Business and Opportunity
You may have read Guardian (UK) writer George Monbiot’s blog yesterday, It will take more than goodwill and greenwash to save the biosphere, which is based on an interview with Shell CEO Jeroen van der Veer. In fact some of the interview is included as a video clip.
What is presented is an interesting discussion on the role of companies, the environmental integrity of investments and the direction that companies should invest in for the good of the planet. But the stark reality of the world in which we live and the system that we have collectively chosen to support our lives is that it is opportunity based. Where an opportunity exists, it will be seized and value extracted – that is the nature of our society. But we have also learned over many centuries that rules and laws are good things. They modify behaviour and ensure that commercialization of opportunity doesn’t in itself destroy value elsewhere. The same rules should apply everybody, for reasons of fairness. Good rules and laws may even open up new opportunities within which others can prosper. But it seems that we are still learning – clearly the rules within our financial system are still not quite robust enough.
The application of rules and laws applies to the environment as well. Lord Nicholas Stern clearly showed in The Stern Team Review that the development and use of abundant energy today is destroying future value, because todays CO2 emissions will have an impact down the line through climate change. So, the rules of the game need to change.
Over the past year in particular, and there will be even more in 2009, I have been busy with a number of colleagues in Shell seeking the necessary rule changes in the energy system, such that business will seize the opportunity presented by the demand for energy in a different way. We strongly believe that a market based rule system, with an emissions trading system at its core, is the way forward to address the issue of CO2 emissions. We also believe that standards should be set for vehicle efficiency, that vehicle fuels should be targeted with a declining CO2 footprint and that a high level target for the use of renewable energy is needed. The people in Shell believe that our company can prosper under a new set of rules. Most of this rule set is now in place in the EU. That is good – but global will be better.
In the Monbiot article, the Shell investment in Canadian oil sands is challenged. But this is an opportunity that many Canadians want to develop. So how do we square this off with environmental concerns – the answer is simple, change the rules. We think that Canada should introduce an EU style emissions trading system, ideally as part of a broader North American approach. With a declining cap (to deliver, for example, the Obama pledge of an 80% reduction by 2050), oil sands will have to find a new way forward. Carbon dioxide capture and storage may be one solution, allowing continued growth. Or maybe the solution doesn’t present itself, in which case oil sands development will plateau and decline.
Either way, changing the rules is the way forward. George Monbiot said as much in the last line of his blog as well.