Although the government has provided a clear outline of how Australia’s carbon-reduction policies will develop through to 2020, companies should not underestimate the organisational change required to respond, according to David Hone, the London-based global climate change adviser at Shell, an oil and gas firm.
Shell has gone through three distinct stages in its carbon management journey, which began in 1997. The first two stages occurred in parallel—recognising that carbon reduction laws would be a reality and making an early effort to influence policy so as to spur corporate investment as well as meet environmental objectives. Mr Hone claims it was a massive challenge getting all the businesses in Shell to recognise the importance of the issue and its long term impact on the company.
The second stage was building capacity within Shell. In order for carbon reduction strategies to be effective, they need to be embedded within the organisation and underpin business procedures, practices and operations. “We had to ensure everyone understood how carbon management policies worked and their impact on the various businesses from a profit and loss point of view,” Mr Hone says. Shell expanded on its existing trading activities to encompass carbon trading. It also implemented business processes in Europe so the refineries, exploration and production facilities would understand how to work with the new trading arm.
The third stage was elevating the issue to a highly strategic level in the Group. Among other things, this meant embedding a US$40 per tonne shadow carbon price into all new project evaluations.
Fifteen years after the start of Shell’s carbon management strategy, Mr Hone still stresses the importance of delivering the right message within the organisation. “CO2 emissions are not like sulfur emissions where you can clean them up a bit and they go away,” he says. “CO2 is cumulative so until you go to zero emissions the problem won’t go away.”
Just like Shell, he believes Australia has made good progress, but still has a long way to go. “While reducing energy use and improving energy efficiency are both good things to do, they are just one part of the solution,” he says. "A cap and trade system will also bring through the right energies, in the right mix at the right time."
