Big Oil and Climate Change
This isn’t working.
Wars are fought over hydrocarbons, fuelled by them. Here Ukraine is not an aberration but a continuation, the latest in a line of conflicts and coups that runs back through Yemen, Libya, Iraq, Iran and beyond, back to the coaling stations of the British Empire. Fossil fuels tie Europe to Putin’s government and enrich his oligarchs – just as they tie the US to Saudi Arabia’s murderous monarchy.
This just isn’t working. Many people are bracing for a drastic drop in living standards as, led by oil and gas markets, energy prices are skyrocketing around the world. Some countries have seen blackouts. But so far the boosted profits of Big Oil have been left untouched by the politicians in its thrall. Meanwhile greenhouse gases fill the atmosphere, past Earth’s breaking point.
Big oil and climate change
Imagine for a moment what life could be like if we were free of our dependence on oil and gas. Stepping out into a neighbourhood without the noise of the combustion engine, you breathe deeply, fresh air filling your lungs. It could be a world with fewer resource conflicts, one with good quality green jobs, where everyone has access to the renewable energy they need. Climate change’s worst effects could be avoided. Standing up to dictators would be easier.
Something is blocking that future – the oil and gas industry. For decades it has dumped its waste on communities; dumped workers according to its whims. For decades industry bigwigs have known that their products are imperilling the planet, burning up what the latest Intergovernmental Panel on Climate Change report calls ‘a liveable and sustainable future for all’.
Even as it has become crystal clear that time’s up, the Big Oil gang has obstructed action. Selling ever more, drilling ever more, investing ever more in fuels of the past, and investing too in the PR and politicians to deflect a clean future. Anything to distract from the incontrovertible, uncomfortable fact that fossil fuels are the core driver of climate change; that pumping and burning them has to stop – soon.
Close to 75 per cent of humanity’s greenhouse gas emissions come from burning fossil fuels – and nearly all our carbon dioxide emissions. The oil, gas and coal that could be extracted from existing wells and mines is more than twice what we can burn to avoid dangerous climate change. Planting trees or changing diets may be useful but will count for nothing if we don’t leave fossil fuels in the ground.
But Big Oil continues to expand, supported by both massive subsidies and private finance. Over the last five years Europe’s biggest banks alone have ploughed $406 billion into oil and gas companies. Overall, global subsidies for fossil fuels amount to around $1 trillion a year – $6 trillion if negative environmental impacts are factored in, according to the International Monetary Fund.
Such subsidies prop up Big Oil’s profits at our expense. BP, Shell, Chevron and ExxonMobil alone have cashed $2 trillion over the last three decades. UK-based BP and Shell announced a combined £40 billion ($53bn) in profits in February, just days after government agency Ofgem hiked energy bills by 54 per cent – adding £15 billion ($20bn) to households’ energy costs and leaving millions more facing energy poverty.
‘We need to clearly identify the organizations that are not only driving, but also profiting from, the climate crisis: namely the fossil fuel industry,’ says Tessa Khan, director of Uplift, which campaigns to end North Sea fossil fuels. ‘Each of us has been made to feel that individually we’re responsible, which is overwhelming and disempowering. But actually, there are a small group of companies who have deliberately derailed action on climate change: we can take them on and win.’
Green transition, what transition?
Against this dire backdrop, renewable technologies – vital for replacing our fossil energies with something better – have gone from strength to strength. Onshore wind and solar are now comfortably the cheapest ways of generating electricity. Unfortunately, apparent progress in some countries – often through the export of energy-intensive manufacturing to the Global South – disguises a big picture which is not quite so rosy.
Overall, in 2020 wind and solar accounted for just 10 per cent of global electricity generated, and only 1.6 per cent of total primary energy supply. But the increasing share of renewables in the energy mix has been outstripped by soaring usage of all forms of energy, including oil, gas and coal. Increasing sales of larger SUVs (Sports Utility Vehicles) are creating more pollution than electric vehicles are saving. Greenhouse gas emissions are at record highs and continuing to rise. ‘The gap between where we are and where we should be is widening. We are heading in the wrong direction,’ said Francesco La Camera, Director-General of the International Renewable Energy Agency last year.
Importantly, these sky-high emissions do not correlate with population growth but are linked to technological and social systems, as energy scholar Simon Pirani, who has researched fossil fuel consumption since the 1950s, has demonstrated. Economic growth has been the chief driver of increased consumption, he argues, with major crises the only interruptions to the upwards trend. And fossil fuel growth has been intrinsically linked to the expansion of capitalism. A step change in both technology and policy – actively phasing out production – would be needed for fossil fuel use to be cut as fast as is required.
Instead, the usual imperatives of the market remain: produce more, sell more. More goods, more cars, more flights, more energy, more oil. Big Oil still profits from selling hydrocarbons; utilities still profit from selling more electricity.
