Ido Lekota spoke to new Shell Downstream SA Chair Aluwani Museisi about the need to deliver cleaner energy for the benefit of all
Newly-appointed Shell Downstream SA Chair Aluwani Museisi says the company is on course with its plan to provide the world’s growing population with more of the much-needed energy from lower-carbon sources.
Museisi said during a recent interview that Shell was using its technical know-how and innovation to deliver cleaner energy for the benefit of all where the company operated.
“We are using our know-how, technology, and innovation to deliver more, cleaner energy to help meet the world’s growing needs, and find ways to use energy more efficiently. We also work with partners, communities, governments, and others to do this in environmentally and socially responsible ways.”
All this is driven by the company’s commitment to environmental sustainability and security of affordable energy supply, said the new Chair.
This, as the new Chair points out, happens in the context where Shell has long recognised the global climate challenge and the role of energy in enabling a decent quality of life. Hence the company’s belief that, while technological developments do emerge, effective policy, and cultural change is essential to drive low-carbon business.
“Tackling climate change is an urgent challenge. That is why we have set ourselves a target to become a net-zero emissions energy business by 2050. We believe this target supports the more ambitious goal of the Paris Agreement, to limit the rise in global temperatures to 1.5% above the pre-industrial levels.”
To achieve its 2050 dream, Shell has set itself some specific targets, including:
- Reducing its absolute emissions by 50% by 2030, compared to 2016 levels on a net basis. This covers all emissions coming directly from the company’s operations as well as from energy bought to run its operation.
- Eliminating routine flaring of natural gas, which generates carbon emissions from the company’s upstream operations, by 2025.
- Maintaining ethane emissions intensity below 0.2% and achieving near-zero emissions by 2030.
In its drive to achieve these targets, Shell has committed itself to reducing its net carbon intensity by the following amounts over the following periods, compared to a 2016 baseline:
- 2-3% by 2021 Achieved
- 3-4% by 2022 Achieved
- 6-8 % by 2023 Achieve
- 9-13% by 2024
- 9-13% by 2025
- 15-20% by 2030
Museisi, however, is also of the view that while moving towards a more decarbonised world economy, hydrocarbons will continue to play a vital role in the coming decades, providing much-needed energy to fuel transport, in particular aviation, and make everyday products from plastics to steel.
It is within this context, he argues, that today, for example, natural gas—the cleanest-burning hydrocarbon—makes up more than half of Shell’s production.
“We believe it will be vital to building a sustainable energy future, especially in power generation, where it produces around half the CO2 and just one-tenth the air pollutants that coal does. We are involved in several projects to safely capture and store CO2 to mitigate the use of hydrocarbons. These depend on government support to be financially viable and to become more widespread. Replacing a coal-fired power plant with a gas-fired plant that has CCS can cut CO2 emissions by up to 90%.”
In line with this point of view, Shell is also providing more lower-carbon energy solutions such as charging for electric vehicles, hydrogen, and electricity generated by solar and wind power, and is using technology to capture and store carbon emissions. For the remaining emissions, the company offers carbon credits including from nature-based projects.
The situation drove the company towards creating a balance between a just energy transition and ensuring a sustainable energy supply that drove the country’s economy for the benefit of all its citizens, added Museisi.
“The world needs a balanced and orderly transition away from fossil fuels to maintain secure energy supplies while accelerating the transition to affordable low-carbon solutions. We are growing our world-leading liquefied natural gas (LNG) business so that we can continue to provide a critical fuel in the energy transition. Our investments in carbon capture and storage, hydrogen and renewable energy will help us produce LNG with lower carbon intensity in the future.
“The world will need energy from oil and gas for many years to come. Just over two-thirds of our capital spending in 2023 was on maintaining supplies of the vital energy the world needs today.
“This includes liquefied natural gas (LNG) which we expect will remain a critical part of the energy mix for many years to come, providing secure energy, replacing coal in industry and providing stability to the electricity grid.
“Our energy transition plans cover all our businesses. In Integrated Gas, we are growing our world-leading LNG business with lower carbon intensity. In Upstream, we are reducing emissions from oil and gas production. In Downstream and Renewables and Energy Solutions, we are growing sales of low-carbon products and solutions such as biofuels, electric vehicle charging and renewable power, while investing in hydrogen and other fuels of the future.”
From both Museisi and Shell’s point of view, the company’s commitment to just energy transition can be read from the kind of investment it has made in low-carbon energy solutions including electric-vehicle charging, biofuels, renewable power, hydrogen, and carbon capture and storage.
“We are also a significant investor in the energy transition, investing R187-R285 billion between 2023 and the end of 2025 in low-carbon energy solutions. These investments include charging for electric vehicles, biofuels, renewable power, hydrogen and carbon capture and storage.”
