Lord Browne urges fossil fuel giants to prove their worth, as executives downplay climate risk at major industry event
(Pic: arbyreed/Flickr)
By Alex Pashley
Major carbon polluters must show they are positive for humanity or face sharp slides in future market worth, according to BP’s former CEO, Lord Browne.
In a stern warning to energy executives at an industry conference on Tuesday, Browne said companies’ failure to show how they improved lives was “very problematic” as countries got serious about climate change.
“Industries come and go depending on their ability to connect with society,” said the British oil company’s chief executive from 1995-2007.
Fail to do that and risk losing 30% of your value, he warned. “If you don’t believe me, just look at the track of the stock of Volkswagen recently. It’s exactly that.”
Analysis: VW scam shows business climate spin deserves closer scrutiny
The share price of scandal-hit German carmaker VW has halved on a month earlier, after it emerged it rigged the emission readings of 11 million diesel vehicles.
Amid intensifying debates on fossil fuel divestment and the idea of “unburnable” carbon reserves to avoid catastrophic climate change, oil companies must seize the initiative, Browne urged.
Ahead of a UN summit in Paris this December to sign a global warming pact, engagement was key.
It was intended as a wake-up call to industry executives and analysts at this week’s Oil and Money conference in a ritzy London hotel.
But by his 5.30pm speech, the audience – heaving during a panel session on oil opportunities in Iran earlier in the day – had thinned out.
Room thinning out as panel on climate change starts. Oil execs less keen than they were to hear Iran oil prospects pic.twitter.com/GkNmcuSYFF
— Alex Pashley (@A_Pashley) October 6, 2015
Shell chief Ben van Beurden took climate change head on at the outset, urging governments and competitors to put a price on pollution to cut greenhouse gas emissions.
That built on its call made with five other European energy producers to set up carbon markets, which would spur renewables and drive switching from coal to natural gas.
A representative for Norway’s Statoil also vowed not to hunker down until the storm passed, but become “a fit energy provider for the low carbon world,” as he collected a “new energy leadership award”.
Report: Oil companies register UN climate commitments
Aside from that, climate action was given short shrift at the 36th edition of the bumper event, thronged by Gulf State oil ministers and international chiefs.
The conference’s focus was fixed on the short-term woes of volatile oil markets, roiled by America’s shale revolution and Saudi Arabia-led OPEC’s rising production.
Oil prices have collapsed over the past year, with benchmark Brent crude falling below $50 a barrel from a peak above $115 last June.
OPEC members are set to shelve US$650 billion worth of energy projects in 2015 – a 22% cut on last year, said chief Abdulla El-Badri.
The idea that this was structural and not a temporary blip didn’t register. El-Badri said the slump was cyclical and the price would eventually rebound.
Report: OPEC chief defends members over missing climate pledges
In a sign of his unfamiliarity with UN climate talks, El-Badri relied on co-panelist and IEA chief Fatih Birol to explain that countries were submitting carbon-cutting pledges ahead of a Paris deal.
In conservations on the sidelines, executives poured scorn on the idea the global economy would be rid of fossil fuels by 2100.
An American working for a Gulf State oil company, who did not wish to be named, said countries had no real political will to transform the energy system.
“They will rush towards the low-hanging fruit of energy efficiency, but nothing lasting will come off,” he proclaimed.
Though decarbonisation this century was exactly what the G7 called for earlier this year.
Emissions must fall 40-70% by 2050 on 2010 levels for the planet to avoid cooking more than 2C by 2100, the bloc of advanced economies said.
Report: Carney urges G20 to tackle financial risks of climate change
Nor were most speakers concerned about regulations impinging on oil demand.
“In the Middle East with the abundance of resources, producers there are just looking at how they can take a profit from these resources rather than focusing on things like a carbon tax,” said Kuwait Petroleum Corp’s Haitham Al-Ghais.
BP chief economist Spencer Dale reiterated his company’s forecast that emissions would rise 25% by 2035 and fossil fuels recede from providing 85% of the world’s energy needs to about two thirds.
After a buoyant week in New York, in which big companies vowed to power themselves 100% on renewable energy and fossil fuel divestment entered the trillions, the tone couldn’t have been more different.
Nigel Topping, CEO of pro-climate multinationals network We Mean Business, said companies were largely oblivious of the content of UN negotiations, which chart emissions trajectories for the next 15 years.
“There’s very little serious conversation about the huge structural changes of the G7 delivering on the commitment to decarbonise the whole economy. A lot of that is because people don’t see their careers lasting long enough to see it.”
He cited an official from Italy’s ENI who expected Paris to flesh out plans for a carbon price – despite it being almost absent from the negotiating text.
Others were expecting the Paris deal to be non-binding, giving it a lack of immediacy.