Shell: Greenhouse gases policy needed

Hofmeister says debate is over, policy makers needed to address science of global climate change by keeping fuel prices high

Cheryl Wittenauer

Associated Press Writer

Touting the importance of a “culture of conservation” and investment in alternative fuels, John Hofmeister sounded less the leader of the world’s third-largest oil company as much as a speaker at an Earth Day celebration.

The Shell Oil Co. president, addressing a group in St. Louis Sept. 7, said as far as the company was concerned, the debate over the science of global climate change is over.

“It’s a waste of time to debate it,” he said. “Policy-makers have a responsibility to address it. The nation needs a public policy. We’ll adjust.”

He said it is a perfect time for policy-makers to keep fuel prices high and force market changes. In Europe, where fuel prices are higher, less fuel is used, he said.

Hofmeister shared his thoughts on U.S. energy security with a group at Washington University’s Weidenbaum Center on the Economy, Government and Public Policy. As early as the 1920s, St. Louis was North American headquarters for Shell Oil, which is now based in Houston.

He said conventional oil and gas resources are no longer enough for the nation’s energy security. The energy future, he said, will include fuel derived from oil shale, gasified coal and other unconventional sources; biofuels such as ethanol from grasses, straw, corn stalks and other plant matter; wind and solar energy; hydrogen fuel cells; and conservation.

He offered an anecdote illustrating how far we have to go.

“This morning at the Hilton, a gas fire was heating an air-conditioned lobby,” he said. “It looks and feels great, but is that an efficient use of energy? We need to change the hearts, minds, values and behavior of Americans toward a culture of conservation.”

But adjusting the thermostat and driving more slowly isn’t enough, he said, adding that the U.S. needs different designs of homes, factories and vehicles.

He also said the U.S. represents 8 percent of the world’s population but is using 25 percent of the energy supply.

“It’s not a sustainable formula,” he said, noting that the rest of the world wants its “fair share,” too. “The world produces 85 million barrels of oil a day and consumes 84 million barrels, with no available extra supply anywhere.”

Hofmeister said world oil selling for as little as $10 a barrel in 1998 made investment in alternative fuels not economical. But he said with oil prices upward of $60 a barrel, solar, wind and unconventional fuel projects are doable.

David Hamilton, director of the Sierra Club’s global warming and energy division, said he’s glad Hofmeister “is not saying global warming is a hoax and their job is to make money.”

But, he added, “I’m not bowled over by the fact they’re aware we’ve got problems. Shell has been in the image-making business for some time.”

He said Shell saw what BP PLC has done to position itself as a greener company to deflect criticism.

In June, Shell announced plans to build a $200 million wind farm on the island of Maui. Hofmeister said it would help meet Hawaii’s renewable energy goals and eliminate the need for a coal-generating plant there.

Shell and General Motors operate five hydrogen fuel cell passenger vans in Washington as a demonstration project. Shell provides a refueling station near the Capitol. But Hofmeister said a technology breakthrough is needed to bring down the cost.

Shell also is investing in producing ethanol from straw and has signed contracts with Idaho farmers willing to produce it. It’s involved with a German company producing ethanol from grass, tree limbs and other wood waste. And it plans to launch an experimental project with an unnamed Northeastern city to create ethanol from paper and cardboard.

Hofmeister said Shell Oil won’t produce ethanol from corn kernels and sugar because it would reduce the food supply and spike food costs. It would use the stalks or woody plant material.

Asked whether companies should be allowed to drill in the Arctic National Wildlife Refuge, he said “Alaska is a very tender environment,” which deserves a public discussion about whether and how to produce energy there.