Culture Change Media  International Editor
Arlington, VA -   September 30, 2004

A Way To Test Future Industry Mandates.   

- as gleaned from the American Petroleum Institute and the U.S. Department of Energy 3rd Conference on: “Voluntary Actions By The Oil and Gas Industry To Address Climate Change”. 

Arlington, Virginia, September 29-30, 2004. 

In 2002, President Bush, after rejecting the Kyoto Protocol to the UN Framework Convention on Climate Change, proclaimed a DOE Climate Vision program involving 14 industry associations, for the stated goal of reducing the greenhouse gas emissions intensity 18% by 2012, through voluntary actions.  Various industry sectors joined an Alliance for Climate Strategies to start tossing around ideas how to go about reducing the greenhouse gas (GHG) emissions.  The American Petroleum Institute (API) is part of the Alliance.  

I participated at the API meeting with an open mind to see what the industry contemplates doing with this hot topic.  Do the folks understand that it is unsustainable to bring out into the atmosphere, within the span of 200 years, fossil carbon that was deposited underground during hundreds of millions of years?  The API Climate Challenge Program mentions that for years oil and natural gas companies have been reducing emissions by increasing energy efficiency and conservation.  

The new program includes: refineries’ pledges to increase energy efficiency 10% by 2012; Increasing use of natural gas; Increasing combined heat and power units at refineries, i.e., in co-generation, reducing leakage of methane in the natural gas industry; Reducing CO2 venting; Develop alternate energy such as renewables, and fuel cells, and Reforestation to capture CO2 and capture CO2 underground. 

All of this sounds like good, self serving, economics leading to financial gains to the industry - so it can honestly be accepted as doable.  Thinking about this somewhat more deeply - the problem here seems to be that the petroleum industry is slow to learn from what happened to the tobacco industry.  The facts are that the tobacco industry did not get nailed by the trial lawyers because there was smoke in their operating smokestacks, rather the obvious problem was that the products they were putting on the market, the cigarettes, were seen as damaging to the health of the public.  The real problem in the Petroleum industry causing GHG emissions is the burning of the gasoline and diesel fuels they sell to the consumers.  

Seemingly only two oil companies - both companies headquartered in Europe - BP and Shell - have accepted the inevitable need to switch their futures from oil to energy, and to understand that they have to become the future suppliers for the energy needs of the economy, and not just suppliers of oil products.  Saving some CO2 emissions by putting solar collectors on an oil rig in the middle of the ocean is good policy, but not yet good enough for changing the image of the company from a seller of fuels to a seller of energy.  British Petroleum has a respectable share of the solar energy industry and Shell Oil Company has a respectable share of windmills’ business - that is a start.  

Having made the above statement, I must correct myself by saying that the actual meeting was much wider then the topics suggested in the API Climate Challenge Program folder.  Some academic presentations enlarged the scope of the meeting and some technical presentations presented potential for further extension into the renewables sphere - i.e., the Sasol presentation of producing diesel fuels from gas, gas from coal, could be extended to the use of biogas.  

But then, Larisa Dobriansky, Deputy Assistant Secretary, National Energy Policy, at DOE, could not tell me what was going on regarding biofuels, in parallel, at the same time, in a different hotel.  Several hours later I found out that Biodiesel from soy-beans was being mentioned there.  David Rickeard, Fuels Development & Policy Planning Advisor for ExxonMobil, spoke on Well-to-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context.  He had by necessity a good presentation of the European scene that included all the various novel fuels.  Listening to this we may also start moving towards a more diversified fuel base.  But then, on the other hand, also a dinosaur or two voiced their opinion at the meeting, special in the non-scripted final panel, such as Mr. Jim Glassman, a Resident Fellow at the Washington DC American Enterprise Institute, who was not sure whether a massive reduction in GHG emissions is a good environmental practice.  

Next week, the International Petroleum Industry Environmental Conservation Association, of which API is a member, will hold a similar meeting in Baltimore (12-13 October 2004) with the pinpointed topic “Transportation and Climate Change.”  This organization has a larger number of oil companies in its membership.  It would be interesting to see the continuation of the Arlington discussion.  Yes, though slowly, but things are moving nevertheless.  I would dare to conclude here, that the writing is on the wall - the industry knows that eventually mandatory regulations will be put in place, and the flurry of activities is simply to test how far the industry could go along with these regulations. 

Furthermore, the industry, this in order to have a level playing-field for business, actually does, secretly, welcome government involvement and regulation. We shall see.

(This article was first posted on CultureChange.org)