One day there is a terrible fire in the forest. All the animals flee in terror, until they come to the bank of a raging river. Both the mouse and tiger are terrified by the flames, but fear to enter the torrent of water that will surely drown them. Then the mouse has an idea. Let me ride on your head, he says to the tiger. Perched high between your ears as you swim, I will be able to make out the best way to the far shore. If we cooperate we can both survive. OK, says the tiger, and they set off. For a while, the pair make good progress. The mouse, shouting directions into the tigers ear above the noise of the flood, navigates them both to a rock where they can rest. But then, on the second leg of their journey and barely half way across river, the tiger suddenly throws its head back and catches the mouse in its jaws. What are you doing? cries the mouse. If you eat me we surely both will drown. Yes, says the tiger, but, after all, I am still a tiger, and I always eat creatures like you. With that, the tiger swallows the mouse and, bereft of a pilot, disappears beneath the waves.
Can big oil companies transform into champions of the environment, or are they more like the tiger in the story, unable to change its ways?
Of the oil majors, BP has made the boldest claims of a green metamorphosis, first with its Beyond Petroleum tag and more recently with a massive international advertising campaign. How far do the claims stand up under scrutiny?
What does it take to be an oil giant?
The most common ranking is by market capitalisation. On that basis the top seven corporations as of April 2005 are:
ExxonMobil (US): $381billion
BP (UK): $221billionn
Royal Dutch/Shell (NL/UK): $211billion
Total (France) $149 billion
Chevron Texaco (US): $123 billion
ENI (Italy): $103 billion
ConocoPhillips (US): $75 billion
Market capitalisation is a highly dynamic indicator, and not necessarily the only factor to take into account. Nationalised companies and other players in the Middle East, Russia and elsewhere hold much larger oil reserves than the western oil majors and are likely to be able to turn these into enormous market and political power, other things being equal.
Beyond PR
BPs spiffy alternative energy web site will tell you about their plans to invest in Low Carbon Power. Browsing in the appropriate mindset you can start envisaging a new industrial revolution: a hydrogen car next to every domestic wind turbine. After all, if (as energy guru Amory Lovins is fond of pointing out) a hundred-fold increase in productivity in just a few years was possible in eighteenth century England, is it really so difficult for the modern worlds highly capitalised global corporations to make a massive leap in energy technology and efficiency?
Even before it declared its intention to invest heavily in renewables, BP had already put down a marker with a voluntary target to cut carbon dioxide emissions from its own operations by 10%. It achieved this in just a few years, and as it is reported subtantially increased shareholder value as a result.
BP is not alone among the giant corporations in its enthusiasm. General Electric (GE) the worlds largest company by market capitalisation, although not an oil company has committed to Ecomagination a great green leap that looks even more ambitious than BPs. The American conglomerate says it will improve its greenhouse gas intensity (the quantity emitted per unit of economic activity) by 30% by 2008.
Both companies earned themselves a place on a recent list of the top ten green companies compiled in the influential magazine Businessweek.
How far do such measures take these corporate tigers towards metamorphosis into butterflys wafting gentle breezes, not fanning climate chaos?
Climatologists, and governments that follow their advice, say that to reduce the risk of dangerous and perhaps catastrophic climatic destabilisation to no more than about one in five, global emissions of greenhouse gases need to be cut by 60% to 90% within five decades, and maybe much sooner.
In this context the plans of the green market leaders look modest. The amount of oil and gas produced and sold by BP continues to rise (its reduction target applies only to internal consumption, not the fuel it sells), and the company has ambitious plans for further growth. Total emissions from BP products will rise in lock step with this expansion, barring big advances in the deployment of carbon capture and storage technology or other forms of sequestration.
As for GE, its ambitious energy intensity target will result in a total reduction of greenhouse emissions of just 1% below 2004 levels by 2012 because the planned growth in its total business will eat up the savings. (Without its new policies, says the company, emissions would increase by 40%.)
BPs total announced investment in greenery some $8bn over ten years is not small; but year for year, it is less than half a percent of the approximately $200bn currently invested every year in hydrocarbon development by all players.
Larger sums are likely to be invested in renewables over the next two or three decades. The International Energy Agency (IEA) which tends to be cautious regarding new technologies reckons that over $1 trillion will be invested by all players in non-hydro renewable technologies worldwide by 2030. Those trillion dollars will triple the renewable share of total world power generation (but not energy for transport), says the IEA.
It sounds impressive but even this massive investment with bring the renewable share of world power generation to just 6% - more in places like western Europe and California, but less elsewhere. Meanwhile, much larger investments in coal, gas and oil are likely to lock huge greenhouse emissions into the global industrial system, barring very profound change.
Also in openDemocracy on environmentalism and politics, a major debate on the politics of climate change with contributions from scientists, scientific writers, policy analysts and acticvists
More recently, Jonathon Porritt assesses the relationship of the enviromental movement to capitlaism, As if the world matters: reconciling sustainable development and capitalism (November 2005)
Tim Worstall, Camilla Toulmin, John Ashton, John Whitelegg, Tom Burke and Andrew Simms respond to Jonathan Porritt (December 2005)
Business as usual
An old joke has someone ask an economist at a party Hows your wife?. The economist thinks for a moment and says Compared to what? So it goes for BP and the other oil companies to which virtually all consumers remain indissolubly wedded.
