Shell to focus on biofuels, ditches wind and solar
London, 19 March: Shell is backing away from investments in wind and solar power, as they don’t fit with the oil giant’s main business and the returns are unfavourable, executives said in a strategy meeting on Tuesday.

Executive director Linda Cook said Shell’s goal over the long term was to build a business in renewables and the firm has “lots of pots in the fire”. But the focus will be on biofuels – seen as a better fit for the company’s core business in fuel production and distribution. It claims to be the world’s largest biofuels distributor, handling more than 5 billion litres in 2007.

“Wind and solar are interesting, but they continue to struggle to compete with other investment opportunities in our portfolio, even with substantial subsidies in many markets ... The outlook is we don’t expect a material amount of investment in this area going forward," added Cook.

Shell completed two wind projects in 2008 and has a wind energy portfolio of more than 550MW, but it hit the headlines in May for withdrawing from the London Array, a landmark offshore wind project off the coast of the UK.

Chief executive Jeroen van der Veer said Shell has spent $1.7 billion on alternative energies in the last five years, in wind power, solar and biofuels. Within this sector, it also includes carbon dioxide capture and storage (CCS) – a key future technology in reducing greenhouse gas emissions, but not a source of energy.

Van der Veer said the company makes “selective technology investment” in wind, solar and hydrogen technologies, but noted: “I don’t expect them to grow much more at Shell from here, due to the portfolio fit and the returns outlook compared to other opportunities.”

He also warned that future biofuels production and CCS may remain niche activities for the company: “We stress that both CCS and next-generation biofuels technologies are at a very early stage and it’s too soon to know if these can [become] commercial large-scale activities.”