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Energy Companies Ready to Deal with Climate Change
26 November 2006
Washington Post. Top executives at many of the US’ largest energy companies have accepted the scientific consensus about climate change and see federal regulation to cut greenhouse gas emissions as inevitable.
The companies have been hiring new lobbyists who they hope can help fashion a national approach that would avert a patchwork of state plans now in the works. They are also working to change some company practices in anticipation of the regulation.
...It’s Shell’s belief that we have to deal with greenhouse gases. From a Shell point of view, the debate is over. When 90-plus percent of the world’s leading figures believe that greenhouse gases have impacted the climate of the Earth, who is Shell to say to say, let’s debate the science?
...We can’t have 50 state policies on greenhouse gas emissions. We believe, Shell believes, we need a national approach to greenhouse gas management and how that would work across our industries, not only the gas and oil industry.
—John Hofmeister, president of Shell Oil Co.
Hofmeister and other top energy company leaders back a proposal that would cap greenhouse gas emissions and allow firms to trade their quotas. Paul M. Anderson, Duke Energy’s chairman and a member of the president’s Council of Advisors on Science and Technology, favors a tax on emissions of carbon dioxide.
Exxon Mobil Corp., the highest-profile corporate skeptic about global warming, said in September that it was considering ending its funding of a think tank that has sought to cast doubts on climate change. And on Nov. 2, the company announced that it will contribute more than $1.25 million to a European Union study on how to store carbon dioxide in natural gas fields in the Norwegian North Sea, Algeria and Germany.
“If we had our druthers, we’d already have carbon legislation passed,” said John L. Stowell, Duke Energy’s vice president for environmental policy. “Our viewpoint is that it’s going to happen. There’s scientific evidence of climate change. We’d like to know what legislation will be put together so that, when we figure out how to increase our load, we know exactly what to expect.”
Next week, the Supreme Court will hear arguments on whether the federal government is obligated to regulate carbon dioxide as a pollutant; its decision could force the government to come up with guidelines.
(A hat-tip to Rafael!)
November 26, 2006 in Climate Change | Permalink | Comments (35) | TrackBack (0)
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That's great to read! Stationary power plants should be required to use CCS for there operations. CO2 affects us all, the science is in. A carbon tax with tradeable credits and a national cap makes sense. Tax carbon, allow credits for inovation and above and beyond approaches for limitation and limit the allowable total for the nation. Figure what is sustainable and fashion ecenemics to follow. That is government of the poeple for the people by the people. I hope the Supreme Court gets this one correct. The stakes are to high for Florida recount B.S. again.
Posted by: Andy | Nov 26, 2006 6:05:38 AM
Is is good to see that the latter day Flat Earth Society has finally acknowledged the earth to be round!
Posted by: Bill Young | Nov 26, 2006 6:23:17 AM
Bill Young, LOL! Thanks.
Posted by: Andy | Nov 26, 2006 6:28:00 AM
If you can't beat em, join em.
Posted by: Neil | Nov 26, 2006 6:29:20 AM
Heh actauly they had planned to do this 4 years ago but poor bush failed to screw things up enough to overcome the creepyness factor of keery. Kinda fubared everything on both sides of the political fence.
The entire "plan" if you can say america realy ever does have one was to stall for time so that the cost of converting was cheaper and so that other countries picked up the lions share of the bill for the initial work. Only no one ever expeted bush to get 2 terms least of all him;/
Posted by: wintermane | Nov 26, 2006 6:46:29 AM
While they are at it, they will make a buck too.
_3 things a company needs focus on, in order to operate most profitably, in the 21st Century:
1) Social contract/license is necessary in order to operate...or at least operate more profitably. Simply put, there is a relation between good works, clean operations, and good PR.
_Oversimplifying it, the better your image, the more easily you attract top talent, the better coverage the coverage by the media, and view of by influential and powerful people and groups, increasing likelihood of attracting business, and decreasing probability of litigation. Altogether, this helps to better the bottom line, thus stock price and credit rating. This is when everything else is equal, Vs a firm with a lower standings with society.
_The rise of NGOs the Internet, with opinionated and watchful bloggers, and a more conscious public consumer, also have much to do with this.
