European oil companies made headlines in June 2015 when they came out in favour of a global climate deal. ‘We want to be a part of the solution,’ wrote BP, Shell, Total, Statoil, BG and Eni, in a letter to UN climate chief Christiana Figueres. The solution, as they see it, revolves around carbon pricing and a shift from coal to gas.
However, this was not the ‘man bites dog’ story some newspaper editors perhaps imagined. To anyone who has watched the companies’ disruptive tactics over the past 20 years, it was more one of ‘dog is still biting man’.
The only reason these companies won any plaudits is in contrast with their US cousins, typified by ExxonMobil. As early as 1990, Exxon’s Brian Flannery was trying to water down the Intergovernmental Panel on Climate Change (IPCC)’s first report.1 He would attend numerous climate negotiations and IPCC meetings until his retirement in 2011.
In 1989, Exxon formed the Global Climate Coalition (GCC), together with Shell, Chevron, Texaco and others, to oppose action on climate change. Throughout the 1990s, the GCC publicly sowed doubt about climate science – a 1992 briefing stated ‘stabilizing carbon dioxide emissions would have little environmental benefit’2 – while regularly attending international climate negotiations, to play countries’ economic interests against each other.
After the 1997 Kyoto Protocol – which the GCC spun as ‘unilateral economic disarmament’3 – climate lobbying focused more closely on the national level. US government papers later revealed that the GCC helped persuade George W Bush to withdraw from the Kyoto Protocol in 2001.4
Oil companies use the ‘3-D’ PR strategy: deny, delay, dominate
The GCC was wound up in 2002, after several members succumbed to public pressure and left. But US oil companies continued to fund climate denial. An internal memo from the American Petroleum Institute stated: ‘Victory will be achieved when average citizens understand (accept) uncertainties in climate science.’5
ExxonMobil provided at least $23 million of funding to climate denial groups between 1998 and 2010. In 2008, the company reacted to criticism by ending funding of nine of them, but it continued to fund 28 others.6 It remains an active member of the American Legislative Exchange Council (ALEC), one of the most effective lobbyists against climate legislation in the US.7
The European approach is different, though the 2015 announcement was nothing new. BP and Shell first attempted to position themselves as climate leaders in 1997, when they acknowledged the reality of the threat, then left the GCC. Then too, their proposed solution was carbon pricing and a dash for gas.
At the time, Shell was struggling with its reputation crisis after Ken Saro-Wiwa’s execution in Nigeria and the Brent Spar fallout, and BP was under fire for its links with Colombian death squads. In response, the two companies pioneered a new approach to public relations, founding the doctrine of ‘corporate social responsibility’. Climate change would be a key part of the package.
One consultancy advised BP on how to handle NGOs, classifying them using the metaphor of marine animals.8 ‘Sea lion’ NGOs were always friendly to companies, and so might be the traditional partners, but did not justify a lot of effort. Conversely, ‘sharks’ were always aggressive, and there was little point in trying to court them. Instead, BP’s effort should go into partnerships with the ‘dolphins’, who were friendly only to the more progressive companies, while working to convince the selectively aggressive ‘orcas’ that BP was not the worst player. Many NGOs took the bait, helping to solidify BP’s new reputation as a climate leader.
Shell produced a series of reports claiming it would integrate ethical concerns into its business. The first, entitled ‘Profits and Principles: Does There Have to be a Choice?’, won a PR award for representing ‘the epitome of issue management’.9 Both companies boosted their credibility with renewable energy investments, though these were consistently below a hundredth of what they invested in oil and gas. BP’s wind and solar investments peaked in 2006 at $300 million10; in comparison, its ‘Beyond Petroleum’ advertising campaign in 2000 cost $200 million.11 Both companies dumped their renewables divisions in 2009.
Taking the bait
In reality, BP and Shell’s new positioning had the same goal as the US companies’ denial: slow down or divert action on climate, to prevent it from impacting their business. It’s the ‘3-D’ PR strategy: deny, delay, dominate.
Let’s start with one of the companies’ prescriptions: a price on carbon. The most developed carbon pricing mechanism in the world has been Europe’s Emissions Trading Scheme (ETS). It has been universally recognized as a complete failure, awarding far too many ‘permits to pollute’. Permits have been so oversupplied that the scheme is lagging behind actual emissions reductions, rather than driving them.12
Shell led a lobbying effort that ending binding European Union targets for renewable energy
What went wrong? Research by Platform and Corporate Europe Observatory13 reveals that BP was a key architect of a British prototype scheme, and worked hard to ensure Europe’s attempt followed the same model. BP and others then repeatedly lobbied for an excessive allocation of emissions permits.
