Selfish Shell?

image: proposed area for London Array scheme within Thames Estuary

Shell, who prides itself on its progressive green initiatives, has reneged on its commitments to the London Array Scheme – a project to build the world’s biggest off-shore wind farm.  The company, who recently announced profits of £4bn, said that the decision was an economical one and claims that it is still fully committed to wind power.

Apparently, they prefer to focus on US wind power because the government incentives promised better returns.  Of course there’s nothing new about the company looking for better returns. We know that all large corporations are motivated by greed but maybe they ought to read this article.  Maybe we’ll see them scurrying back to the UK, cap-in-hand.

Anyway, although BWEA are said to be playing down the pull-out, it remains to be seen as to whether it will put the project in jeopardy.  It certainly must be a huge blow.  What a shame.

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About Earthie

This is just a place to store all my head thoughts in the unfortunate event that my mind may, one day, choose to erase the lot. Hopefully m
This entry was posted in 'Green' investments, Business, Climate change, Community Projects, Development, Energy, General, Oil, Planning, Renewables, Sustainablity, Technology, UK, US, Wind power. Bookmark the permalink.

15 Responses to Selfish Shell?

  1. matt says:

    Hey EP, when you referred Shell in your post above to read ‘this article’ I hadn’t realised you’d directed them to The Coffee House. Wondered why that Shell executive was on the phone to me this morning. 🙂

  2. Pete Smith says:

    Oh well … Shell is a publicly-owned company with the complete set of obligations; to do its best for shareholders, from individuals to pension funds; to conform to national and international legislation; to do the ‘right thing’, whatever that is. If backing out from the London Array helps fulfil one or more of those obligations, hey ho. I’m inclined to agree with the British Wind Energy Association, who seem pretty blase about the whole thing, saying it’s “business as usual”. Investors are like buses, there’ll be another one along in a minute.
    I’m surprised to hear you say Shell are shifting their focus to the US because of government incentives. An earlier post on this site (‘The US has no energy strategy’) describes how tax credits for US wind projects will end in 2009. Shell themselves say one of the reasons for their decision is the interminable planning process in the UK; can’t argue with that.

  3. matt says:

    Hey Pete

    Yes, Shell’s line/excuse about pulling out of the UK for the US is either;

    a. a lie
    b. a globalisation line designed to get more out of Gordon
    c. a case of them knowing something we and journalists worldwide are yet to learn about; a Bush subsidy perhaps

    🙂

  4. Pete Smith says:

    Of course, Shell isn’t obliged to give us the real reasons, although it might have for all we know. In fact, Shell isn’t obliged to do anything apart from conform to legislation and exercise a duty of care towards its stockholders’ investment. If that involves pulling out of projects because they’ve had a better offer, no amount of name-calling will make a difference. The joys of the free market.

  5. earthpal says:

    “I’m surprised to hear you say Shell are shifting their focus to the US because of government incentives. An earlier post on this site (’The US has no energy strategy’) describes how tax credits for US wind projects will end in 2009.”

    Yes, I was surprised too. That’s what I meant when I linked to the article and said that Shell should read it.

    You’re right of course Pete. These corporations have a duty to their shareholders first and foremost. But sometimes, some things are just too important to put profit first. I know that’s a naive and childish view but it’s not like Shell would have made any of its shareholders destitute by sticking to its initial commitments to London Array. It just made record profits. Why flip-flop like that and cause the project to be delayed at best? We dont have the time. Very cowardly of them I say.

    I don’t understand why planning permission has a bearing on their decision? I thought all the main permission thingybobs had been granted by the government.

  6. earthpal says:

    Matt, I hope the Shell exec. was polite to you. I did tell him you were a good friend and to be accommodating . . or else. 😀

  7. matt says:

    Oh him, yeah, well he sent over his learjet which was nice. But I realised I had my regular 5-a-side football game on, so had to turn him down. Shame really.

  8. Pete Smith says:

    “some things are just too important to put profit first”
    I know EP, and those are the things that shouldn’t be handed over to the private sector to let the market sort things out. Other examples we’ve mentioned in the past have been the railways and nuclear energy.
    It’ll be difficult, but we need to give the whole system a good shake and get our priorities right. Airport expansion and economic wars in the Middle East? Out. Government taking full responsibility for basic functions that affect everyone’s livelihoods? In.

  9. Pete Smith says:

    “I don’t understand why planning permission has a bearing on their decision?”
    It may not have had much in this case, although long after the turbines themselves had been given the OK there was a protracted tussle over some shore-based infrastructure, a junction box or suchlike.
    Anyway, the planning permission excuse may have been, as Matt so euphemistically put it, a lie 🙂

  10. matt says:

    Lets remember that Shell have to sell their interest in the scheme, so another company or consortium will probably be found.

    Shell doesn’t just talk about planning permission being easier in the states, but also the better economies of scale. They complain that the costs for the London Array have ^ 45%. Fact is the cost on all energy projects have sky-rocketed. What Shell is in fact saying is that they aren’t interested at the moment in pioneering large renewables projects in the UK (which would help to get the economies of scale here in the UK they talk about existing in the US at the moment).

    This quote from the Guardian article may be spot on;

    Greenpeace chief policy adviser Benet Northcote attacked Shell for selling off its renewable assets “left, right and centre” while investing millions to extract oil from the Canadian tar sands, which he said was one of the most climate-wrecking forms of fossil fuel extraction known to man.

    So, who might buy Shell’s share; BP!?

  11. Pete Smith says:

    Yes, I see. I kinda dismissed the “economies of scale” as gibberish, as I couldn’t see what could have a larger scale than the London Array, the world’s largest offshore wind farm. My mistake was to think only in terms of wind projects. Shell are looking for the best return on their investment, and after all they are still primarily an oil company. They obviously reckon they can leverage their investment more effectively in North American oil projects, e.g. the Canadian tar sands or the new Bakken field.
    How much might Shell’s share be worth? Perhaps we could have a whip round 🙂

  12. earthpal says:

    “…we need to give the whole system a good shake and get our priorities right. Airport expansion and economic wars in the Middle East? Out. Government taking full responsibility for basic functions that affect everyone’s livelihoods? In.”

    Well said Pete.

    Matt, yes, I read that article too. Also, Shell likes to promote its green cfedentials but I read that it only contributes 1% of its profits to green projects and most of them are in the States. I think its interest in America might have something to do with the fact that George Bush is easy lobby fodder for the big oil barons. No prizes for guessing why.

  13. matt says:

    What’s becoming obvious to me is that free market Bush loves doling out subsidies, especially to his business pals. Gordon on the other hand seems obsessed with the puritanical free market approach, hence those looking for a hand up with new business ideas wither on the vine. I blame the influence of Gordon’s father’s rousing (?) sermons which were no doubt full of messages about standing on ones own two feet and facing the world with a steely determination; seeking help (apart from God) would be seen as weakness. 🙂

  14. Pete Smith says:

    “…sermons which were no doubt full of messages about standing on ones own two feet and facing the world with a steely determination”

    Nowt wrong with that. I’m sure Brown Snr. must have had a bunker under the rhododendrums, stocked with 5 years’ supply of haggis and porridge.

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