2) Lowering long-term risk to operations is another key point. Proactively going after problems w/in the reach of their own firms, or a group of firms through industry associations, or by any other means will bring about improved conditions, which lends to results that are more favorable. GHGs, with associated climate change, and environmental degradation are two specific targets
3) Identifying and exploiting inefficiencies, developing new strategies, tactics, and technologies to do it. All may help profit margins by tightening internal costs/expenditures, or externally through marketing and selling new products (business consulting to IT to optimization of warehouse logistics).
_All three have existed in one form, or another for years, centuries, if not always. This is also not all of the things they need to do, since virtually all normal rules of running a successful business, still apply.
Posted by: allen_Z | Nov 26, 2006 7:31:33 AM
"When 90-plus percent of the world’s leading figures believe that greenhouse gases have impacted the climate of the Earth, who is Shell to say to say, let’s debate the science?"
That is so true, scientific truth is always determined by the majority. Better red, than expert.
Posted by: Robert Schwartz | Nov 26, 2006 8:30:50 AM
Something I'd like to see happen:
Energy companies/Federal govt impose a tiered consumption tax on all energy produced by fossil fuels.
(Triple or quadruple rates above a certain kilowatt usage.)
It frustrates me that people waste so much energy on things they do not need such as leaving the AC on when nobody is home, leaving the lights/tv on, setting thermostats too high or too low & using a 50inch plasma tv that conumes 300watts/hr.
If people refuse to conserve on their own, maybe a hit to the pocket book will motivate them.
Posted by: cs1992 | Nov 26, 2006 8:44:56 AM
That is so true, scientific truth is always determined by the majority. Better red, than expert.
Poor thing. It must get you angrier every day to be progressively marginalized.
Posted by: pizmo | Nov 26, 2006 9:06:01 AM
Paul M. Anderson, Duke Energy’s chairman and a member of the president’s Council of Advisors on Science and Technology, favors a tax on emissions of carbon dioxide.
Kind of self-serving, since they're leading the fight for more nukes (at taxpayer expense, of course).
Posted by: pizmo | Nov 26, 2006 9:07:37 AM
The best long-term bet for energy companies is to start developing renewable energy, such as bio-methane, bio-hydrogen, bio-diesel, solar and wind energy. It has been costing more and more to pump oil from deeper and deeper wells, and exploration cost has been high without the returns like in the past. For example, in 2005, the oil companies put out over 100 billions USD for oil exploration. Imagine if they would invest some of that money on development of bio-energy and infrastructure. Then, we won't have to worry about running out of (polluting) petroleum again!
Instead of funding think tank trying to refute global warming, Exxon-Mobile could instead tell the same think tank to come up with strategy for a renewable energy future. High-temp electrolysis and gasification of biomass are two most promising ways of producing renewable hydrogen from solar energy, wind energy, and biomass. Hydrogen, when efficiently produced locally, will be the most efficient form of renewable fuel for the future. Bio-methane can also supplement hydrogen as transportation fuel for long-range application due to its higher energy density in compressed form.
Posted by: Roger Pham | Nov 26, 2006 9:15:41 AM
Rather than hire lobbyists, I would like to see them invest some of their $100B per year profits in renewable energy industries in a really BIG way. Thousands of new companies, employing millions of people making wind turbines, solar panels, constructing cellulose biofuels plants and doing research would boost the economy and provide more energy security for all of us.
Posted by: SJC | Nov 26, 2006 9:22:06 AM
CS1992:
I'm with you on this one. Using energy at 5 + times the world average is not a necessity nor glorious.
Hitting the pocket book with variable + progressive rates would certainly help.
Positive action programs (as applied in Vermount at a few States) also help to reduce waste and conserve energy.
Posted by: Harvey D. | Nov 26, 2006 9:55:38 AM
Energy companies exist to make money. They will adapt their tune to the shifting political winds only to the extent they have to to keep making money. Don't think badly of them for that - it's called capitalism, i.e. the worst way to run an economy except for all the others. The conclusion we should draw is that the sector is acknowledging the reality that the political climate did indeed shift massively on Nov 7 and, is looking to manage the change process.
Btw, Roger. Expect Exxon-Mobil to still drag its feet because of all the Western oil majors it is sitting on the largest proven reserves of crude oil. Shell and BP are producing faster than they are finding new resources, which threatens their share prices. For them, the gradual migration to biofuels is a matter of corporate survival, not environmental do-goodery. Their marketing departments just like to spin it that way.