For all BPs declared greenery, its essential position with regard to energy technology and the environment is closer to other oil majors than it appears. All share a PR baseline which says that, yes, lots of investment in new technology and energy efficiency is a good thing. But the emphasis on this positive message and some acknowledgement of the sheer scale of the challenge in meeting it (see, for example Chevrons Will You Join Us? campaign) is not matched by any readiness to contemplate a future in which oil and gas consumption might actually have to be reduced.
Still, if the oil majors are ever to be part of the solution, they have at least to acknowledge that they may need to change the way they do business at some point. BP and Shell (both listed in London) have done this. The same cannot be said for the biggest oil company of all, ExxonMobil. And from their point of view, why should they? Since Lee Raymond became chairman and chief executive in 1993 (the year after the Earth Summit where the Framework Convention on Climate Change came into being), the companys market capitalisation has more than quadrupled. Sales have almost tripled, and profits have quintupled.
And while some oil companies concede that climate change presents a serious challenge, others have consistently supported fringe and disreputable individuals and entities that attempt to undermine the scientific consensus and the need for precautionary action.
Denial and sustained efforts to manufacture ignorance and hostility to the scientific method are a tried and tested strategy. By creating doubt about the links between their products and cancer, for example, tobacco and asbestos companies enjoyed decades of fat profits while millions of people met terrible deaths.
And when it comes to the decisions that really matter, the oil companies have won every round. The most recent round of climate talks in Montreal, for example, ended with a stipulation that dialogue going forward [would] not open any negotiations leading to new commitments [to reduce emissions]. Not content with this, parts of the oil industry and its allies are attempting to undermine the relatively progressive consensus in Europe (according to a recent report in the Guardian).
Big oil is aided by corporations that do not have a direct interest in selling oil and gas, or even coal, but whose heads are closely allied to the power elite. One example is News Corporation which, through its Fox news channel, continually reinforces disinformation sometimes in direct contradiction to the basic laws of physics to tens of millions of viewers. (It can claim to maintain fairness and balance by publishing quality books that engage with the issues in a responsible way, but these only reach readers in the very low thousands.)
The real revolution
Responding effectively to the challenge of climate change will require profound and complex changes in how the world operates. It wont be achieved simply by bashing oil companies. Even if all the oil, gas and coal companies listed on stock exchanges were to pledge to become 100% green now or within five or ten years, demand for oil and gas would not disappear. Rather, it would be met by nationally owned or controlled companies in countries like Saudi Arabia, Iran and Russia that are not open to scrutiny and have vastly greater reserves than western majors (reserves big enough to destabilise the climate should they be consumed and the greenhouse gases released).
An effective response will require many things, including those that can be summed up in five words: greed, fear, accountability, liability and aspiration.
Greed and fear, emotions well known to capitalists and not unknown in other human beings, can motivate extraordinary efforts. If I can make better money by selling you power from solar panels rather than from coal, I may go to considerable lengths to persuade you they are good thing. If I fear losing my livelihood or dignity by having nothing of value to offer in a changing world, I may wake up and pay attention.
For an assessment of the discussion around Saudi Arabias oil reserves see:
The Breaking Point by Peter Maas (The New York Times Magazine, 21 August 2005)
The Wrong Way of Looking at the Problem? Caspar Henderson's blog entry at Grains of Sand (22 August 2004)
More than anything else, greater accountability and the prospect of liability can drive greed and fear. Parts of the oil industry have already been hit by something of an accountability revolution. So far this has largely focussed on the direct social and developmental impacts of oil extraction, especially in Africa manifest in initiatives such as Publish What You Pay and a trust fund set up to manage revenues from the Chad-Cameroon pipeline.
The results of accountability initiatives to date should not be exaggerated (Chad-Cameroon, for example, which some still claim to be a success, may have actually become yet another example of monstrous abuse) and there is no guarantee that progress will not be reversed, not least because new players such as Chinese oil corporations may not be bound by the norms affecting established players. Nevertheless, it is not infeasible that this could be the start of a virtuous spiral, especially with the growing presence of innovations such as the Carbon Disclosure Project and the growing recognition in western public opinion that climate change is a political issue.
Liability could become a factor if the polluter pays principle a well-established legal norm is applied with regard to greenhouse gas emissions. If and when it does, at least two things are likely to happen. First, an enormous game of pass-the-parcel (trying to stick responsibility on others). Second, a massive tonic to efforts to generate energy more cleanly and/or provide equal or better services in ways that consume less energy in the first place. As I noted in openDemocracys predictions for 2006, the start of this could be in sight.
Lastly, and most importantly of all, there are the aspirations of countless millions to live in a just world where the prospects for the future are not immeasurably diminished and the rule of law applies equally to all. As the Australian writer and scientist Tim Flannery notes, 70% of people alive today will still be alive in 2050 so climate change affects almost every family [and community] on this planet.
The billion or so of us who are already rich consumers have the choice to reduce the emissions from our lifestyles by 50 to 90% within a year or two with no compromise in lifestyle and in many cases with considerable improvement with the very significant exception of the addiction of so many of us to air travel. There are likely to be pitfalls along the way, such as some dubious claims for sustainable biofuels. But taking account of these there is still a chance that we can contribute hugely to the well-being of present and future generations and give the oil companies and other pushers of pollution the signals they need to change.