Royal Dutch Shell CEO to Call for 'Carbon Pricing'

LONDON—The chief executive of oil firm Royal Dutch Shell PLC will tell a gathering of industry executives Tuesday that the world must find economic ways to reduce its dependence on the most polluting fossil fuels, calling on governments to institute an effective system for pricing carbon.

According to excerpts of Ben van Beurden's speech to the Oil & Money conference in London seen by The Wall Street Journal, the boss of one of the world's biggest oil and gas companies is promoting a carbon-pricing plan that will encourage investment in renewables and favor cleaner-burning natural gas over more carbon-intensive coal.

The system of carbon pricing generally taxes polluters, which then pass the costs onto consumers and can lower demand. Another system is a so-called cap-and-trade plan that would set some limits on what polluters could emit.

The call for a carbon-pricing system comes as the energy industry positions itself ahead of United Nations climate-change talks that could result in an agreement to curb emissions. Shell, together with many of its European counterparts, has been vocal in promoting natural gas—an increasingly significant portion of their output—over coal ahead of the December talks in Paris.

Shell itself is in the midst of completing a $70 billion acquisition of BG Group PLC that will make liquefied natural gas one of the primary focuses of its business.

"Gas is a fossil fuel, yes, but a crucial one for the building of a low-carbon future," Mr. van Beurden will tell executives and government officials at the conference, adding that oil and gas will remain important parts of the energy system for years to come.

The Shell chief will also address the slump in oil prices over the last 15 months, acknowledging that the crude market may remain under pressure for some time.

The company has already announced plans to cut back its spending and focus on reducing costs. Operating costs are expected to fall by around $4 billion over the course of the year and Shell's spending on exploration and development is set 20% lower than last year.

"Shell is pulling out all the stops to safeguard our dividends and buyback program, and to keep our investment program steady for the future," Mr. van Beurden will say.

Write to Sarah Kent at sarah.kent@wsj.com

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(END) Dow Jones Newswires

October 05, 2015 20:35 ET (00:35 GMT)