Fossil fuel industry must take stranded assets seriously, says Tim Yeo
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Version 0 of 1. The chairman of parliament’s energy and climate change committee has joined those warning the fossil fuel industry to take the threat of stranded assets seriously, and believes Shell is wrong to write off critics as naive. Tim Yeo, a veteran Conservative MP and nuclear enthusiast, also expressed alarm at the latest delays at the new Hinkley Point building project in Somerset, saying he hoped they would not lead to eventual cancellation. Shell’s chief executive, Ben van Beurden, told a dinner of the international petroleum industry last week that those who argued fossil fuels should be kept in the ground were misguided in a world of rising energy demand. Yeo, however, said the company should be wary: “I do believe the problem of stranded assets [where fossil fuels are rendered worthless because they cannot be burned in a world threatened by global warming] is a real one now. “Investors are starting to think by 2030 the world will be in such a panic about climate change that either by law or by price it will be very hard to burn fossil fuels on anything like the scale we are doing at the moment.” Catherine Mitchell, professor of energy policy at Exeter University, said it was disingenuous of Van Beurden to accuse industry critics of being naive given the UN’s intergovernmental panel on climate change (IPCC) had warned about the dangers of a carbon bubble. “We have to recognise those realities, but its disingenuous to attack critics over stranded assets given the findings of the IPCC. Shell’s comments are also undermined by its commitment to drilling in wilderness areas.” The Green MP Caroline Lucas said that the IPCC’s evidence made clear that 80% of proven fossil fuel reserves must stay in the ground. “Shell has given evidence to MPs on the environmental audit committee several times now, on each occasion demonstrating a shocking disregard for climate science and for the wider environmental risks of their reckless oil drilling plans – notably in the Arctic. “His peddling of a ‘moral’ justification for perpetuating fossil fuel dependence in developing countries is hypercritical and ill-informed. Not only are the world’s poorest communities the most vulnerable to the impacts of climate change, developing countries themselves recognise the value of renewable, sustainable energy and are investing heavily in it – with growing success. “Nobody’s saying we will end fossil fuel use overnight, but Shell is clearly in denial about the urgency and feasibility of a rapid transition to a zero carbon energy system. With the costs of renewables falling dramatically, clean energy is fast becoming the best economic as well as environmental option.” Craig Bennett, the director of policy and campaigns at Friends of the Earth, said the phasing out of fossil fuels had already started and oil companies were concerned. “Shell has got to move into the 21st century or see its business model go the way of Kodak and Blockbuster Video.” The campaign against burning fossil fuels was highlighted by new calls on pension funds and others to dump their involvement in miners and oil companies as part of a global disinvestment day on Saturday. Yeo believes fossil fuel companies must prepare themselves for a different kind of low carbon world. “There may well be national [carbon] performance standards. There may well be caps everywhere. We now have a nuclear non-proliferation treaty, we may have then a coa-fired power station non-proliferation treaty and you can monitor these things externally. “Or we may have a carbon price at $50 and investors think ahead so they think the world will have to be a low carbon one in the 2030s and pension funds with 25 year time horizons must take this into account. So the oil companies and the gas companies have to recognise this.” Yeo, who is stepping down at the forthcoming election after being deselected by his local South Suffolk party, says he hopes to play a continuing role in energy campaigning. He was recently made chairman of the newly-created New Nuclear Watch Europe lobby group, backed by a variety of operators and supply companies. He has also in the past taken paid roles at low carbon companies which at one stage forced him to temporarily stand down from the chairmanship of the energy select committee. The tacit admission last Thursday by EDF that it was struggling to meet its own deadline for a final investment decision to be made at Hinkley is seen by Yeo as very serious, especially if it were to lead to the project being shelved. “If there is going to be a serious setback at Hinkley with EDF then what happens next given everything else (other new nuclear projects) is several years behind?” |