Shell could use its core competences to play a leading role in the energy transition, concludes a study including 11 (former) Shell managers and 11 energy experts, and academic literature.

The development and exploitation of biofuel technology, energy storage and renewable hydrogen are the most compatible with Shell’s core competences, advise the experts in a study by Inger Bos, Lotte Bosschieter, Jonah Link, Martijn Piek and Nicolas Poolen, MSc students of Sustainable Business and Innovation at the University Utrecht.

“Incumbents can play a fundamental role in the transition of an industry due to their strong capabilities in research & development and their dominant role in the market,” earlier research shows. However, “core competences can become core rigidities,” researchers warn.

Research question of The oil tanker’s green compass: “To what extent are Shell’s core competences compatible with technological and business model innovations most likely to support the energy transition?”

Conclusions in summary:

Shell’s core competences:

  • Innovation capacity
  • Large scale project management
  • Global reach
  • Financial capabilities

Energy transition innovations, most compatible with Shell’s core competences:

  • Biofuel technology
  • Energy storage
  • (renewable) hydrogen (renewable power to gas)
  • Carbon Capture & Storage (CCS)
  • Smart transportation

Read the complete study here

Executive Summary

This research identifies opportunities for Royal Dutch Shell (Shell) in the energy transition by determining the alignment between sustainable innovations and the firm’s core competences. This study provides concrete suggestions for Follow This to present to shareholders, thus increasing the legitimacy and necessity of its mission to transform Shell into a sustainable energy company.

Ten innovations most likely to support the energy transition are identified through a survey among energy sector experts from four universities in the Netherlands. To identify the core competences of Shell, a survey is sent to (former) Shell employees. Finally, a mixed approach of semi-structured interviews is adopted to reveal and scale the compatibility between the innovations and core competences.

According to the energy expert survey, the energy transition will most likely be supported by a mix of the following innovations: energy storage, solar energy, smart electricity management, wind energy, hydrogen, geothermal energy, smart transportation, electric cars, carbon capture and storage and biofuel technology. Moreover, four core competences of Shell are identified and categorized. Based on the survey from former Shell employees, Shell’s four core competences are its innovation capacity, large scale project management, global reach and its financial capabilities.

Shell can best use its core competences in the development and exploitation of biofuel technology and energy storage as most compatibility has been identified by the energy experts. Furthermore, hydrogen, carbon capture and storage and smart transportation are in line with the presented core competences. On the contrary, low overall compatibility with the innovations was found for geothermal energy, electric cars, wind energy, smart electricity management and solar energy. However, in this group wind energy scored extensively higher on large scale project management and can be exploited by Shell in the construction of large scale offshore wind farms. Furthermore, this competence is found most compatible for all innovations.

Based on these results several recommendations are presented. Follow This can build on these findings to present a shareholders’ vision of Shell in which the multinational takes responsibility for its scope 3 emissions as stated in the presented resolution. Using a combination of solutions, Shell can become a market leader using its core competences for hydrogen as a power-to-gas solution for energy storage, biofuel technology development, carbon capture and storage and exploitation of large scale wind farms. This research shows that the possibilities for Shell are present and in line with their core competences. Shell can use its core competences in the energy transition and make a significant impact to reach the Paris Agreement by reducing its emissions.