Shell and Valero Put Their Money Where Their Business Is

The reactions of environmental organizations to Shell announcing that it would pull out of wind and solar investment, with Greenpeace taking the crown as usual with its comment that the company has ""rejoined the ranks of the dirtiest, most regressive corporations in the world."

Several other organizations also used the opportunity to criticize Shell. Not that any of them rose above the level of pointless blather. To address Greenpeace's statement, the group has now managed to imply that at some point Shell had left the ranks of the dirty and regressive. That was never the case.

Shell's total investment in green energy from 1999-2006 reached $1.25 billion, according to Reuters. Compared to the company's operating budget, the amount was literally play money -- or, more accurately, a large marketing budget. For the price of erecting a few wind turbines (which might yet offer a return on the money) Shell was able to give its oily black body a green patina.

But lest it seem like I'm also taking Shell to task, I'm not. All the major oil companies have been at best hesitant, at worst highly resistant, to investing in most renewables. But they should be. It's not part of oil industry expertise, and does not offer returns in line with what they receive from their other business units.

In a wave towards what is their expertise, Shell has said it will continue investing in biofuels, where it recently put money into enzyme engineering firm Codexis. The enviros have said that biofuels don't yet have a proven greenhouse gas emission profile, and they're right. But that simply means that Shell shouldn't be lauded for the investments; they're just business.

Equally so for Valero, a North American refiner that just bought up eight big ethanol facilities from bankrupted Verasun. Indeed, the investments suggest that oil companies are finally figuring out at least one aspect of the renewables business. It may be planning to integrate technology from Zeachem, a cellulosic ethanol technology startup that it just put venture capital into, to make the plants more effective.

The Guardian's George Monbiot suggests three reasons for Shell choosing to make its announcement right now: The possibility of an oil crunch (leading them to direct all their resources to liquid fuels), low carbon prices in the European Union, and a loss of effectiveness in the greenwashing that the environmental groups apparently bought into.

Those last two serve to point a new way forward for the company. Greenwashing is a failure because the populace has now gained a basic level of understanding of the issues. They now expect honesty. Meanwhile, Shell knows that its business is dirty, and that carbon prices will someday go up. The solution? Spend more time saying so, and advocating policies that will help. Anything less will just lead to more PR boondoggles.