Day 6

Shell's support for a carbon tax is environmentally conscious — and financially savvy, says researcher

Shell, one of the world's largest oil and natural gas companies, has threatened to withdraw from nine industry groups if they don't back a carbon tax. Law professor Stewart Elgie says that shows the company is preparing for a low-carbon future.

'They have a financial interest in this position,' says Hadrian Mertins-Kirkwood

Royal Dutch Shell is challenging fellow oil producers by threatening to withdraw from industry associations. (David Bell/CBC)
Listen8:23

Royal Dutch Shell's support for carbon pricing models is a sign that the company is ready to make climate change concessions, according to environmental experts.

Shell, one of the world's largest oil and natural gas producers, announced in early April its intention to withdraw from the American Fuel and Petrochemical Manufacturers trade association.

In its report, Shell said the association's climate policies fail to align with the company's own environmental outlook.

Shell also suggested that it may withdraw from nine other trade groups, including the Canadian Association of Petroleum Producers, if these groups are unable to align with the company's climate change goals.

According to University of Toronto political science professor Jessica Green, Shell's willingness to challenge its fellow oil producers could have a ripple effect throughout the industry.

"I'm not going to say that they're the good guys, but I think this is a signal to the rest of the fossil fuel industry that we need to stop burying our heads in the sand and fighting this, and we have to have some sort of collaborative approach," said Green.

"[It's] not going to get us to decarbonization, but it's an incremental improvement."

University of Ottawa law professor Stewart Elgie, who also serves as the chair of the Smart Prosperity Institute, said Shell's willingness to strain its industry relationships — and potentially harm its bottom line — should be read as a sign that the company does take climate change seriously.

"They understand that a price on carbon is the most economically effective way to reduce emissions and create an incentive for clean innovation," Elgie told Day 6 host Brent Bambury.

He also noted that tension between competing oil and natural gas producers has existed for years, but said Shell is one of the first to publicly acknowledge that tension.

[It's] not going to get us to decarbonization , but it's an incremental improvement.- Jessica Green, political science professor at the University of Toronto

"The fact that some oil companies have spoken for carbon pricing reveals that tension," said Elgie.

He likened Shell's stance to former Canadian forestry giant MacMillan Bloedel's decision to cease its clearcut logging operations in British Columbia in the 1990s.

"Within a few years, other companies started following suit and eventually, Canada's forestry associated changed its tune and started becoming an advocate for sustainable forestry," explained Elgie.

Skepticism remains among policy experts

Experts like Hadrian Mertins-Kirkwood are quick to point out, however, that Shell likely isn't taking a pro-carbon pricing stance for purely environmental reasons.

"At the end of the day, they're still an oil company," said Mertins-Kirkwood, senior researcher for Canadian Centre for Policy Alternatives.

"They have a financial interest in this position."

He added that Shell views itself an energy company, and that the company is a "pretty major renewable energy investor."

For instance, Shell's corporate website states that the company's New Energies arm "invests up to $2 billion a year in cleaner energy solutions," including wind and solar energy.

Still, Mertins-Kirkwood speculated that fossil fuel companies that don't collaborate with governments adopting low-carbon initiatives could get left out of important negotiations. 

"If [energy companies] are totally obstinate and just don't want to work with governments at all ... they're going to have more punitive regulations imposed on them," he explained.

At the end of the day, they're still an oil company ... They have a financial interest in this position.- Hadrian Mertins-Kirkwood , Canadian Centre for Policy Alternatives

Nonetheless, Mertins-Kirkwood acknowledged that carbon pricing models are a "very modest climate policy" that are among the first of many steps needed to prevent global climate catastrophes.

"We can be supportive of climate goals such as emission reductions or deployment of low carbon technologies while at the same time taking policy and advocacy positions on how these goals can best be achieved," Shell Canada spokesperson Kristin Schmidt told Day 6 in an email statement.

"Generally speaking we advocate for policies which deliver emissions reductions at the lowest cost to society."


To hear the full interview with Stewart Elgie, download our podcast or click 'Listen' at the top of this page.

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