Sustainable Heroes IV
New Energies Strategy
Elisabeth Brinton is the Global Vice President Strategy & Portfolio of Shell New Energies. Prior to joining the oil and gas major, Elisabeth has held numerous senior executive roles for energy companies such as PG&E and AGL Energy. Elisabeth brings exceptional operational and global energy market experience to the energy transformation, and has made it her goal in life to make energy available to everyone in a more sustainable manner.
We have watched you through your various senior leadership roles at PG&E, AGL Energy and now Shell. You have proven to be a passionate leader, successfully forging teams and consensus on building low carbon businesses. Where does your interest in energy stem from?
A passion that I have always had is to make a positive difference. Energy is ubiquitous, it is essential to our economic growth, our economy and our everyday way of life. So I thought as a person, if I could make a small contribution in my life to something that is meaningful and ubiquitous, then that is energy.
What inspires me about energy in particular is that we are at this incredible inflection point. In the power and energy sector we have the opportunity to really address one of the huge problems that our planet faces, which is the trilemma of how you have sustainable clean energy that is affordable, reliable and easily accessible. From a career perspective, part of what inspires me is to play my small part in contributing to solve this. It is great to be able to do well by doing good.
What do you see as the biggest challenge with the energy transition and implementation of “new energy” strategies?
One of the biggest challenges is around timing of the energy transition. If you look across any of the data sources, there are different projections. When timing is uncertain and local governments make their own individual decisions, it creates uncertainty over the types of investments you can make.
Another challenge is commerciality: who is going to pay for the energy transition? This will impact companies in different ways, whether you are a traditional utility or an oil and gas major, and it is part of what makes the energy transition work so interesting. Although we have a framework for climate action on a global scale from the Paris Agreement, when you really get down to it, energy gets political, and it gets local. As a result, every different country and sub-region has a different view of how to implement the energy transition (if they even care). So as a business, when you are trying to make commercial decisions in terms of implementing new energy strategies, it gets highly complex.
Does the strategy differ between traditional utilities and oil and gas majors? What role do these players have in the clean energy transition?
Yes, because their core DNA is different. The three utilities (Sacramento Municipal Utility District (SMUD), PG&E and AGL Energy) that I have been an executive officer for have a completely different business models, mostly depending on market regulations. PG&E, for example, is a regulated utility operating in California, AGL Energy is a gen-tailer operating in the Australian unregulated energy market, and SMUD is a vertically integrated company. Each of these businesses “grew up” in different regions and from different business models, but they all play a very important role in the energy transition.
When you look at oil and gas supermajors, their revenue engines are very different. Shell is an integrated supermajor, which plays well into the power space. One of the reasons why I chose Shell is because it has made a strong commitment to being a leader in the energy transition. For example, late last fall Shell announced that part of their senior executive compensation will be measured against a reduction of its carbon footprint. This is why Shell is so exciting to work for – they are not avoiding the challenge, but rather leaning into the issue.
What is unique is that Shell has one of the strongest global brands in the world. Shell’s brand is ranked 26th in the world, as independently verified by Brand Finance. That makes it higher than BMW, Coca Cola, McDonald’s, Intel, and UPS, for example. The next closest utility is EDF, from France, which ranks 142.
An example of the power of Shell’s brand is First Utility, a U.K. competitive energy retailer, which Shell purchased last year and has since rebranded to “Shell Energy”. In a survey commissioned by Shell before the re-branding of First Utility, eighty-one percent of U.K. customers said they would buy electricity or gas from Shell. They already know Shell from a fueling point of view and trust the brand. Shell is in a position to innovate and introduce new power solutions. On the industrial side, Shell makes an impact through its focus on natural gas, which is a cleaner alternative to coal.
Shell is seen as one of the most progressive O&G players, with a number of recent acquisitions and investments in disruptive technology companies. Can you share some insights on Shell New Energies’ investment strategy? What makes a good investment?
Last year Shell announced to the market that we would invest up to $1-2bn per annum, and that we aim to produce returns of 8-12%, in the power business. With that return requirement, it is actually pretty hard to invest. That backs into your question on how to make good investments. When we think about strategy, we think about how we shape the portfolio, with the core focus on how to build the best modern integrated power business. We look at what fits and whether it is accretive to the positions we already have in the market.
There are different elements to it depending on what business you look at – renewables and the supply side of the business versus the trading business.
With SENA (Shell Energy North America), we want to make sure we are building a case on top of the position we already have. We look for synergies, goodwill that is actually accretive to the business and the portfolio as a whole. When we think about expansion or other markets, we “think global and act local”.
I’m also always thinking about the global portfolio as a whole. What move will make the portfolio stronger? Is there a strategic fit? We’re not a private equity firm, we are a commercial operating business. As a result, we need to make sure each move will help advance the operating business that we are a part of.
Another aspect of being a good investor in this space is to have a passion for leaning into the energy transition and leveraging your operational experience. But, at the same time, you need emotional “dispassion” to make those hard decisions and to say “no”. You have to balance leaning in, being bold, but also being rationally dispassionate.
Throughout your career you have led innovation across multiple sectors. What technologies do you see as having a real impact on the industry transformation?
Storage. Obviously, there is a lot of hype in storage, but storage is so important, especially on the liquid side. I am personally really excited about hydrogen. Hydrogen is a dense energy carrier. It is still early days and the cost of the different types of technology need to come down. What is interesting about hydrogen is that regular hydrogen today is not a source of power itself, but it can help solve some of the deep commercial uses down the line. As more and more renewables come online, we will move from scarcity to abundance. What will we do with all that green electricity? Hydrogen can help solve that. One of the things we need to figure out in the energy transition is hydrogen’s role in all of this.
Who is your sustainable hero and why?
My sustainable hero is Mary Nichols. She is the Chairwoman of the California Air Resources Board. I have been privileged that she has been and still is a mentor of mine. She is a leader of change over the decades. A lot of people can lead through 15 minutes of fame. Mary sticks with it through all the ups and downs. She balances incredible intellectual curiosity with pragmatism and she knows how you get change instituted. She is an amazing role model, and I want to be like Mary when I grow up.
About Sustainable Heroes
Join us on a journey into the hearts and minds of some of today’s greatest heroes, who have dedicated themselves to positively impact tomorrow’s world. We invite you to explore with us what makes these heroes tick, what drives them to overcome arduous trials and immense challenges, known and unknown.
In this issue, we pay homage to global leaders accelerating the sustainable transformation – all of whom share the goal of fighting climate change and creating a sustainable world that is more resilient and lower carbon intensive.
We encourage you on your own quest for ways to innovate, embrace sustainability and do the right thing. Become a heroine or hero to others and help us together solve the problems threatening our very survival. To each of you heroes and heroines, there is a brighter, more sustainable future that we can build together for future generations.
We welcome nominations for people you’d like to see featured in future editions. Please send your nominations and other comments to anikolausson@ greentechcapital.com.