Dispatches from The New York Times/Shell Oil 2012 Energy Summit titled Earth 2050: The Food Water Energy Nexus.

Last week I was in Houston to attend an intimate gathering of about 50 people to participate in The New York Times/Shell Oil 2012 Energy Summit titled Earth 2050: The Food Water Energy Nexus.

The gathering included a robust participation of Shell’s senior management, including Simon Henry, CFO and Executive Director and Marvin Odum, President, as well as a host of other corporate managers, NGO experts and thought leaders, including Michael Shellenberger, author and political strategist, Ted Norquist, Chairman of the Breakthrough Institute, and Steven Levitt and Steven Dubner, co-authors of Freakonomics.

One could not possibly listen to the abundance of facts and figures without thinking of how desperately we’ve abused our planet.

Shell’s Stance

Equally noteworthy was Shell’s commitment to subject itself to questions from who some might consider “radical environmentalists” – people like me. For this feat of bravery, they deserve great credit.

Central to the conversation, and most challenging, is the pace at which large companies should change their business models to reduce the negative externalities of their operations. This will most likely reduce short-term revenue and profits, even if the long-term financial benefits provide significant gains.

When I asked Russ Ford, Executive Vice President, Shell, Onshore Gas Americas, to quantify Shell’s capital investments in renewables as compared to oil and gas, I could not get an answer. But he unequivocally stated that “it’s small.” When I pressed him on why Shell didn’t invest more, given the negative impact of burning oil and gas, the answer was that Shell needed to meet its obligations to shareholders.

Russ is an exceptionally bright and articulate promoter of the ways in which natural gas will make the world a better place, despite the reality that, as it burns, it sends us ever closer to the perils of global climate change. Is natural gas better than oil? Probably. Yes,  uncertainties surround the health and environmental externalities associated with fracking.

What Restrains Radical Progress?

First, a pattern of belief that it’s more dangerous to disappoint shareholders than to face the consequences of climate change and the balance sheet. Globally, oil and gas companies have trillions of dollars of oil and gas reserves on their balance sheet. They make money by moving those reserves off the balance sheet and using them to generate revenue.

There’s so much oil and gas on the balance sheets of energy companies that Paul Gilding, author of The Great Disruption, estimates that if we really want to prevent the earth from warming an average of two degrees, we must leave 90% of those reserves in the ground – and write off their value, resulting in a huge loss for those oil and gas companies.

What We Need

We need braver managers like Paul Polman, Unilever CEO, who declare unequivocally that if your concern is short-term profits, invest your money in another company.

I give Shell a lot of credit for facilitating the conversation we had. Dialogue always precedes change. At the end of the day I am fearful that history will judge them and us quite harshly. We know there’s a brick wall in front of our car. We devote endless hours debating how to apply the brakes. Do we tap them? Do we ease off the gas while we tap on the breaks? As the wall approaches, there remains certainty that we will crash. The only question is how fast we’ll be going when we hit the wall. Collectively, we just don’t seem to have the will to turn the car around.