Critics may prefer natural gas and oil be left in the ground, but renewables aren’t yet able to take over and “provoking a sudden death of fossil fuels isn’t a plausible plan,” Royal Dutch Shell plc’s chief said Thursday.

Producers have to join the debate on lowering carbon emissions and explain what they are doing within their operations, CEO Ben van Beurden told an audience at an International Petroleum Week dinner Thursday night in London.

“Our industry should be less aloof, more assertive,” he said. “We have to make sure that our voice is heard by members of government, by civil society and the general public. I’m well aware that the industry’s credibility is an issue. Stereotypes that fail to see the benefits our industry brings to the world are short-sighted. But we must also take a critical look at ourselves.”

The energy industry “cannot talk credibly about lowering emissions globally if, for example, you are slow to acknowledge climate change; if you undermine calls for an effective carbon price; and if you always descend into the ‘jobs versus environment’ argument in the public debate.”

Shell, ExxonMobil Corp., Chevron Corp. and BP plc already use carbon pricing on the expectation that emissions will be regulated (see Daily GPI, Dec. 5, 2013). ConocoPhillips, Apache Corp., Devon Energy Corp. and Hess Corp. also price their emissions, along with Total SA, PG&E Corp., General Electric Co., Ameren Corp., American Electric Power Co. Inc. and Xcel Energy Inc.

“The outcome of the political process is uncertain, but the trends behind it are unmistakable,” van Beurden said of carbon regulations. “Even more than the oil price, these trends will shape the future of the industry over the coming decades. For a sustainable energy future, we need a more balanced debate. ‘Fossil fuels out, renewables in’ is too often…what it boils down to. Yet in my view, that’s simply naive.

“Yes, climate change is real. And yes, renewables are an indispensable part of the future energy mix. But no, provoking a sudden death of fossil fuels isn’t a plausible plan.”

Van Beurden said oil prices would be an important issue through the rest of this year.

“Higher shale production in the U.S., an unwillingness by OPEC to cut its own production, and an energy demand slowdown in China — these are just some of the factors shaping a complex situation. Low prices have big implications for exporting countries like Iran, Russia and Venezuela. But also for shale producers in the U.S., and even the domestic budgets of producers in the Gulf states. In consuming nations, low oil prices are an economic boon stimulating growth and demand.”

At today’s prices, oil supply “will probably not keep pace” with growth,” said the Shell chief. “It may even decline, as prices are close to cash costs, according to consultants like Wood Mackenzie. As a result, energy companies could shut down some of their existing production. If the brighter economic outlook becomes reality, the market could tighten, and this would support higher prices. But two questions remain. Firstly, how far and how long will prices fall? Secondly, how quickly can prices recover?”

If projects are postponed or canceled, a rapid recovery may occur, he said. “This would lead to less new supply, not so much now, but in two or three years. Combined with economic growth, the market could tighten quickly in this scenario. But what if the largest supply growth engine, U.S. shale oil, proves to be resilient in the face of falling prices and the markets remain well-supplied? In that case, with moderate economic growth, prices could stay low for longer.”

In either case, the market is going to be volatile this year “if only because for now OPEC shows no sign of wanting to resume its role as swing supplier. But for the longer term, I see no change to fundamental drivers of oil markets such as rising demand and the need for new supplies.”