Nick Stern: Shell is asking us to bet against the world on climate change

Shell is asking investors to bet against the world taking action on climate change or in renewables displacing fossil fuels, says influential economist Nick Stern.

Speaking at a Guardian debate on divestment last night, Lord Stern said Shell and other hydrocarbon companies were getting it wrong on the potential of renewables technology and that people will insist on policies to hold global warming to 2C.

“They do not believe the world will be wise enough to follow policies that can hold the world to 2C and are asking us to bet against the world ... telling us that we won’t do what we’ve set out to do and that it is a safe bet to bet that we won’t.

“We have to try to show them that they are wrong and that we can get the world’s people to insist that we must follow those policies. We must try to build pressure to try to make that 2C assumption correct and the forecast of the energy companies wrong.”

Stern’s intervention comes after Shell CEO Ben van Beurden told the Guardian that his company would continue to look for new reserves of oil and did not believe its assets were overvalued or unusable as a result of current or reasonably foreseeable future legislation concerning carbon. He also said renewables would become important for Shell after 2050.

Speaking at the Guardian event, David Blood, co-founder of Generation Investment Management with Al Gore, said Shell and other fossil fuel companies had got their forecasting wrong on climate policy and renewables.

“They are completely missing what is happening in their industries, which is that the alternatives to hydrocarbon-based energy is becoming extremely competitive. For them to say that for the next 20-30 years we do not believe wind, solar and energy efficiency will be sufficient to displace hydrocarbons is a really very silly thing to be saying given all the technological advances we have witnessed in the last 10-20 years.”

Stern said most effective divestment strategy did not just look to divest from fossil fuel companies, but to positively keep stocks or invest in companies that were taking responsible action on climate change.

Ecotricity founder Dale Vince went further in urging consumers to not only divest away from fossil fuels, but also boycott them in their daily lives. “Simply selling shares in a fossil fuel company does not undermine its business plan. The problem is that we are all demanding fossil fuels and that is what underpins the business plan.

“Alongside a divestment campaign we need a boycott campaign. We all need to stop buying fossil fuels, which is a lot easier than it has ever been with green electricity, gas and electric cars.”

Stern agreed and said the best way to undermine demand for fossil fuels would be to expose people to the proper price through taxing carbon and ending subsidies.

Others at the debate were cautious about the impact a solely UK or US divestment or boycott strategy could have on fossil fuel companies. “When we’re talking to extractive industries they don’t really care about the demand in the UK or Europe,” said Meryam Omi, head of sustainability at Legal & General investment management. “It’s going to go down anyway because of efficiency measures.

“They are talking about India and China, and particularly India, where they are right at the point of deciding what kind of energy system they want. They have ambitious targets for solar, but ones that will require a lot of investment now while coal is cheap,” said Omi.

This article was updated on 29th May 2015 to clarify Shell’s position on renewables. It says it is exploring investment opportunities in the sector and is currently one of the world’s largest producers of biofuels.