Oil company Royal Dutch Shell has created a business division to invest in renewable energy, according to The Guardian. Shell created its New Energies division with an initial $1.7 billion in capital investment and plans to spend $200 million per year. The division will include Shell’s existing work in hydrogen-based fuels and biofuels, and will also enable the company to expand into wind energy.
The move is small step given that annual expenses on New Energies will amount to less than one percent of the $30 billion Shell spends on its core business of oil and gas every year.
Currently, Shell owns interest in nine wind projects throughout North America and Europe, which have a total capacity of about 500 megawatts, according to Shell. Earlier this month the company partnered with Dutch companies Eneco and Van Oord to bid for the rights to develop offshore wind projects off the coast of the Netherlands.
In addition, Shell announced last year that it would stop all of its offshore drilling work in the Arctic after spending around seven billion dollars over several years on a single well there. Offshore drilling has become expensive, given the volatile oil market over the last few years, falling from over $100 per barrel in early 2008, to a low of $26 per barrel in February.
Offshore drilling is also risky, as evidenced by BP’s Deepwater Horizon oil spill in the Gulf of Mexico in 2010 that killed 11 people and spewed around two million gallons of oil. And, just last week, an offshore oil well operated by Shell spilled around 88,200 gallons of oil into the Gulf of Mexico. In a statement, Shell said that the oil rig, Brutus, was not drilling at the time and that it did not know how the spill happened.
Whether or not Shell’s New Energies division represents the beginning of a fundamental shift in its business strategy or whether it is simply lip service, remains to be seen.