Now that Exxon has vocally expressed its support for a carbon tax (see Strategic CSR – Exxon), it seems that the rest of the oil and gas industry is falling over itself to help tackle climate change. The article in the url below, for example, announces an effort by ten companies (including Saudi Aramco, Shell, and BP, but not Exxon and Chevron), who have committed a total of $1bn in a "decade-long plan to fight climate change":
"The 10 companies unveiled their plan … as the Paris climate agreement came into force, underlining growing energy industry concerns that the deal will spur governments to force the sector to capture or pay more for the planet-warming carbon emissions it produces. 'Don't worry, we've got it,' BP chief executive, Bob Dudley, said in London, explaining the $1bn investment would add to efforts each company was already making 'on the transition to a lower emissions world.'"
In other words, this sudden enlightened perspective is essentially being driven by the desire to avoid government regulation; it is also self-serving in that it involves investment in ways to burn oil more 'sustainably,' rather than discover alternatives to oil for our energy needs:
"The 10 companies, which also include France's Total, Norway's Statoil and CNPC of China, said they would initially focus their spending on measures such as carbon capture and storage systems, which trap CO2 emissions and store them deep under the ground or sea. Their $1bn will not be targeted at technologies that pose a direct competitive threat to their businesses, including renewable power or energy storage."
Equally, the investment is being criticized as minimal, given the revenues these companies generate, as well as the scale of the problem:
"Their $1bn investment over a decade is also small compared with the $348bn spent globally last year on clean energy and it pales beside the sums experts say would need to be spent on carbon capture measures to meet the Paris agreement's goals. The bill could reach $4tn between now and 2050, according to the International Energy Agency, although the global energy advisory body thinks the figure could be higher without carbon capture systems."
Nevertheless, the initiative does highlight the fact that, any solution to a transition away from carbon-based energy sources will require the co-operation of the oil and gas companies. There is simply too much money at stake to expect them to role-over the make way for alternative energy sources. The best way I have seen to achieve this is to somehow incentivize these companies to leave their oil reserves in the ground – in essence, to buy the oil from them before it is extracted (see Strategic CSR - Divestment). The details of how this might work, however, and how to you prevent the distorted incentives for these companies to 'discover' more oil that then remains underground, is less clear. What is clear, however, is that neither the industry nor the governments of major oil export/import countries are yet serious about tackling the problem.
Instructor Teaching and Student Study Site: https://study.sagepub.com/chandler4e
Strategic CSR Simulation: http://www.strategiccsrsim.com/
The library of CSR Newsletters are archived at: https://strategiccsr-sage.blogspot.com/
Big Oil in $1bn decade-long plan to fight climate change
By Pilita Clark
November 5/6, 2016
The Financial Times
Late Edition – Final