Shell chief urges European rethink of energy strategy

The chief executive of Shell today stressed that “there is no national security without energy security”.

And he warned that Europe needs to rethink its energy strategies to tackle the challenges – and embrace the technologies – of today and not focus just on future targets.

Speaking at the opening of International Energy Week in London, Wael Sawan said that “energy must be at the heart of any national or regional strategy. And the focus must be on the energy of today as well as the energy of tomorrow”.

This, he said, was happening in the US and China. “The United States, which, as the world's leading petro state, is leveraging its vast oil and gas resources to power exports, reinforce independence, and fuel the technologies shaping the future, such as AI.”

China, meanwhile, is “on its way to becoming the first major electro state. coupling coal with renewables to turn its historic vulnerabilities, like its lack of oil and gas, into strategic strengths. In doing so, it's moving from being the world's factory to becoming one of the world's innovation hubs.”

However, Sawan said that in Europe, he sees a “clear and commendable focus on the energy of tomorrow”, but no such focus on the energy needs of today.

Europe’s long reliance on imports had been thrown into stark relief in the aftermath of Russia’s invasion of Ukraine and had “reinforced the reality that energy cannot be separate from geopolitics”.

And as electrification accelerates at pace, he said there were “serious questions” about Europe’s energy strategy to meet demand now and in the years to come.

“Because even as renewables scale, they remain intermittent. Europe's energy system will still need a stabilising force. What is that force? The role can be performed by natural gas, especially LNG.”

Sawan said planning the generation mix for the energy transition was not about picking winners and choosing losers.

“Our energy system challenge is not one of substitution, but one of energy addition. The energy system is the biggest machine humanity has ever built, requiring trillions of dollars of capital for innovation and infrastructure expansion. And we must be sure that we build a resilient energy system for the future before we dismantle our existing one.”

Focus on resilience

Energy resilience has been in the spotlight in the past year, particularly because of the blackout in Iberia, and there is consensus that what is needed is a holistic approach, a view repeated by Sawan.  

“Building the future energy system is a systems change, not just a technology change. The transition to the new energy system creates new exposures, new dependencies, and new vulnerabilities. That's why growth and security must be designed into the energy system at every single stage. Without that foundation, the transition can't move at the pace that the world needs to do.”

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And when it comes to policy, Sawan said what was needed was policies that “cut friction, not ambition”.

“In a world that is becoming more uncertain, we shouldn't just be preoccupied with the challenges but also recognise our opportunity to reimagine the energy system.

“Because in this uncertain world, what certainty we have is that energy will continue to sit at the heart of it.”

And with the annual Munich Security Conference taking place later this week – where energy has found itself among the top agenda items in recent years – he again stressed that “energy cannot stand alone. It has to be at the heart of any national regional strategy, because it underpins economic and industrial strategies, it underpins digital and AI strategies, it underpins climate goals and ambitions. And, of course, it underpins defence, because there is no national security without energy security.”