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Last days of `Age of Oil'

Many corporate leaders now know that our energy future is going to be strikingly different. There is a growing acceptance that the world is in the early stages of the transition from a carbon-based to a hydrogen-based energy economy, says LESTER R. BROWN.


Fossil fuels ... on the way out.

IN August 1997, a few months before the Kyoto Conference on Climate Change, the Global Climate Coalition (GCC) helped launch a massive advertising campaign designed to prevent the United States from endorsing any meaningful agreement to reduce global carbon emissions. This group, including in its ranks some of the world's most powerful corporations and trade associations involved with fossil fuels, concentrated its efforts on a series of television advertisements that attempted to confuse and frighten Americans.

Among other things, the ads indicated that "Americans will pay the price ... 50 cents more for every gallon of gasoline", even though there was no proposal for such a tax. The campaign was successful. The so-called Carbon Club had effectively undermined public support of U.S. efforts to lead the international effort to stabilise climate.

While the public image of the GCC at the time was that of a unified group, there was already dissent within the ranks. John Browne, Chairman of British Petroleum, in a speech at Stanford University on May 19, 1997, announced that "the time to consider the policy dimensions of climate change is not when the link between greenhouse gases and climate change is conclusively proven, but when the possibility cannot be discounted and is taken seriously by society of which we are part. We in British Petroleum have reached that point".

Browne's talk shocked other oil companies and pleasantly surprised the environmental community. British Petroleum withdrew from the GCC. Dupont had already left. The following year, Royal Dutch Shell announced that it was leaving too. Its corporate goals, like those of British Petroleum and Dupont, no longer meshed with those of the GCC. Like BP, it no longer viewed itself as an oil company, but as an energy company.

In 1999, Ford withdrew from the GCC. Its young Chairman, William C. Ford, Jr., great-grandson of Henry Ford, went on record saying: "I expect to preside over the demise of the internal combustion engine." The company was already working on a fuel cell engine, one where the fuel of choice was hydrogen — not gasoline.

Ford's decision to withdraw was yet another sign of the changes occurring in major industries involved directly and indirectly with fossil fuels. A company spokesman noted, "Over the course of time, membership in the Global Climate Coalition has become something of an impediment for Ford Motor Company to achieving our environmental objectives."

In rapid succession in the early months of 2000, Daimler Chrysler, Texaco, and General Motors announced that they too were leaving the coalition. With the departure of GM, the world's largest automobile company, the die was cast. A spokesman for the Sierra Club quipped, "Maybe it is time to ask the last one out to turn out the light."

The image created by this accelerating exodus of firms from the GCC was that of rats abandoning a sinking ship. It reflected the conflict emerging with GCC ranks between firms that were clinging to the past and those planning for the future.

Some of the exiting companies, such as BP Amoco, Shell and Dupont, joined a progressive new group, the Business Environmental Leadership Council, now an organisation of some 21 corporations. This new outfit, founded by the Pew Center on Global Climate Change, says, "We accept the views of most scientists that enough is known about the science and environmental impacts of climate change for us to take actions to address its consequences."

Other leading companies that have joined the Council are Toyota, Enron and Boeing. Membership requires individual companies to have their own programmes to reduce carbon emissions. BP Amoco, for example, plans to bring its carbon emissions to 10 per cent below its 1990 level by 2010, exceeding the Kyoto goal of roughly five per cent for industrial countries.

Dupont has one of the most ambitious goals of any company, going far beyond that of Kyoto. It has already cut its 1990 greenhouse gas emissions by 45 per cent and plans to reduce them by a total of 65 per cent by 2010, rendering hollow the claim that lowering carbon emissions to meet the Kyoto goal is not possible.

On the supply side, BP, Amoco and Shell are investing heavily in new sources of energy. BP Amoco is now a leading manufacturer of solar cells. Shell, already a major player in both wind and solar cells, is also investing heavily in hydrogen and will likely open the world's first chain of hydrogen stations in Iceland.

To date, the net effect of the various public and private initiatives worldwide has been to check the growth in global carbon emissions. Since 1996, global carbon emissions have levelled off. The burning of coal, the most carbon-intensive fuel, dropped five per cent in 1999. The next step is to reduce carbon emissions across the board.

Abandonment of the GCC by leading companies is partly in response to the mounting evidence that the world is indeed getting warmer. The 15 warmest years in the last century have occurred since 1980. Ice is melting on every continent. The snow/ice pack in the Rockies, the Andes, the Alps and the Himalayas is shrinking. The volume of the ice cap covering the Arctic Ocean has shrunk by more than 40 per cent over the last 35 years. To deny that Earth is getting warmer in the face of such compelling evidence is to risk a loss of credibility, something that corporations cannot readily afford.

The high price paid by the tobacco industry's continuing denial of a link between smoking and health is all too familiar. This loss of credibility led to a major shift in public opinion, one that is now affecting court proceedings and the decisions of juries considering the claims of plaintiffs against the tobacco industry. And it figured prominently in the agreement by the industry to pay state governments $251 billion to compensate them for the medicare costs of treating smoking-related illnesses.

In a thinly veiled effort to conceal the real issue — the loss of so many key corporate members — the GCC announced that it was restructuring and would henceforth only include trade associations in its membership. While the companies leaving the GCC are still represented by their trade associations, their loss of confidence in the GCC's ability to represent their corporate interests is all too evident.

Thoughtful corporate leaders now know that our energy future is going to be strikingly different from our energy past. There is a growing acceptance among the key energy players that the world is in the early stages of the transition from a carbon-based to a hydrogen-based energy economy.

In February 1999, ARCO Chief Executive Officer Michael Bowlin said in a talk at an energy conference in Houston, Texas, "We have embarked on the beginning of the Last Days of the Age of Oil." He went on to discuss the need to convert our carbon-based energy economy into a hydrogen-based energy economy.

Whether the GCC will survive as a collection of trade associations or whether it will join the Tobacco Institute, which closed its doors in January 1999, is uncertain. What is clear is that the organisation that so effectively undermined U.S. leadership in Kyoto is no longer a dominant player in the global climate debate. The stage is set for the United States to resume leadership of the global climate stabilisation effort.

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