Category Archives: Carbon pricing systems

Alberta Canada: Don’t cheer the new premier yet. Demand she break the oil barons’ vice-grip

Repost from The Guardian
[Editor:  Significant quote: “…investment in oil and gas creates fewer jobs than practically any other industry. Investment in the clean energy sector, on the other hand, creates 7 to 8 times more work. The oil barons aren’t essential “job creators”; they’re economic suppressers.”  – RS

Don’t cheer Alberta’s premier yet. Demand she break the oil barons’ vice-grip

Alberta’s climate plan falls far short of what’s possible: unleashing a green economy that creates hundreds of thousands of jobs and transitions off the tar sands

By Martin Lukacs, 24 November 2015 14.12 EST, updated 25 November 2015 10.28 EST
The Syncrude Oil Sands site near to Fort McMurray in Northern Alberta. Photograph: David Levene for the Guardian

Alberta’s new climate plan is drawing praise from sources that have rarely got on with the oil-exporter – Al Gore, labour unions and some of North America’s biggest green groups. At first glance, it’s not hard to see why: Alberta is promising an accelerated phase-out of coal, increased funds for renewable energy and impacted workers, and a price on carbon. It’s a major step hard to imagine scarcely a year ago, when the province was still under a multi-decade Conservative reign.

So why then are the oil barons celebrating? Beaming with pride, the heads of Canada’s biggest tar sands companies flanked Premier Rachel Notley during Sunday’s announcement.

Their hope: that Alberta’s globally tarred reputation will suddenly be scrubbed clean. Despite the lofty rhetoric, the government has committed only to bringing emissions below today’s levels by 2030 – making it even less ambitious than what Stephen Harper’s federal petro-state offered. This might be what the Premier meant when she promised that new pipelines – which companies desperately need to export tar sands – would soon benefit from “creative lobbying and advocacy efforts.”

The tar sands now has a glossy new sheen. Alberta’s plan sets a cap on their emissions – an acknowledgement that tar sands will no longer grow infinitely. Except it’s so high as to allow a staggering forty percent increase over the next fifteen years. And if a Conservative government returns to power, could it abandon the policy and ensure nothing is accomplished? In other words, this is a cap big enough to drive a three-story tar sands truck through.

Here’s the other reason the oil barons are cheering: they know they could be getting squeezed a hell of a lot more. After all, Alberta’s New Democratic Party got elected with a mandate for bold change. Albertans were tired of oil-soaked politicians who let companies vacuum up billions in profit amidst skyrocketing inequality and deteriorating public services. And the oil price crash made clearer than ever before the cost of a boom-and-bust economy built on a single volatile commodity.

Climate science backs that mandate for rapidly transforming our economy: it tells us that since we’ve delayed for so long, small reforms will no longer suffice. And Albertans understand the scientific reports that the vast majority of fossil fuels need to stay in the ground to avert dangerous climate change – the impacts of which they’ve already experienced in flooded Calgary and a drought-parched countryside. But while good times fueled denial, the ecologically suicidal politics of the establishment could be ignored. When the oil shock hit, they also started looking economically reckless.

As the oil barons thrash about in a self-induced crisis, this should be the time to part ways with them. Exxon is being investigated in the United States for having discovered the lethal consequences of climate change in the 1970s, then lied about it for decades while doing everything to make this catastrophe a reality. Low oil prices – which don’t look to be going away – have already forced the cancellation of extraction projects and created a thaw in investment throughout Alberta’s oil patch. The cost of renewable energy has dropped at incredible and unexpected speed. And just weeks ago, President Obama rejected the Keystone XL pipeline. It was not, as Premier Notley put it, a “kick in [Alberta’s] teeth.” But you couldn’t pick a better moment to kick the oil barons to the curb.

None other than the Economist – not exactly a radical menace to big business – has argued that the oil price collapse offers a “once-in-a-lifetime opportunity” to transform a dysfunctional energy system.

The Alberta government could start by vanquishing the myth that the oil barons are economically indispensable. As the oil industry has thrown almost forty thousand people out of work, they have proved their interests never aligned with Albertans. The facts always told a different story: investment in oil and gas creates fewer jobs than practically any other industry. Investment in the clean energy sector, on the other hand, creates 7 to 8 times more work. The oil barons aren’t essential “job creators”; they’re economic suppressers.

So why – and this applies equally to Prime Minister Trudeau – fixate on building cross-country pipelines, when you could create more jobs in clean energy? Tackling climate change could be not just a public relations strategy to finesse the exporting of Alberta’s bitumen. It could be a chance to massively boost and transform the economy – making it more healthy, just and humane.

