CAMBRIDGE MA. – David Hone, Chief Climate Change Advisor at Shell International, provided his insights into changes in the oil and gas industry, international dimensions of climate change policy, and the prospects for emissions trading in the newest episode of “Environmental Insights: Discussions on Policy and Practice from the Harvard Environmental Economics Program,” a podcast produced by the Harvard Environmental Economics Program. Listen to the interview here. A full transcript of the interview is available here.
Hosted by Robert N. Stavins, A.J. Meyer Professor of Energy and Economic Development at Harvard Kennedy School and director of the Harvard Environmental Economics Program and the Harvard Project on Climate Agreements, Environmental Insights is intended to promote public discourse on important issues at the intersection of economics and environmental policy.
Hone, who has a degree in chemical engineering, has worked in the oil and gas industry for more than 40 years, the past 20 focusing almost exclusively on the challenge of addressing global climate change. He concurrently serves as a board member of both the International Emissions Trading Association (IETA) and the Center for Climate and Energy Solutions (C2ES). In the podcast, Hone spoke of the efforts oil and gas companies are taking to increase investments in alternative fuels in order to reduce global emissions.
“I think what's apparent today is that the industry is starting a pathway of transition. That's been building momentum over the last few years, as companies have started to look at their portfolio, think about the longer term, look at the opportunities that are out there, look at the future energy mix,” Hone stated. “But I think where people perhaps have problems with all of this is that they imagine a very fast transition and they forget about the immense scale that this industry rests on. It's providing not just Shell, but all these companies a hundred million barrels of oil per day into the global economy. And that's not just going to vanish in any short period of time.”
Hone admitted that while the COVID-19 pandemic has caused some real hardships for the industry, its flexibility has allowed it to respond fairly effectively, at least over the short term.
“[The] immediate problem has been largely addressed, but there's still a period I think ahead of weak demand, which the industry is going to have to deal with,” he stated. “And that will probably modify the rate at which the various companies, not just the companies like Shell, but the international oil companies, the rate at which they invest. So it will take a while for the whole system to correct to this, but it will correct.”
Shifting the discussion to international climate change policy, Hone spoke highly of the European Union Emissions Trading System (EU ETS), crediting its simple design for getting the continent closer toward net-zero emissions.
“It's focused very much on large emitters that are quite price responsive, and it has a declining cap that will eventually go to zero. The rate at which that goes is under discussion at the moment, but nevertheless, it will go to zero. And it has consistently delivered,” he said. “We've seen high prices and very low prices over the last 15 years, but it just keeps ticking on and delivering. And I think that's cause for optimism around its future.”
Hone’s interview is the 13th episode in the Environmental Insights series, with future episodes scheduled to drop each month.
“Environmental Insights is intended to inform and educate listeners about important issues relating to an economic perspective on developments in environmental policy, including the design and implementation of market-based approaches to environmental protection,” said Stavins. “We speak with accomplished Harvard colleagues, other academics, and practitioners who are working on solving some of the most challenging public problems we face.”
Author: Doug Gavel