Leading private energy industry and Climate Change mitigation

1. Leading private energy industryand Climate Change mitigation Daniel Abreu MejiaErasmus Mundus Conference on Climate ChangeCEU, Budapest, 26 & 27 Feb, 2009

2. 1. The energy sector unsolved climate change dilemma 2. Climate change mitigation scenarios framework 3. The politics of technology perspectives in the energy sector: Private energy scenarios Vs. Alternative “climate sensitive” energy scenarios 4. Building the link between higher education and climate change: A case study

3. Theoretical Framework A neo-Gramscian approach to global environmental governance This perspective was initiated by Robert Cox (1981), enriched with discourse approaches by Stephen Gill (1995) and adapted to business by Peter Newell (2005). It is shaped by a rejection of mainstream positivist International Relations approaches on the basis of considering them as problem-solving theories. This framework proposes that international environmental governance is a profoundly political process that engages business, NGOs, state agencies, and intergovernmental actors in contestation over structures and processes of governance. This neo-Gramscian approach and its conception of hegemony provides a basis for a more critical view to corporate political strategy that emphasizes the interaction of material and discursive practices, structures, and stratagems in sustaining corporate dominance and legitimacy in the face of environmental challenges.

4. 1. The energy sector unsolved climate change dilemma The issue: More than any other environmental issue, climate change goes to the heart of the modern industrial economy. Energy, particularly fossil fuels such as coal, oil and gas, drives economic growth in the contemporary global economy. Most problematically, the largest and most powerful states and regions in the global economy (the US, EU and China) are sustained by the spendthrift use of the relatively available reserves of these resources, even tough they are becoming more difficult and expensive to obtain. The emerging economies are expected to deepen even more this trend.

5. Relationship between economic growth & energy demand Source: Exxon Energy Outlook (2008) “when the centrality of fossil fuels in producing global warming is combined with the centrality of fossil energy in industrial economies, it becomes clear that the fundamental interests of major sectors of those economies are threatened by proposals to limit greenhouse gas emissions” (Levy, 2005:73)

6. Leading private energy industry = Fossil fuel based energy industry (+80% of energy production is based on fossil fuel sources) Industry scope: In terms of influence the private oil and gas industry is by far, in economic terms, the most powerful business sector in the world. Of the Fortune Global 500 10% belongs to this industry alone, including 6 in the top 10 and 3 in the top 5. With respect to profits, the two most lucrative corporations worldwide irrespective of industry are ExxonMobil and Shell (45.2 b & 32 b in 2008). Still Shell and Exxon only produce 5% of global oil production, other State Own corporations are believed to be even bigger, like Saudi Arabian Oil Co.

7. 2. Climate change mitigation scenarios framework The IPCC successfully gained a scientific consensus on which should be the mitigation target for addressing climate change: GHG emissions to be reduced to less than 50% of today’s emissions by 2050, in order to maintain the global mean temperature limits increase between 2-2.4°C above pre-industrial levels. In the core of the issue is the fossil fuel energy industry, as more than 60% of GHG emissions comes from energy production and consumption (IEA, 2008). In consequence climate change scenarios and energy ones are interconnected, and the forecast of one informs and interacts with the other. Without policy changes climate model projections indicate that average global surface temperature will likely rise a further 1.1 to 6.4 °C during the twenty-first century. There is confidence that just a 1 to 2°C increase in global mean temperature above 1990 levels poses significant risks.

8. Scenario Definitions • Scenario as ‘best-guess’ or forecast types of projections (non-intervention Scenarios) or exercises aiming at exploring alternative futures • Quantitative (Exxon like) Vs. Narrative scenarios (Shell like) • IPCC context: scenarios are directed at exploring possible future GHG emissions • pathways, their underlying driving forces and how these might be affected by • policy interventions (More than 700 Climate Change scenarios since 2000) Using IPCC criteria a scenario can be identified as a mitigation scenario if: Incorporates specific climate change targets, which may include absolute or relative GHG limits, GHG concentration levels. b) It includes explicit or implicit policies and/or measures of which the primary goal is to reduce CO2 or a broader range of GHG emissions.

9. Emissions pathways for alternative stabilization targets Based on Nakicenovic et al., 2006 and Hanaoka et al, 2006

10. 3. The politics of technology perspectives in the energy sector: Private energy scenarios Vs. Alternative “climate sensitive” energy scenarios

11. Background ExxonMobil and Shell represent polarised corporate public positions around the issue of climate change mitigation. ExxonMobil was til very recently, the epitome of corporate denial of global warming through regressive actions against US climate policy being well documented, in particular with their successful lobby against the US government ratifying the Kyoto Protocol. Leading private energy scenarios Shell on the other hand was one of the first corporations to publicly validate climate change as an issue and to discursively support preventive climate action and engaging in highly visible ‘CSR’ initiatives like being first supporter of the Global Reporting Initiative, one of the first signatories of the UN Global Compact and initiating an embryonic renewables business.