Look at what Germany – a similar, industrialized nation – has accomplished. In just over a decade, Germany has generated 30 percent of their electricity through renewables and created 400,000 good jobs in clean energy, much of it community-controlled and run by energy cooperatives. Using the right policies, Alberta could make this transition happen even more quickly, with greater benefits for First Nations, workers, and those getting the worst deal in the current economy.

It’s not too late to seize the historic opportunity. The NDP could still put forward a plan to create 200,000 good, green jobs over the next several years. Reports have laid out how this could happen with targeted investment: in accessible public transit, in energy-saving housing retrofits, in eco-system restoration, and by taking advantage of Alberta’s incredible potential for renewable energy. Nature didn’t make Alberta an oil province. Erect new signs: welcome to solar, wind and geothermal country.

How should Alberta pay for this transition? By putting their hands on the enormous profits of the industry that created the crisis in the first place. The new carbon tax – and the royalty hike the government must vigorously pursue – should be raised to send a stronger message to the market to jump-start a transition off oil.

Economists have shown a fair and effective tax would look more like $200 a tonne. $20 or $30 a tonne will not cut it – especially when half of the revenue generated will return as subsidies to oil and gas companies and dirty electricity generators. At this rate, most oil companies will be spending barely $1 more per barrel of oil. Polluters should be paying, not being paid off. The only message this will send the market is to “dig, baby, dig.”

Rolling out a plan to create a new, cleaner economy that’s more just and prosperous would convince voters there is an alternative to the oil economy. At that point the NDP could initiate a debate on a moratorium on tar sands development that has been called for by a hundred of North America’s top scientists. Scientific studies show we could get all of our electricity from renewables by 2030, not just 30 percent as Alberta now promises; and an economy entirely run by renewables by 2050. When popular movements can build pressure for such a transition, one thing will be sure: oil barons won’t be hand-clasping on the stage – they’ll be howling from the sidelines.

These movements, with Indigenous communities leading the way, have pushed the Alberta government this far. Now they must push them farther, and faster. It’s not time yet to cheer Alberta’s premier. Demand instead she break the oil barons’ vice-grip on our future.

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    Investing in socially responsible companies makes sense

    Repost from the San Francisco Chronicle
    [Editor:  Significant quote: “Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.”  – RS]

    Investing in socially responsible companies makes sense

    By Tom Kiely, Lenny Mendonca and Steve Westly, September 17, 2015

    What do CalPERS, and many of the world’s largest sovereign wealth funds from Scandinavia to the Mideast have in common? They’re betting big on sustainability.

    In May, the California Public Employees’ Retirement System, a $307 billion retirement fund, said it will require its asset managers to factor environmental and social risks into their investment decisions. Norway’s giant national sovereign wealth fund, with $890 billion in assets built off its oil and gas reserves, is divesting from companies that mine or burn coal. A majority of the world’s largest institutional investors — pension funds, insurance companies, sovereign wealth funds — incorporate considerations about a business’s environmental and social track record into their investment decisions.

    However, too many company managers are still under the spell of the myth that shareholders are the only stakeholders who count. For decades, neo-classical economists suggested — and business schools taught — that sustainability investments unnecessarily raise a firm’s costs, creating a competitive disadvantage. Invest in anything but the bottom line, and you risk your survival we’ve been told endlessly.

    Shareholder idolatry holds executives back from making the investments they should to benefit the planet and their businesses in the long-term. For every corporate leader there is a regiment of laggards.

    Sure, most of the Standard & Poor’s 500 companies issue sustainability or social responsibility reports each year, but try reading those reports — they are a catalog of the tepid. Few companies integrate social and environmental factors deeply into their business strategies. U.S business organizations, such as the Chamber of Commerce, have opposed government-led efforts to reduce climate risk as overly bureaucratic and costly for business, while doing little to further business-led initiatives to improve corporate sustainability.

    That’s a big mistake. For instance, in one recent study, three Harvard Business School professors showed how “firms with good performance on material (our emphasis) sustainability issues significantly outperform firms with poor performance on these issues.”

    When it comes to these investments, the materiality test is crucial. Companies make all kinds of investments in sustainability and in corporate social responsibility programs. But only some of these things have a material impact on performance. The researchers looked at a set of environmental, social, and governance measures that both companies and their investors deemed material and measured their impact on stock prices.

    What did they find? Studying the performance of over 2,000 companies in six sectors, the researchers discovered the stock price of companies that invested to improve sustainability in ways that were material to their businesses outperformed companies that did not.

    This makes sense to a growing number of investors. Smart sustainability investments allow companies to attract better employees, improve their brands to sell more or sustain a price premium.

    What should be done? Companies must do a better job of compiling non-financial data on their environmental and social performance and report it to investors and other stakeholders. Fifty percent of institutional investors surveyed by PricewaterhouseCoopers in 2014 said they were dissatisfied with the environmental-social-governance information companies provided.