Posted by: Rafael Seidl | Nov 26, 2006 10:59:30 AM
I think we'll see the rapid deployment of GreenFuel Tech's flue gas bioreactor system within the next few years. Their experiments in Arizona were a resounding success and they're licensing the technology from Australia to South Africa.
Posted by: Cervus | Nov 26, 2006 11:06:28 AM
From what I understand, all the oil companies pump more than they find to an average of 1 barrel found as proven reserves for ever 2 barrels pumped. Those are very round numbers, but they illustrate the problem.
Posted by: SJC | Nov 26, 2006 11:50:58 AM
Its good to hear oil company execs admitting climate change is real.
But... don't they realize that oil will be basically forbidden fruit? There is no way to sequester emissions for 500 million cars. Sequestering will probably be a no go as far as a global solution to co2. Just too much of the stuff when burning fossil fuels.
Local transportation will be powered with batteries.
Are any oil companies realizing this (that the new oil is batteries) and investing heavily into their research?
Posted by: Matt | Nov 26, 2006 12:39:18 PM
Matt:
The only way is to find a more carbon-neutral fuel that can run on those 500 million cars. Biobutanol, for instance.
Posted by: Cervus | Nov 26, 2006 1:13:57 PM
Chevron currently controls most of the NiMh battery technology through a subsidiary. Li-Io is better tech and less encumbered by IP monopolies.
Bioreactor conversion of flu gases at coal fired utilites should set an example of how to reduce carbon and convert it to new revenue streams (biodiesel and algea byproducts.
Global Green Solutions is piloting a system in Texas and is positioned well with the oil/gas industries.
Posted by: gr | Nov 26, 2006 2:09:46 PM
It seems reasonable that they should look for US wide regulation rather than a state by state approach.
The main thing is to reduce the amount of C02 released which jars a bit with the Oil companies' basic mission.
There is so much waste in affluent countries as cs1922 says - it should be easy to get it down by say 30% without dropping people's standard of living at all.
Beyond that thengs might have to change, but not by much. Just drive smaller cars, fit CFL's turn down the AC/heating etc.
You can do a lot with CFls and underwear.
Tiered fuel charges would be very hard to implement - how would you set the tiers - by Household, by person in a household, by adult etc etc.
Probably better to just have carbon taxes across the board. No exceptions.
Even this is not enough as people will pay an awful lot to keep driving and most people cannot change their cars just because the price of gas has gone up 30%.
It will take 5 to 10 years to refresh the nation's car stock.
I think it will take a stick and stick approach - carbon or fuel taxes (like we have in Europe) and fuel efficeincy standards.
On the bright side, the government will earn loads from fuel taxes - they just have to get reelected.
Posted by: mahonj | Nov 26, 2006 2:20:47 PM
In Denmark, where tax is more than 50% of the price of gasoline, the Minister of Finance is currently stifling all attempts to either 1) reduce the car tax on economical cars or 2) reduce carbon tax for biofuel because either attempt to reduce GHG emissions will result in less tax..!
"Temporary" tax increases tend to become permanent, once they get enrolled into the state budget. And that's coming from someone who's usually pro behaviour-altering taxes.
Maybe the problem is just that our minister is an ignorant sonofabitch, totally devoid of vision..?
Posted by: Thomas Pedersen | Nov 26, 2006 2:54:36 PM
Thomas, how much is a litre of gasoline in Denmark ?
It is currently about 1 Euro in Ireland - mostly tax (and the same for diesel).
How much purchase tax do you pay on buying cars ?
We pay 22 - 30% + 21% VAT in Ireland.
hence cars are expensive (!)
This is just to help those in the USA realise how cheap motoring is in the USA.
- and to understand why diesel is so popular in Europe.
Posted by: mahonj | Nov 26, 2006 3:39:47 PM
for reference, 1 snazzybuck/liter = $4.99/gal
compared to ~$2/gal in most states.
so, 15k miles at 15mpg (average Atlanta annual commute in an SUV) would cost $5k/yr instead of $2k.
thats a lot of money, but still probably not a deal-breaker for people who choose to commute alone and live in the suburbs for personal and family safety reasons.
so, bring on the inevitable carbon taxes, just don't expect them to accomplish much.
