Royal Dutch Shell Chair Backs Carbon-Trading System

Royal Dutch Shell (RDSA) and Nokia Corp. (NOK) Chairman Jorma Ollila has some advice on the best way to reduce air pollutants that some believe are causing global climate change: price them and trade them, rather than tax them.

A system to cap and trade pollution credits would be preferable to taxing polluters, and more palatable to politicians who know that those who raise taxes "typically are not re-elected," Ollila said Thursday in a National Press Club speech.

Ollila acknowledged that devising a system to trade pollution credits won't be easy, but he expressed confidence that it can be done and suggested that broad agreement on that goal might be reached in December at a United Nations climate-change summit in Copenhagen.

A definitive agreement resolving climate-change concerns is not needed in order for the Copenhagen summit to be a success, Ollila said in response to a question about the event. However, he said he hopes the summit will produce consensus on ways to reduce air pollution, such as carbon trading, even if the details have to be worked out later.

Commercial systems to capture and store carbon dioxide emissions are needed as well, according to Ollila, who also is the incoming chair of the World Business Council for Sustainable Development. He said carbon sequestration technology has been tested successfully on a small scale, but noted that development costs remain "quite formidable" and may require public-private financing.

China's voracious appetite for energy - it commissioned 60 mega-sized coal-fired power plants last year, more than one a week - underscore the need for rapid development of cleaner, alternative energy sources and pollution-reducing technologies, according to Ollila.

Ollila urged companies and governments to collaborate on developing electrical "smart grids" and energy-efficient "smart buildings," and predicted that firms that don't jump on the green-energy bandwagon won't survive in the long haul.

Despite cost-cutting measures, Shell hasn't compromised on its sustainability agenda, including its commitment to alternative energy development, added Ollila.

Shell's support for U.S. climate-change legislation has put it at odds with the U.S. Chamber of Commerce, yet Ollila hinted that Shell isn't likely to quit the chamber over the matter, as Apple Computer (AAPL), Exelon Corp. (EXC), PG&E Corp. (PCG) and PNM Resources Inc. (PNM) have done.

Ollila said walking out on the business lobbying group would be an extreme reaction to a dispute over one issue, and isn't necessary since everyone knows "there is a disagreement between Shell's position and in this case, the chamber's position."

He declined to say whether Shell is cooperating with a Justice Department investigation of allegations of corruption involving former U.S. Interior Secretary Gale Norton, saying that's a matter for Shell's management team.

-By Judith Burns, Dow Jones Newswires; 202-862-6692; [e-mail]