    Business leaders need to step up and champion these efforts.

    Also, executives should act like leaders in policy debates. In early June, 80 companies, including U.S.-based Coca-Cola and Mars, pressed the British government to fight for strong action against climate change in international talks, and to aggressively push for a long-term low-carbon plan for the United Kingdom.

    Where are U.S. business leaders on this?

    Business leaders should propose a concrete plan for pricing carbon, for instance. After all, more than 150 companies already factor a carbon price into their business planning decisions, according to a recent study by CDP, a sustainability measurement organization. Executives have the public clout to elevate the debate on carbon pricing, and the experience to propose pragmatic frameworks for getting this done.

    Corporate executives need to stop thinking of sustainability as a political discussion, and see it for what it is: good business.

    Tom Kiely is a member of the Standards Council of the Sustainability Accounting Standards Board. Lenny Mendonca is a consultant to leaders in the public and social sectors. Steve Westly, a former state controller, is managing director of the venture capital firm the Westly Group.
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      Why U.S. oil companies clash with EU peers on global warming

      Repost from The San Francisco Chronicle

      Why U.S. oil companies clash with EU peers on global warming

      By David R. Baker, Sunday, June 7, 2015 11:37 am
      John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images
      John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images

      The fight against climate change has opened a trans-Atlantic rift in an industry often seen as a monolith — Big Oil.

      Unwilling to sit on the sidelines of climate negotiations, Europe’s largest oil companies last month issued a joint statement calling for a worldwide price on the greenhouse gas emissions that come from burning their products. Such a price, they said, would help the global economy transition to cleaner sources of energy.

      The CEOs of BP, Eni, Royal Dutch Shell, Statoil and Total all signed the statement.

      None of their American counterparts did.

      Chevron Corp. CEO John Watson argued that his European colleagues are pushing a policy that consumers would never embrace. Focus instead on developing nuclear plants and natural gas reserves to fight global warming, he said.

      “It’s not a policy that is going to be effective, because customers want affordable energy,” Watson said last week, at an OPEC seminar in Vienna. “They want low energy prices, not high energy prices.”

      The split, analysts say, reflects the stark divide between climate politics in Europe and the United States.

      Europe already has a cap-and-trade system for setting a price on greenhouse gas emissions. Public debate over global warming revolves around how best to fight it, not whether it exists.

      In the United States, many conservatives still insist that warming is either a natural phenomenon or an outright hoax perpetrated by scientists, environmentalists and their political allies. Pricing carbon is a nonstarter for most Republicans in Washington, who are trying to block President Obama’s climate regulations. An effort to create a nationwide cap-and-trade system died in 2010, in part due to opposition from oil- and coal-producing states.

      “The domestic politics for the U.S. companies is different from what it is for the Europeans,” said Raymond Kopp, a senior fellow with the Resources for the Future think tank. “Right now, this is a difficult conversation for them to have domestically.”

      And that’s assuming they want to have it all.

      Exxon CEO Rex Tillerson has expressed support for a tax on greenhouse gas emissions but hasn’t pushed for it. The company formerly supported groups that questioned the scientific consensus on warming. Billionaires Charles and David Koch, whose wealth comes largely from oil and gas, have poured money into the campaigns of political candidates who oppose action on climate change. The Koch brothers have announced plans to spend $889 million during the 2016 election cycle.

      California policies

      And while Chevron’s home base lies in the only U.S. state with a full-scale cap-and-trade program — California — the company has often criticized the state’s climate-change policies, warning they could push energy prices higher.

      Last month’s statement from the European oil CEOs, in contrast, brands climate change “a critical challenge for our world” that must be tackled immediately. The executives urge governments that haven’t already done so to start putting a price on carbon.

      The statement, issued as an open letter to two top international climate negotiators, is notably silent on whether the companies prefer a tax on greenhouse gas emissions or a cap-and-trade system. Such systems — including California’s, which began in 2012 — force businesses to buy credits for each ton of carbon dioxide they emit.

      The CEOs make clear, however, that they eventually want a worldwide price.

      “Pricing carbon obviously adds a cost to our production and our products,” they write. “But carbon pricing policy frameworks will contribute to provide our businesses and their many stakeholders with a clear roadmap for future investment, a level playing field for all energy sources across geographies and a clear role in securing a more sustainable future.”

      Natural gas strategy

      The CEOs also hint at how their companies could thrive in such a future, by producing more natural gas and investing in renewable technology. Indeed, the companies already have extensive natural gas holdings, analysts noted.

      “If you’re on the board of directors of an oil company, you have to be asking yourself, ‘What’s our future in a low-carbon world?’ And with this letter, I think you see these companies trying to figure it out,” said Ralph Cavanagh, energy program co-director for the Natural Resources Defense Council environmental group.