Tweaks are made to try and adapt networks to cheap variable renewables, but we are nowhere near the grid development required. Investor courts like those of the Energy Charter Treaty also hamper change. The evidence also suggests that in a market system many of the savings from energy efficiency will be swallowed up by increases elsewhere. Fuel-efficient cars may be driven further; cheaper electricity can lead to other wasteful usages – take Bitcoin mining. This ‘rebound effect’ can wipe out most of the efficiency savings, or even lead to higher usage overall. ‘Currently there’s not a market for producing less or using less,’ points out Sean Sweeney, a researcher with Trade Unions for Energy Democracy.
Meanwhile, green capitalism threatens new problems. Large scale renewable projects risk becoming a new form of extractivism, with Global North companies replicating the same dynamics seen with fossil fuels – building projects on indigenous land without consent, extracting profit while returning little benefit to communities. And if ever-increasing energy usage continues even renewables are likely to butt against resource limits, such as the availability of rare earth metals.
Neither is nuclear the answer. It is much more expensive than wind or solar – as well as adding to the risk of another planetary scale catastrophe through nuclear waste, the possibility of reactor meltdown, or creating the ingredients for nuclear weapons. Hinkley Point C, a reactor under construction in the UK, is likely to prove the most expensive building in the world, while a similar model in Finland took 15 years to build – too long for the climate.
Ending climate profiteering
It’s not as if this frenzy of production is working for everyone: 770 million people still don’t have access to electricity, despite all the harm to our climate
Big Oil has had decades to do the right thing – it can’t, and it won’t. Therefore, enabling a just transition must mean, first of all, bringing private oil and gas companies into public ownership. No-one should be able to profit from destroying the only home we all share – what income remains in the last years of oil must go to cleaning up the messes of extraction.
Public ownership is also a vital step to planning the transition of workers and communities into new, green industries, and to reorienting the skills and capacity of the oil and gas sector to renewables. It could bring an end to the lobbying and corruption the industry uses to obstruct climate action. ‘There is no longer a role for companies or profit-seeking as an organizing principle of this aspect of human society – not if we want to continue to have human society,’ argue scholars Johanna Bozuwa and Olúfémi O Táíwò.
Routes to public ownership could include using compulsory purchase laws to acquire assets, or purchasing majority stakes. (In 2020 majority stakes in the whole US fossil fuel sector could have been bought for only $350 billion.) Modifications to bankruptcy laws for fossil fuel companies could insist on government oversight (receivership) to protect the interests of workers and communities while ensuring wells and mines are wound down, and prevent bankruptcies being used to wriggle out of obligations.
Then there’s the role of lawsuits, which are beginning to mount up against fossil fuel companies. They could force the release of company documents making it increasingly tricky for them to defend themselves. If cases gain momentum they might recover significant sums from Big Oil, potentially making nationalization easier. ‘If fossil fuel companies are ever found liable for the full extent of climate damage that could be caused by their products... they would immediately be insolvent,’ says Bloomberg New Energy Finance founder Michael Liebreich.
Public ownership will need to align operations with the climate imperative – immediately ending all expansion, while prioritizing workers and communities and creating real democratic control.
The fossil fuel wind-down
While vital to a rapid transition, public ownership will not be enough. In fact, much of the world’s oil and gas production is already owned by national oil companies such as Norway’s Equinor and Russia’s Gazprom, as is the overwhelming majority of known reserves.
Ending subsidies for hydrocarbons should be the first step, and given their eyewatering scale could make much production unprofitable. This must include ensuring Big Oil pays all its social obligations, like pensions and clean-up costs, and be paired with increased support for ordinary people, particularly those whose livelihoods depend on cheap fuel.
Rapid, binding targets need to be set for reducing and then stopping production, guided by the available carbon budget and the principle of common but differentiated responsibility. Richer countries in the Global North, whose economies are less dependent on extraction, must move fastest – with a 2031 deadline, one new study suggests.
Some countries have already committed to phaseout: The Beyond Oil and Gas Alliance founded last November by Costa Rica and Denmark now has eight full members, pledged to licensing no new extraction projects and setting a ‘Paris-aligned’ date to end drilling.
‘We need to start with a target like eight years, say, and work back from that to what we have to do,’ says Grahame Buss, a spokesperson for new UK campaign group Just Stop Oil and a former principal scientist at Shell.
Ideally a phaseout will need an international agreement featuring binding caps on fossil fuel production, reducing year on year – but the absence of this is no excuse for rich countries to delay action.
Alternatively, a framework such as ‘Cap and Share’ could function even within a system where some privately owned fossil fuel companies remain. Oil, gas and coal companies worldwide would be required to buy a permit at auction for each unit of carbon extracted, but with strict caps, informed by science and cut rapidly. Income would then be redistributed to people, providing some worldwide cushioning from the impact of fuel-price hikes. These policies could also be pursued by one country or a group with permits applied to both production and imports.