12. Energy Scenario(s) The “Scramble”scenario: “a world of intense competition between individual countries, which rush to secure more energy for themselves. Political responses to the twin crises of the energy squeeze and climate change are often knee-jerk and severe, leading to price spikes, periods of economic slowdown and increasing turbulence. There is no effective framework for managing GHGs…” The “Blueprints” scenario: “…A global policy framework – and with it a global cost of emitting CO2 – emerges that spurs innovation, increases energy efficiency, limits the impact of rising energy demand and global warming, and helps maintain steady economic growth…” But even the “Blueprints” scenario still stabilizes GHG at levels higher than the climate change mitigation target of the IPCC.

13. Shell “Blueprints” scenario direct CO2 emissions from energy

14. Energy Scenario • Key conclusions of the outlook: • 1. Economic progress will drive energy demand significantly higher by 2030 (up to 40 percent vs. 2005) – even with substantial gains in energy efficiency. This growth will be concentrated in non-OECD nations. • 2. Fossil Fuels will remain indispensable to meeting demand arguing that as renewables start from a small base, even with rapid growth they cannot significantly alter the global energy mix over the outlook period. In conclusion, fossil fuels will continue to provide about 80 percent of energy in 2030. It is a non-intervention scenario as it does not aim at exploring alternative futures and it reflects no major policy changes in the energy industry.

15. ExxonMobil CO2 emissions forecast and “sensitivities” reductions

16. Alternative energy scenarios institutional profiles The International Energy Agency Is an intergovernmental organization founded by the Organization for Economic Co-operation and Development (OECD) in 1974 in the wake of the oil crisis. Their Energy Technology Perspectives (2008) study is delivered under the context of the G8 request to the IEA “to advise on alternative energy scenarios and strategies aimed at clean, clever and competitive energy future”. Greenpeace International Greenpeace International was founded in Canada in 1971 to oppose US testing nuclear devices is currently widely known for its confrontational and high visible tactics. Their Energy [R]Evolution was developed under the request of the German aerospace center and done together with the European Renewable Energy Council, thus as expected the renewable sector is privileged in the projections.

17. Climate Change Alternatives Scenarios Summary Source: Own construction based on Greenpeace 2007 and IEA 2008

18. Argumentative comparison of selected energy scenarios Shell & ExxonMobil Argumentative Outline Greenpeace & IEA Argumentative Outline Key claim: More fossil fuel use is unavoidable, thus climate change is set to rise further Key claim: Greater energy efficiency and renewables are feasible, thus climate change can be mitigated Lead warrant: Developing countries economic growth will continue, driving higher energy demand Lead warrant: Economic growth can be greatly decoupled from energy demand Main principle: The economic is the main criteria to approach the issue of growing energy demand and climate change Main principle: Climate change mitigation shall be the main criteria to analyze the future supply and demand energy issue Source: Own construction

19. General Conclusions Energy and climate change scenarios from the leading private energy firms are more than technical forecasting exercises. They also have a political dimension that aims at influencing the public debate to support in the foreseeable future an energy system dependent on fossil fuels, in spite of potential negative environmental consequences. Although key actors like the leading private energy firms, a transnational environmental NGO and an intergovernmental agency, all depart from almost the same energy databases and climate change references, they arrive at not only different but contradictory conclusions and forecasts. This suggests that the widely used scenario methodologies are not only technical tools but also political instruments that reflect the organizational interests of the institutions that develop them.

20. Conclusions on private energy scenarios A key observation is that even though the energy and climate change forecasts of both corporations are polarised in their communication approaches, they are in fact very congruent in the arguments posited. In other words, they say the same thing in very different ways. They mainly argue that a global energy system dependent on fossil fuel is indispensable in the foreseeable future due to expected substantial growth in emerging economies.Thusnarrowly framing the climate change mitigation issue in economic terms, presenting the inevitability of increasing climate change. This argument is contested on the basis of the alterative energy scenarios of Greenpeace and the IEA, and other 24 climate change mitigation scenarios included in the IPCC 4th Report (2007c), which presents the feasibility of decarbonising the energy system with greater share for renewable technologies and more energy efficiency gains.

21. Conclusions The implication for climate change derived from this research is that the prospect for effective implementation of mitigation actions from key actors is uncertain. As it is concluded that the leading private firms’ scenarios and investment strategies in the energy sector are unaligned with the scientific consensus of climate change halting objectives. A precautionary note is that this regressive position towards climate change mitigation does not seem to be a trend unique to the fossil fuel energy sector; as the transportation industry is also far from being aligned or even intending to be aligned with climate objectives. Moreover no single State has adopted a climate policy that meets the IPCC minimum climate mitigation criteria. Therefore even if the leading oil corporations align toward sustainable energy pathways, for a climate change mitigation perspective that wouldn’t be sufficient without the effective policy commitment of governments and other key emitter sectors in industrialized and industrializing economies.

22. 4. Building the link between higher education and climate change. Case study: Research partnership with Greenpeace International Finding the meeting point between academic research requirements and ‘on the ground’ research needs: Not an easy marriage. Recommendations: More institutional support from academic institutions.