Posted by: shaun mann | Nov 26, 2006 10:38:06 PM
Ya politicos in america are already freaking out at the fact gas taxes are gona go to hell in a handbasket as alt fuels take over.
As for the oil companiesas always they make exactly about 9.5% profit. They have always made roughly that amount.
Posted by: wintermane | Nov 27, 2006 2:59:07 AM
As for the oil companiesas always they make exactly about 9.5% profit.
LOL!!
I'm sorry - I had to laugh. The oil companies do a great job of telling the public how low their profit rate is, while telling investors how high it actually is.
Do you understand the difference between net income and return on average capital employed? More importantly, do you understand why the latter is the true success measurement employed in integrated oil & gas?
Income net of revenues is essentially meaningless.
Posted by: pizmo | Nov 27, 2006 8:19:11 AM
Hydrogen is comes from fossil fuel. Which means it has to be extracted, processed and delivered at 3 times the cost of gas since it takes 3 times more fossil fuel to get the equivalent hydrogen from it.
This means 3 times more CO2 from processing fossil fuel.
We need to concentrate on solar energy which is as cheap as natural gas for electricity generation. See nanosolar.
Also we have to put emphasis on electric cars such as the 400 BHP pick up, 200 mile range, 10 minute fillup developed by phoenix motors.
http://www.popularmechanics.com/automotive/new_cars/4201003.html
Posted by: Jay Lemieux | Nov 27, 2006 11:10:47 AM
Hydrogen is comes from fossil fuel.
No, it can come from fossil fuel. It doesn't need to.
Which means it has to be extracted, processed and delivered at 3 times the cost of gas since it takes 3 times more fossil fuel to get the equivalent hydrogen from it.
This means 3 times more CO2 from processing fossil fuel.
Specious reasoning unsupported by facts.
Posted by: pizmo | Nov 27, 2006 11:14:45 AM
Jay Lemieux needs a chemistry lesson me thinks.
Fossil fuels are a variety of Hydro-carbons. These are usually large molecules made of H and C bond together. It is true that you can extract the H and have a bunch of leftover C. That does not mean breaking up hydro-carbons is the only way to create H.
Hydrogen is only a form of energy storage as a previous comment mentioned.
Posted by: HighDroGen | Nov 27, 2006 12:49:21 PM
Yes I know EXACTLY how it works. The oil companies have always done a very siple thing. They make the fuel and then tack on a profit. Its simple and it works even when fuel prices jump around like crazy.
But its realy designed for lower fuel cost rates then currently exist.
But they sure arnt gona turn away the profits now as theyare all investing in hundreds of pojects most of wich wil fail. what is 100b a year profits industry wide when the next platform they might have to buld may cost 25 billion each? Or they may have to sink 40-50 billion into coal to liquids or god forbid they may have to BUILD an entire nuke imdustry just to provide the fuel they sell?
They are quite litteraly staring trillions in future investments right in the face and are amn glad they have a buffer for now. They sure as hell wont have it for long.
Posted by: wintermane | Nov 27, 2006 2:02:34 PM
But they sure arnt gona turn away the profits now as theyare all investing in hundreds of pojects most of wich wil fail.
Reinvestment isn't tracking increased profitability.
They are quite litteraly staring trillions in future investments right in the face and are amn glad they have a buffer for now.
So the $400 million given to the departing CEO of XOM was a "buffer"?
Posted by: pizmo | Nov 27, 2006 3:32:34 PM
"TXU Corp. is planning to spend $10 billion to build 11 new coal-fired power plants, which would more than double the company's carbon dioxide emissions, from 55 million tons to 133 million tons a year. That increase in emissions is more than the total carbon dioxide pollution emitted in all of Maryland or by 10 million Cadillac Escalade sport-utility vehicles."
Let me see if I understand this. I am supposed to pay extra $5K for a green car, such as Toyota Prius. Then I am supposed to spend say $30Kish for solar panels and wind turbines to generate green electricity. Altogether I am supposed to spend close to $50K over the next couple of decades to reduce my own CO2 emissions.
Meanwhile these fellas are going to spend $10B to generate vast amounts of CO2 and supply electricity to the factories that make SUVs that will generate yet more CO2.
