LONDON—Governments are obsessed with affordability of energy, according to Shell Plc CEO Ben van Beurden who argues it can’t be solved with some sort of premium.
The executive’s comments came during the Energy Intelligence Forum and, in particular, during a leadership dialogue on Oct. 4 about energy security in Europe after Russia’s invasion in Ukraine earlier this year, the energy “trilemma” focused on energy sustainability, affordability and availability, among other issues.
“There was a time when we only focused on sustainability of energy and nobody really cared about stability or affordability and that was sort of taken for granted,” van Beurden said. “And now we are saying you can’t take the affordability for granted and it is, therefore, something that we have to manage.”
Energy sustainability is based on three core dimensions, according to the World Energy Council and includes energy security, energy equity and environmental sustainability of energy systems. The balancing of these three goals constitutes a “trilemma” and balanced systems enable prosperity and competitiveness of individual countries, according to details posted by the council.
“Gas in Europe is the ground zero of the energy challenge at the moment.”—Ben van Beurden, Shell Plc
The Shell executive dismissed the notion of energy affordability being solved with a premium.
The issue is solved with “good policy and by making sure that we understand that this is a very sort of volatile market that you cannot afford spare capacity to run very, very small,” van Beurden said. “We cannot live in this world without spare capacity.”
The executive applauded efforts by the U.K. government to address some of the issues stemming from the current energy crisis and said that hopefully the current events “are a bit of a wakeup call for government to say… it’s actually a trilemma.”
Gas in Europe
Van Beurden said “gas in Europe is the ground zero of the energy challenge at the moment.” However, he believes there is enough gas, by definition, since governments would do whatever to weather the current energy crisis.
“Will it be comfortable? No, absolutely not at the moment,” he told attendees of the annual event. “We see significant responses to high gas prices and people are a little bit unsure, but it is actually [through] economic destruction that we are going to see massive improvements in energy efficiency.”
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But van Beurden warned that the short-term consequences of managing through the energy crisis would be “dire,” referring to China’s increased use of coal, which he said in the recent quarter was more than the oil and gas produced by his company.
The negative consequences could also result in some good down the road, the executive added.
“In the end… we will have this massive impetus to do something with energy security and therefore the energy transition will accelerate,” van Beurden said. “What will happen in the meantime is that we will have traveled in the wrong direction… and alter the economic reality for a lot of people in a lot of economies and not always for the better.”
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