Since mid-September, we have seen Royal Dutch Shell say they will do one thing, while behind the scenes, do the opposite. On September 21, 2020, one of the world’s largest oil producers confirmed they plan to cut as much as 40 per cent of their costs in oil and gas drilling to shift their focus to renewable energy. Meanwhile, Shell applied to consolidate 18 of its offshore oil leases in Alaska’s West Harrison Bay, in order to begin drilling in 2023.
Oil exploration in the remote coastal waters of the Arctic is risky business – and Shell knows it. Five years ago, the company abandoned another offshore project along US Arctic waters after incurring criminal fines for pollution violations, losing control of a drilling rig and problems with encroaching sea ice. Given the fact that Arctic offshore extraction costs are at least double the commercial value of crude oil, Shell’s exit from the project in 2015 was not a surprise. The recent pandemic has caused oil prices to drop even further, making Shell’s decision to re-engage in the Arctic even more mystifying. But the financial costs to Shell’s investors are nothing compared to the impacts which drilling in this vulnerable and biologically important part of the world can have on the Arctic’s nature and people.
Shell wants to drill in waters rich with unique marine life that support whales, walrus and seals.
It is also a critically important area for polar bears. Offshore drilling installations pose huge risks of polluting the icy cold water, with limited capacity and technology for cleanup in extreme and remote conditions. But even before they begin drilling, construction and other start-up operations pose serious risks to marine life in the area.
The threats to the Arctic’s biodiversity and waters from oil and gas drilling are all contributing to a much larger, global threat of burning that oil and releasing more greenhouse gases into the atmosphere. Continued petroleum development, particularly in the Arctic, contradicts global commitments to a net-zero future – 85 per cent of the world's proven resources must remain in the ground for humanity to meet its commitments under the Paris Agreement. Companies like Shell must do more than just talk about shifting to renewables, they must abandon oil and gas.
Shell is not the only oil and gas company operating in the area. If Shell was to relinquish its leases, some other company would snap them up – and that is the problem. When global titans like Shell say one thing and do another, it continues to normalize the notion that it is still reasonable for the oil and gas industry to bet on the planet’s failure to achieve a net-zero future.
More than any other extraction company, Royal Dutch Shell should understand the climate risks. Significant parts of the Netherlands lie below the sea and every centimeter of global sea level rise will profoundly change the lives of the Dutch people. As a driving force of the European Union’s economy, the company should be leading the charge towards a green recovery by doing more than just talking about sustainability.
There is growing evidence that the global demand for oil and gas has already peaked. Governments say they want to build back better from the pandemic to become more aligned with nature and less dependent on fossil fuels by offering sustainable job opportunities. It is time investors and citizens make it clear to oil producers that nice speeches are not enough, they must back up those words with actions. Ending new claims to future oil and gas extraction in Arctic waters needs to happen now.
The hottest temperature ever measured above the Arctic circle was recorded in Verkhoyansk, Siberia this past June. In fact, the + 38.6°C reading was just one of many highs that made June 2020 in Siberia five degrees warmer than any June from 1981 to 2010. A recent Oxford University-led study shows man-made climate change due to carbon emissions made this Siberian heatwave 600 times more likely.
SROCC’s chilling predictions are all around us one year later.