      Chevron and Exxon have also invested heavily in natural gas, which when burned in power plants produces roughly half the greenhouse gas emissions of coal. Regulations limiting emissions, including the Obama administration’s effort to cut emissions from power plants, could help them.

      “I can’t imagine that Exxon or Chevron, which are companies that would benefit from a shift to natural gas, would be privately opposed to the Clean Power Plan,” said Amy Myers Jaffe, director of the energy and sustainability program at UC Davis.

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        Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

        Repost from ClimateProgress

        Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

        By Emily Atkin, June 3, 2015 at 4:19 pm

        Shell, Statoil, Total, and BP were four of six companies to request a price on carbon be included in international policy frameworks. Six large European oil and gas companies are asking governments across the world to charge them for the carbon dioxide they emit.

        In a letter released Monday, Shell, BP, Total, Statoil, Eni, and the BG Group told the chief of the United Nations Framework Convention on Climate Change that a price on carbon “should be a key element” of an international agreement to address global climate change. The letter came while U.N. negotiators met in Bonn, Germany to work towards that agreement.

        For those who want to fight climate change, this is good news. But it’s not totally unprecedented. Other high-emitting companies, including Shell, have expressed support for a carbon price before. And big oil companies have been expecting some sort of carbon price for a long time — the biggest ones have already incorporated it into their business plans. Exxon Mobil, ConocoPhillips, Chevron, BP, Shell; they’re all financially prepared for a carbon price if and when it comes their way.

        That more and more oil companies are now actively calling for a carbon price, though, is good for the climate fight. Total, BP, Statoil, and Royal Dutch Shell are all among the 90 companies causing the vast majority of global warming via their exorbitant carbon emissions. Now, they’re acknowledging they want to at least pay for some of those emissions, and that seems like a positive development.

        At the same time, it’s not like any of those six companies are halting their plans to drill. They haven’t recognized the science that says two-thirds of all proven fossil fuel reserves will have to be left in the ground to avoid catastrophic warming. Shell is still planning to explore for oil in the Arctic; BP just recently expanded its operations in the Gulf of Mexico.

        More importantly, though — at least in terms of getting a carbon price in the final U.N. climate deal — the European companies that signed the letter wield little power within the U.S. Congress compared to other big oil companies. This matters because the terms of that deal will almost certainly have to be approved by Congress if it is to include an enforceable price on carbon. Under U.S. law, any international agreement that binds or prohibits the United States from actions not otherwise mandated by law must be ratified by Congress.

        BP, Statoil, and Total might be actively calling for a carbon tax, but the three biggest U.S. oil companies — ExxonMobil, Chevron, and ConocoPhillips — aren’t. (ExxonMobil says they would prefer a carbon tax to a cap-and-trade system, but they don’t outright support it). And those U.S. companies are spending much more to influence Congress than the letter-writing companies on campaign donations and lobbying.

        Contributions include donations from company employees, PACs, and soft money contributions.
        Contributions include donations from company employees, PACs, and soft money contributions. CREDIT: Patrick Smith

        To be fair, European companies have more restrictions on how much they can give than U.S.-based companies do. But not only are the biggest U.S. companies spending far more to influence U.S. politics, their money is going to politicians who are actively fighting efforts to price carbon in the United States.

        During the 2014 election, for example, the biggest receiver of funds from ExxonMobil, Chevron, and ConocoPhillips was former Sen. Mary Landrieu (D-LA). Landrieu marketed herself, among other things, as the “key vote” that made sure a carbon pricing system wasn’t implemented by Congress in 2010. Other candidates supported by those three companies were John Boehner, Mitch McConnell, Mark Begich, John Cornyn — all have said they oppose a price on carbon.

        In fact, the Republican party as a whole in the United States is opposed to policies that price carbon. Though it says nothing about a carbon tax, the last official Republican party platform touts opposition to “any and all cap-and-trade legislation.” Unsurprisingly, the vast majority of all oil company campaign contributions is going to Republicans.

        oillobby (1)
        Oil Lobby CREDIT: Patrick Smith

        There are other reasons to be skeptical of any big oil company fighting for a price on carbon. For one, some companies have said they would support a carbon tax, but only if they can avoid other climate-related regulations. As David Roberts pointed out for Grist back in 2012, “the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped.” It’s also reasonable to assume that oil companies see profits increasing in the markets for low-carbon natural gas while the high-emitting coal industry tanks, and realize that coal would be hurt far worse by the policy.

        In other words, it is great that some of the world’s biggest contributors to climate change want to be charged for the carbon they emit. But we still have a long way to go before big oil actually joins the fight.

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