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.
Lots of fair points, and it’s great to see Shell engaging in a discussion in an open forum such as this.
The main point seems to be that Shell (and other companies) are clamouring for restrictions and regulation, whilst governments are lagging behind. (Which all smells very similar to CFCs/Montreal Protocol in the late 80s). This is sensible for countries with strong governance, be they developed or developing.
However, for countries with relatively weak governance (swathes of Africa, for example) will Shell voluntarily restrict their activities, or will they continue regardless?
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The “dirty oil” concerns raised by U.S. politicians and directed at Alberta’s oi sands are usually in reference to low-carbon fuel standards, and less often with cap-and-trade policies. Are these two policy options as complementary or competing?
Also, draft U.S. climate change bills would would seem to require importers of Canadian oil sands/bitumen and its by products to hold “foreign allowances” issued by the U.S. government from a special “foreign reserve”. Won’t this make any Canadian cap-and-trade program a mute point?
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David,
Do you agree that ‘rules & laws’ as you put it should be driven by what yields the biggest benefit to society as a whole? Or whomever has the means to shout the loudest?
If you agree with me that markets should be regulated for the benefit of society as a whole then surely you will also agree that participation in that process of vested interests is not desirable because they will be motivated primarily by the opportunities they see rather than the public good.
It appears from George’s article and your response that you both agree that it isn’t for companies like Shell to determine laws, regulations and taxes – it is for governments to decide based on independent analysis and the interests of all people equally. That being the case there is no reason or need for Shell and others to involve themselves in debates on public policy. But yet you do it anyway.
You claim that George challenges Shell’s investment in tar sands but I don’t think that’s entirely accurate. GM even states that he just sees this as the Shell discharging its duty to its shareholders. The problem is the dishonest nature of the advertising campaign because it draws attention away from the reality of the situation, like the Alberta tar sands project and seeks to re-assure people about climate change.
This is corrosive because it leaves the impression that clever people in white coats are on the case when it comes to climate change, so don’t worry! In reality like you point out, it is the responsibility of all of us. Now isn’t the time to be re-assured, now is the time to be worried, pay attention and most importantly, get involved.
The most honorable, helpful thing that Shell can do with regards to climate change is to take its well-funded lobby and back down. Stop advertising, donating, debating and leave political decisions to individuals like you and I, not legal entities.
All the best,
Martin
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