James Smith, who visited Leeds yesterday, admitted that the economic downturn had increased the pressure on British firms as they tried to cut carbon dioxide emissions but said that not doing so could store up problems for the future.

Mr Smith spoke as part of a tour of the UK in which he has worked with the UK Business Council for Sustainable Energy (UKBCSE) to discuss how local authorities could help to make cities cleaner and greener. He has already been to Sheffield, Bristol, Birmingham, Newcastle, Manchester and Glasgow and yesterday he met representatives of Leeds City Council.

He said: "We have to be very realistic. There is an economic crisis but climate change, if it is not tackled, could be an even bigger problem. We are doing our best to deal with the very specific economic issues there are day to day but keeping our environmental programmes going long term."

Mr Smith said that cities could play a major part in tackling climate change if local authorities opted for carbon-cutting measures, such as making their buildings more energy efficient, reducing emissions from their municipal transport and using sustainable biofuels.

"A lot of the technology solutions are to be found in the cities. We need a high amount of collaboration – academics, companies big and small, people from local authorities and from non-governmental organisations (NGOs)."

Shell UK has pledged to cut its 1990 levels of carbon dioxide emissions by five per cent by 2010. Mr Smith said the company had spent heavily to help achieve this, including $1bn on cutting gas flares in Nigeria with a further $2bn planned.

It has also launched the Springboard programme, in which grants of up to £40,000 are awarded to small and medium-sized businesses which have ideas on how to tackle climate change.

Steve Smith, Leeds City Council executive member for environmental services, said: "By working in partnership with the business community we aim to create a low carbon city with a high quality of life."

The council is launching Leeds Climate Charter, which will try to help organisations improve environmental management.

TAKING ON THE SUPERMARKETS

James Smith has been with Shell UK since 1983 and much of his early career was spent in upstream oil and gas production. He worked in Malaysia and Brunei for four-and-a-half years as well as in several Middle East nations and the US.

He declined, however, to predict whether oil prices would rise or fall next year, after a series of dramatic changes which has seen the price of a barrel fall from $147 to less than $55 last month.

Mr Smith did say that Shell would continue to take on supermarkets, which have been selling petrol at low prices, to win business from motorists. He said Shell UK would go "toe to toe and head to head – and the consumer gets the benefits".