Ben Van Beurden, chief executive officer of Royal Dutch Shell, one of the largest oil companies in the world, says when he gets a new car this September it will be a Mercedes S Class 500e, a plug-in hybrid with a 13.3 kWh battery and an all electric range of about 19 miles. Some of you will be laughing up your sleeves at this news. 19 miles of range? That hardly qualifies as an electric car at all! Hold you criticism for a minute and hear what Van Beurden has to say about his decision.
Van Beurden’s current car is a diesel, so switching to a plug-in is pretty big news. But he isn’t alone in the C suite at Shell. CFO Jessica Uhl already drives a BMW i3 electric car. “The whole move to electrify the economy, electrify mobility in places like northwest Europe, in the U.S., even in China, is a good thing. 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.”
On Tuesday, Shell beat the expectations of stock analysts by reporting higher than earnings than predicted after the company went through a round of cost cutting. It says $50 a barrel oil is part of its new “lower forever mindset.”
Changes in automotive technology, the fight against climate change, and slowing economic growth in China are reducing what was once the world’s ever increasing thirst for crude oil. 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,” Van Beurden said.
Shell says it plans to spend up to $1 billion a year on its New Energies division as it transitions from fossil fuels to more renewable power . It says there are business opportunities in hydrogen fuel cells and new biofuels for air travel, shipping and heavy freight. With the current cost of batteries, those industries are not thought to be suitable for battery electric solutions, although that calculus may change significantly in coming years.
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 auto fleet by 2040 and displace about 8 million barrels a day of oil production. To put that into perspective, Suadi Arabia, the world’s biggest oil producer, supplies only 7 million barrels of oil today. “We have to continue to reinvent,” Van Beurden says