Ben Van Beurden said the move to electrify mobility is "a good thing"
Shell chief will shun petrol cars to go electric
When the boss of Europe’s biggest listed oil company says his next car will be electric, it says a lot about the future of fossil fuels.
Royal Dutch Shell responded to the worst oil-price crash in a generation with its US$54 billion takeover of BG Group last year, betting that demand for natural gas will rise as the world shifts to cleaner-burning fuels. Now the chief executive Ben Van Beurden says the next thing he will buy is a car that does not need either oil or petrol to run.
“The whole move to electrify the economy, electrify mobility in places like north-west Europe, in the US, even in China, is a good thing,” Mr Van Beurden said. “We need to be at a much higher degree of electric vehicle penetration – or hydrogen vehicles or gas vehicles – if we want to stay within the 2 degrees Celsius outcome.”
The United Kindom said on Wednesday it would ban sales of diesel and petrol-fuelled cars by 2040, two weeks after France announced a similar plan to reduce air pollution and meet targets to keep global warming below 2 degrees Celsius. The car maker Volvo said this month that it will manufacture only electric or hybrid vehicles from 2019 onwards.
Changes in automotive technology, the fight against climate change and slowing economic growth in China are dampening the world’s once boundless appetite for crude. Speculation in the energy industry has shifted from so-called peak oil – the idea that consumption will keep rising until the supply of fossil fuels dries up – to peak demand, when reserves considered valuable assets today wind up being left in the ground.
“If policies and innovation really work well, I can see liquids peaking in demand in the early 2030s and maybe oil will peak a little bit earlier if there’s a lot of biofuels coming into the mix as well,” Mr Van Beurden said.
Electric cars will outsell fossil-fuel powered vehicles within two decades as battery prices plunge, according to Bloomberg New Energy Finance. Plug-in cars will account for a third of the global car fleet by 2040 and displace about 8 million barrels per day of oil production – more than the 7 million barrels Saudi Arabia exports today, the London-based researcher has said.
Adoption of electric vehicles could eat away 5.2 million barrels per day of oil demand by 2040, according to the International Energy Agency. A switch to biofuels by users such as airlines is also hurting oil’s share of the market.
Shell has said it plans to spend as much as US$1 billion a year on its New Energies division as the transition toward renewable power and electric cars accelerates. The company has said it sees opportunities in hydrogen fuel cells and next-generation biofuels for air travel, shipping and heavy freight.
Other big producers including Total and BP are also diversifying as they adjust to a world of $50-per-barrel oil.