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Shell Creates New Energies Division To Invest $1.7bn

Shell, Europe’s largest oil company has created a separate division, the New Energies in an effort to invest in low-carbon renewable power.

Shell Creates New Energies Division To Invest $1.7bn

Shell is refocusing its efforts to invest in renewable low-carbon power with its New Energies division, its new green energy arm.

Europe’s largest oil company is set to explore green renewable energy with a focus on wind power over the coming decade.

This long-term initiative follows a report released by Catham House, the London-based international affairs think tank. The report stated that the global oil companies such as Shell need to overhaul their business model or face a ‘brutish and short end’ in the coming decades.

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The Era of Green Energy

The New Energies division will be established upon the already existing involvement in electrical, biofuel and hydrogen research. The $1.7 billion capital investment will be put in wind power technology projects.

Presently, the New Energies division has a capital expenditure amounting to $200 million. The division will operate alongside the Integrated Gas department manage by Maarten Wetselaar, Shell executive board member.

As more oil companies rush to innovate, the low-carbon economy is expected to grow. The collapsing crude oil prices have considerably destabilized the industry, with no end in sight for the declining oil prices.

Shell will have to balance between innovation and investment, while risking lower returns for investors and continued degradation of the environment.

Other oil giants have made their foray into the green energy sector. Total for example has already established a New Energies division and has owned SunPower, the second largest solar energy operator in the world.

BP, Shell’s primary competitor has also attempt to enter the green energy sector. The oil giant established Alternative Energy with its headquarters in London but later closed its operation in 2011 to invest in fossil fuels

Shell is certainly not alone in its foray into green energy as it transition from oil production. Even then, environmentalists are still not pleased with Shell’s efforts given that the New Energies division is just 1% of the company’s $30 billion expenditure on gas and oil.

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