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January 18, 2010
Canadian Tar Sands Are Target of Shareowner Resolution at Shell
    by Robert Kropp

Coalition of investors successfully files a resolution addressing the financial, environmental, and reputational risks of Shell's oil extraction from Canadian tar sands.


A coalition of 142 institutional and individual investors have filed a shareowner resolution with Royal Dutch Shell, requesting that the company report to its shareowners on the investment risks associated with its tar sands projects in Canada. The resolution, which will be voted on at Shell’s Annual General Meeting on May 10, is led by FairPensions, a UK-based organization that promotes sustainable investment in the pensions and investment industry.

The extraction of oil from Canadian tar sands requires environmentally damaging strip mining of large tracts of land, and produces three times the greenhouse gas (GHG) emissions of conventional oil extraction. The process of carbon capture and storage (CCS), which aims to capture carbon dioxide (CO2) and dispose of it underground, has been championed by the oil industry claims as a solution to the financial and environmental problems of tar sands.

However, in a 2008 report, Greenpeace describes CCS as one of the “unproven, band-aid technologies,” which “will not reduce emissions from the tar sands on any significant scale in the near future.”

Tar sands extraction has been identified as having a significant role in Canada's GHG emissions in 2007, which were 26% higher than 1990 levels and 34% higher than the target it agreed to in the Kyoto Protocol.

The investors claim that 30% of Shell’s total resources are Canadian oil sands. In the likely event of regulation mandating carbon pricing, the price of a barrel of average oil sands could rise by $11 a barrel by 2030.

The resolution states, “In order to address our concerns for the long term success of the Company arising from the risks associated with oil sands, we as shareholders of the Company direct that the Audit Committee or a Risk Committee of the Board commissions and reviews a report setting out the assumptions made by the Company in deciding to proceed with oil sands projects regarding future carbon prices, oil price volatility, demand for oil, anticipated regulation of greenhouse gas emissions, and legal and reputational risks arising from local environmental damage and impairment of traditional livelihoods.”

 

 
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