Sun, Jul 02, 2006 - Page 19 News List

The energy industry turns a shade of green

Royal Dutch Shell is piping waste carbon dioxide to rose growers who use it to nurture their crops. Could alternative projects offset the damage that energy companies cause the environment?


Browne of BP stunned his peers in 1997 by openly acknowledging the link between rising carbon emissions and global warming. Once a lone voice, he now relishes his role as a pioneer.

But Browne certainly does not see a world free of hydrocarbons anytime soon. Despite BP's marketing campaign and credentials with many environmental groups, the bulk of its US$15 billion in investments this year will still go into its oil and gas business.

Compared with that, its efforts at renewable energy seem relatively modest. The company plans to invest about US$800 million each year over the next decade to develop alternative and low-carbon sources of energy.

During that same period, it expects to generate US$6 billion a year in revenue from alternative energies. That would be substantial in any other industry, but BP made that much in profits in the last quarter alone.

BP's new alternative energy business will focus mainly on the power sector, which accounts for 40 percent of the world's carbon emissions. By 2015, the company expects it will be able to reduce carbon dioxide emissions by 24 million tonnes a year in absolute terms.

"It's a progressive change," Browne said during a recent interview in his London office overlooking St. James's Square. "All I would say is that it's better to do this than not at all."

While they are encouraging interest in alternative energy sources from clean sources, high oil prices are also spurring lots of dirtier ones, too.

"Some people have this notion that high oil prices are going to solve the climate problem," said Joseph Romm, an analyst at the Center for Energy and Climate Solutions, "when in fact they encourage forms of unconventional oils that are really bad for global warming."

In hopes of countering such developments, BP's most ambitious alternative project is to build a new type of power plant that runs on hydrogen, captures the carbon dioxide, and injects it back into a nearby field to help flush out either oil or natural gas. The company is planning such projects, each costing about US$1 billion, in California and in Scotland. Few companies have invested much into that technology, but with many countries mandating lower carbon emissions, that attitude may change.

"The oil industry has the know-how to do geological storage," said Stephen Bachu, a senior adviser for the Alberta Energy and Utilities Board. "If you ask why it is not done, that is because there is no reason to do it. Either the oil industry will make a profit, and that is why you see carbon dioxide in enhanced oil recovery projects, or the oil companies will do it to avoid paying a penalty."

Graeme Sweeney, who is in charge of renewable energy at Shell, and is the company's "Mr. CO2," in charge of the carbon management strategy, said it mattered little to him what kind of energy source Shell was selling.

"We see ourselves," he said, "as being in the energy business."

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