Enabling a global phaseout will also require transferring resources and technologies to poorer countries. The G77, representing most low and middle-income countries, has called for annual transfers of at least 1.5 per cent of GDP from richer nations – nearly $800 billion in 2020. Not only do Global South countries need this be able to build their own clean energy future, the Global North has already burnt far more than its fair share of hydrocarbons. Spending on militaries – huge polluters – and other harmful sectors must be cut to protect living standards while making these transfers.
A publicly owned energy system
While a daunting prospect, this is also an opportunity to build a better energy system – one that works for all.
This will mean making renewable energy available to everyone as a public good, not for private profit – including the hundreds of millions currently without electricity or clean cooking, and the many more who are forced to spend large chunks of their income on essential needs. Access should not be determined by ability to pay: energy needs decommodifying. ‘We shouldn’t be able to profit from energy,’ argues Lavinia Steinfort, a researcher with the Transnational Institute. ‘The Global North needs to cut out non-essential energy use... Transition can never happen if buyer and seller are the organizing models.’
For Sweeney this means reclaiming the mission of energy utilities and electricity networks, which are major consumers of fossil fuels. Rather than being about selling more power, it should be about conserving energy – minimizing use – while maximizing renewable production. Again, public ownership would be the best route, enabling the transformation of networks in the shortest possible time. Public and active transport will also need support in preference to car use. The potential for savings is massive – Cambridge University researchers found practical design changes to the most energy hungry systems could cut demand by up to three quarters.
Meanwhile genuine democratic control should put workers and affected communities back in the driving seat. Gabrielle Jeliazkov, a campaigner with London-based campaign group Platform, points out that an organized workforce is a potential source of power and that just transition work requires climate and labour activists to work together. ‘Energy workers are a part of the communities that benefit or don’t benefit from the fossil fuel industry existing,’ she says. ‘We can either continue to live with an exploitative energy system, or build one that is for people rather than profit.’
Examples already exist. Uruguay has transitioned its electricity system to near 100 per cent renewable energy over a decade, and is setting up distributed generation alternatives for the 0.3 per cent of the population that cannot be connected to the grid. Led by state power company UTE, it has cut electricity costs and made wind power its largest energy source.
And in the northern highlands of Nicaragua, the Association for Rural Development Workers has been electrifying rural communities through small-scale hydro projects. Community members contribute labour towards construction, decisions are made democratically, and residents pay into a fund for maintenance depending on their income, rather than buying electricity.
Time to move away from big oil and gas
Fossil freedom is within our grasp. We know what’s at stake, we know it can work – and we know Big Oil will obstruct our way to getting there.
A struggle for energy democracy – for green energy for all – can bring together a range of movements. With boundless creativity, campaigns are beginning to draw together the threads that connect the climate crisis with fights to protect land and livelihoods from the fossil fuel industry, that link strengthening indigenous and Global South sovereignty with struggles for democratic control over resources and the energy system. From divestment campaigns, shown to push firms into emissions cuts, to lawsuits. From the indigenous people and allies putting their bodies on the line to stop pipelines, to campaigns like Stand LA, which last year won a motion for the phaseout of oil and gas extraction in Los Angeles, which disproportionately affects black and Latinx communities.
‘When we create space from our frontline communities to lead, we can make big change that not only benefit our most vulnerable, but all of us,’ says Rabeya Sen, policy director at Esperanza Community Housing Corporation, one of the coalition’s members.
Bans on lobbying and political donations can help cut off Big Oil’s corrupting influence. Supporting movement media and building political education will also be crucial.
‘Before we introduce solutions, there is a lot of work for movements to convince people that we actually need to end the fossil fuel industry,’ says Archana Ramanujam, co-host of the Future Beyond Shell podcast. ‘That means there is a discursive role for movements, to revoke the social license of fossil fuel companies. Campaigns for divestment and to ban fossil fuel advertising are great examples of this.’
Some have even called for sabotage. Author John Lanchester suggested a steady campaign could take SUVs, the second largest cause of increased CO2 emissions last decade, off our streets – hundreds in UK cities recently had their wheels deflated by the group Tyre Extinguishers.
This year we’ve seen workers in the UK and US push both countries towards banning Russian oil and gas after refusing to unload Russian fossil fuels. Fridays for Future youth activists held demonstrations in 130 cities in response to a call from Ukrainian activists to end hydrocarbon imports from Putin’s regime. Building labour power and solidarity further can help fight Big Oil’s stranglehold.
Rapid changes in the conversation are possible, as shown by the invasion of Ukraine, or, more positively, by the success of networks like Extinction Rebellion or the youth climate strikers. With clearer demands we can go further. Better understanding of what needs to change is the first step.
This article is from
the May-June 2022 issue
of New Internationalist.
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