relevant, but to show how ‘invaluable’ they are. Well… I’m sure they will do their best. But as more and more countries are dealing with the effects of climate change, it would serve us well to realize their services have come at a cost.