Meanwhile, if the companies want carbon pricing, to create the incentives for a low carbon future, do they also oppose fossil fuel subsidies, which have the opposite effect? Um, no... When Britain's March 2015 budget gave a $2-billion handout to oil companies (over five years), combined with the biggest cut in oil production taxes since the early 1990s,14 Shell’s Paul Goodfellow welcomed the changes as ‘vital to encourage investment’.15 BP was less grateful when Alaska proposed $5.2 billion of tax breaks (over six years) in 2013: it ‘does provide some good steps forward to making Alaska more competitive, but we don’t feel that it goes far enough’.16
Blowing up the gas bridge
If the idea of gas serving as a ‘bridge’ fuel to renewables ever made sense, it would need to be a substitution, not a supplement: any increase would have to have been matched by a rapid reduction of coal and oil use.
The IPCC estimates that for a two-thirds chance of keeping global temperature rise below 2°C, total emissions since the Industrial Revolution cannot exceed 2,900 gigatonnes of carbon dioxide equivalent.17 By 1997, half of this ‘carbon budget’ was left; now we’re down to less than a third. At current rates, we will hit the limit in 2037.
Even in 1997, known reserves of fossil fuels already exceeded the budget. Now, using gas as a bridge would require coal burning to stop overnight, and nearly half of oil reserves to be left in the ground.
The six companies which advocated climate action in June have indeed increased their extraction of gas since 1997 – by 76 per cent – but they have also increased their extraction of oil, and show no intention of cutting back. They have blown up the bridge.
Meanwhile, in 2011, Shell led a lobbying effort against European Union targets for renewable energy deployment, in favour of a larger role for gas. ‘Gas is good for Europe, and Europe is good at gas,’ said Shell’s Malcolm Brinded.18 The company enlisted the UK government, and a coalition of energy companies,19 to make the case. The lobbying succeeded in ending binding targets for Member States’ renewable energy and energy efficiency after 2020.
Keeping on digging
In 1997, Shell acknowledged the problem that fossil fuel reserves already exceeded the carbon budget. ‘How far is it sensible to explore for and develop new hydrocarbon reserves? ’ asked Heinz Rothermund, a Shell UK Managing Director, in a lecture. ‘Given that the atmosphere may not be able to cope with the greenhouse gases [from] reserves discovered already?’20
Yet, along with other oil companies, it accelerated the search for more oil. Shell’s spending on exploration exploded from around $1 billion in 1997 to $3 billion in 2007 and nearly $7 billion in 2014.21 As a result, oil and gas reserves have grown, while the carbon budget has shrunk.
They portray continued growth of oil and gas as inevitable, creating a fossil fuel fatalism that becomes a self-fulfilling prophecy
BP, Shell and Exxon all now state that they work on an assumption that the 2°C limit will be exceeded, and it is on this basis that they plan their investments.
They justify this by arguing that continued fossil fuel expansion is a moral duty, as it provides energy to the world’s poorest people. ‘The issue is how to balance one moral obligation, energy access for all, against the other: fighting climate change,’ says Shell CEO Ben van Beurden.22 The claim conveniently sidesteps the reality that the poorest are the hardest hit by climate change, and that decentralized renewables are generally the most effective way of delivering energy to those who currently lack it.
The aim is to portray continued growth of oil and gas use as inevitable, creating a fossil fuel fatalism that undermines efforts to create alternative futures, and becomes a self-fulfilling prophecy.
When the six European oil companies wrote to the UN in June, they said they wanted to be more involved in climate policymaking. ‘Our companies would like to open direct dialogue with the UN and willing governments,’ they wrote, to find ‘a workable approach.’ ‘Workable’ here is a euphemism for ineffective: an approach that doesn’t reduce their profits.
In September, Shell went a step further, co-founding the Energy Transitions Commission to provide ‘independent’ advice to governments on how to address climate change while serving economic development.
Oil companies have no place in climate policy. They don’t believe in keeping the world below the 2°C limit, and argue against action to reduce fossil fuel use, while digging us ever deeper into the problem. Whether obstructing from the outside, or putting on the brakes from the inside, oil companies have been a consistent barrier to progress.
When the international community regulated tobacco, it wisely cut tobacco companies out of the process. The UN’s Framework Convention on Tobacco Control23 not only excluded tobacco industry representatives from international negotiations, but also prohibited industry lobbying at the national and international levels.24
A coalition of organizations led by Corporate Accountability International is calling for a similar approach to be applied to climate change. Far from giving oil companies greater access, policymakers should be working to get them out of the way.
GCC statement, 11 December 1997. ↩
SustainAbility, ‘Strange Attractor’, 1997. ↩
Issue Management Council press release, 21 January 1999. ↩
Annual reports. ↩