In South Africa, one of Shell’s major investments in renewable energy is in the form of Daystar Power—energy solutions—which provides solar solutions to businesses. Through its business model, Daystar takes power supply and management off the plates of its clients.
By taking care of all its power needs from generation to operations and maintenance the company helps its clients to focus on their core business.
Museisi is confident that given the support from its shareholders, Shell is on the right path towards making an invaluable contribution towards the much-needed global energy transition. This can be seen from the fact that in 2021, 89% of Shell’s shareholders voted in support of the company’s Energy Transition Strategy.
On how oil companies such as Shell contribute to sustainable development and an inclusive economy – Museisi avers companies’ support for the draft Upstream Resources Development Bill should be seen as a commitment to such ideals.
The Bill is, among others, aimed at:
- Providing for active and black people’s participation in the development of the nation’s petroleum resources.
- Selling a percentage of petroleum resources to the state for strategic stock requirements.
- Providing local content as a development strategy to enable skills development, local recruitment and national participation through the supply of goods and services.
Commenting on the challenges facing in its drive to invest in alternative and environmentally sustainable energy solutions, Museisi says there is “still more robust dialogue that needs to happen among the various stakeholders—including business, government and the affected communities.”
Museisi’s comments come on the back of the pending case in which Shell is appealing against a 2022 ruling made by the Makhanda Court. The ruling put a stop to the company’s planned seismic survey of the Wild Coast which was approved by Minerals and Energy Minister Gwede Mantashe in 2014.
The Court then found that the process by which the decision to grant an exploration right was made was procedurally unfair on several grounds including failure to consider the communities’ spiritual and cultural rights and their right to food.
The court further held that the Minister’s failure to consider the Integrated Coastal Management Act, climate change and the cultural rights and spiritual beliefs of the affected coastal communities, constituted a failure by the Minister to consider all relevant factors when deciding to provide authorisation.
Both the Minister and Shell contend that the Makhanda High Court erred in several aspects including by allowing the review application to be lodged beyond a 180-day time limit. Shell went further to say they would lose millions of dollars spent on preparing for the project and the judgement is in contractual breach of an exploration right obtained in 2014.
Mantashe criticised the communities who objected to the project and supporters, saying their action “was an attempt to deprive Africa of its energy resource investments”.
“The Makhanda Judgement will dampen investor appetite if left unchallenged,” Megan Rodgers and Tim Baker, lawyers for Impact Oil and Gas told the media.
The Wild Coast seismic survey case happened amidst a drumbeat which has set up gas as a “critical transition fuel” with support from the higher echelons of South African society.
“The gas industry will be with us in the transition, in a big way,” Mineral Resources and Energy Minister Gwede Mantashe once told Parliament.
President Cyril Ramaphosa even endorsed this view. At the Mining Indaba in Cape Town, he told delegates that African countries “need to be able to explore and extract oil and gas” as this would ensure “energy security” as they decarbonise their economies.
Hlonipizwe Mtolo, the now resigned Chair of Shell’s downstream operations, told the Makhanda High Court then: “If Shell can find domestic offshore gas, this could play a key part in diversifying South Africa’s energy portfolio,” adding that gas was a ”strategic bridge to low carbon emission targets.”
He went further to describe the seismic survey not as “blasting” marine life along the Wild Coast, but rather as “an acoustic investigation at sea”.
However, the role of gas is more contested. For example, there is a view that South Africa will need a limited amount of gas—or an alternative, like green hydrogen—to fill in the gaps after the switch from a coal-dominated power system to one dominated by renewable energy.
This view is based on a research-based prediction that South Africa will likely reach a renewables tipping point in the mid-2030s. At this point, the prediction contends, the country will need some form of flexible power to be available as a backup for when both wind and solar underperform for stretches of several days.
However, it is not a given that gas would play this role: green hydrogen produced from renewable energy or batteries would be a cleaner option, and the country could continue burning diesel until green hydrogen is available, bypassing gas entirely.
Museisi previously headed Shell South Africa’s corporate relations, where was responsible for communications, government relations, social investment, transformation, and external relations teams.
His background includes significant roles in both government and private sectors. Before Shell Downstream, he served as the senior director for government affairs and policy for a global company. He also served in the Department of International Relations and Co-operation, where he spent 11 years as a diplomat representing South Africa
Museisi holds a Master of Business Administration and a Bachelor of Economics degree, as well as an Advanced Diploma in Diplomacy from the Academy of the Department of International Relations and Co-operation.
Ido Lekota is a former Sowetan Editor and regular contributor to Leadership Magazine.