Is anyone still wondering why green doesn't sell?!?!? Really what is the point? Few measly watts from very expensive solar panels have no chance against MWs from these massive coal plants. We'll get global warming anyhow. This is like Borg, "Resistance is futile"
Geeez
Posted by: q | Nov 28, 2006 6:37:21 AM
I think that the problems with the actions of the energy companys are complex and date back to the time when certainly here in europe most energy production was in the state sector. Here in italy we have the probably the highest energy costs in the whole of europe , for example the cost of heating our house last year in the coldest four months of the year was around 500 us dollers per month, yet there is no actions taken by the state to encourage saving , ie correct insulation etc.
this year I have embarked on a series of works on the house to improve its performance, changed the roof and fitted 8 cm of natural cork insulation, fitted solar panels to heat the domestic hot water , and recently changed the gas heating system over to a condenser type of boiler, last year I changed all the windows over to double glazed units . This all costs money but should deacrease our carbon footprint considerably in the future years. However I seem to be in the minority certainly in ths part of the world, most houses having little or no insulation, and indeed new houses being built with only 2 cms of expanded polysterene in the roof!
In Italy we survive in winter on imported gas from russia ,and indeed last year it nearly ran out over a long cold period , causing near panic on the part of the govenment. Yet still there are no incentives to change policy, and to encourage people to save , low energy bulbs are kept under the counter in the local electrical shops etc, not on display.
I think the problem lies with consumpion , in our capitalist societys this is deemed to be good ,providing income for the share holders.
Ask anyone here what are the major shares held in their own pension portfollios and the answer will almost certainly be energy and oil company stocks
the reason is obvious these stocks provide strong and sustained growth over a long period, large companys also invest their employees funds into these stocks,
and at the top of the scale so do govenments . Any reduction in consumption is a probable headache for these adminstrations , pension plans not performing, pushing more realiance onto the state to provide for people in their old age, in many european countries the state pension systems are very close to collapse anyway.
Governments need to be seen to be to be doing something about the dreadful state we have got ourself into , yet when the shouting and chest beating is all over they just slip back into their old ways, for example witness Mr blairs performance a month or so ago after the realease of the stern report into the economic damage that climate will inflict on the world, since then nothing has been heard or done, and now they want to spend some 32 billion pounds on a new nuclear deterant for the UK, if this money was spent over the next twenty years investing in new tech to reduce the UKs carbon footprint that would be progress.
So I am afraid we are stuck with it . there is a saying " you are what you eat" and this is true with governance , " we are who we elect" until this sort of short term , and purly economic thinking can be removed from governmental levels we are finished, and to think that at one time we thought that nuclear weapons was going to be the end of us all!
Posted by: andrichrose | Nov 30, 2006 3:17:59 AM
There is money to be made in energy and that is the driving force. Coal is cheap and as a source fuel allows power plant owners to make money hand over fist. That is why W and Company have 86ed all the coal plant upgrades that Clinton and Gore worked on.
Posted by: SJC | Nov 30, 2006 8:58:25 PM
Of course reinvestment isnt trackingl. For one thing alot oinf nevestors are nervous and simply want MONEY nd alot of energy companies are nervous and are building lquid assets to buy into whatever winds up working.
As for the big arse returment... very likely the contrsct stated a certain percent of profits or some such and as such hes one damn happy rich dude.
Posted by: wintermane | Dec 4, 2006 3:28:06 PM
As an advocate for biodiesel,vege oil / compression engines / gassified systems since 1987, I have been involved in this issue by understanding the mentality of the user. Whether the desire for production is supply driven, or demand driven, is an issue for the capitalist with deep pockets - to fill - although more spontaneous results occur from the shallow pockets that change pop out of with the faith for a better tomorrow. Self sustainability, and de-centralized energy production model Autonomy, and Anarchy . But I'm not so sure that the result is so unBEARable or full of BULLshit. somewhere in the middle the grass is greener for both to Co-exist. When modelling energy pyramids along side pyramids of Biotic consumers of energy we can see both opportunity and valiant efforts with the least of which the failures, but knowing one's position has made all the difference (some famous poet). Just wantewd to enter into a dead conversation.
Posted by: one4gaia | Apr 4, 2008 7:09:13 AM
