British Petroleum (BP), which describes itself as one of the world's largest petroleum and petrochemicals groups, is “rebranding” its corporate image.

BP’s website describes the exercise in these words: “The move to a single brand follows a $120 billion series of mergers and acquisitions which, over the past two years, has brought together the former British Petroleum, Amoco Corporation, Atlantic Richfield (ARCO) and most recently Burmah Castrol, to create a combined group with a market value of more than $200 billion.”

Central to the rebranding is a new logo, described by BP as “a vibrant sunburst of green, white and yellow”. Green for “environmental responsibility”, and yellow representing the sun. The logo, called the Helios mark after the sun god of ancient Greece, “is intended to exemplify dynamic energy - in all its forms, from oil and gas to solar - that the company delivers to its ten million daily customers around the world.”

BP says it had has spent US$7 million on researching and preparing the new brand. It plans to spend a further US$25 million each quarter-year in support of the brand change, mainly on signage and advertising.

BP says the rebranding is part of a major drive by the group to grow its worldwide retail business by over 10% annually, and to “strengthen the sense of identity and common purpose of our 100,000 staff in more than 100 countries”.

BP’s television advertisements, screening frequently during Olympics broadcasts, say nothing about corporate consolidation and staff indoctrination. The add merely poses a number of inane, rhetorical questions. “Can business be a force for good?” “Can 100,000 people, working in over 100 countries, build a new brand of progress?”

BP’s rebranding is a classic exercise in “greenwashing”, a term which made its first appearance in the Concise Oxford English Dictionary last year, defined as “disinformation disseminated by an organization so as to present an environmentally responsible public image”.

In April 1999, Greenpeace awarded BP CEO John Browne an “Academy Award” for the “Best Impression of an Environmentalist”. In July 1999, BP out-greenwashed some stiff competition, including Chevron, Exxon, Mobil and Shell, to win a Greenhouse Greenwash Award.

In March, BP was awarded a greenwash award by the environmental coalition Earth Day 2000, which said that, “Of all the oil giants, BP has perhaps most carefully crafted its image to appear concerned about the environment”.

BP Solar

BP’s subsidiary BP Solar is one of the world's largest solar power producers, with a global market share of 10-20% and projected revenues in excess of US$200 million in 2000. BP Solar says its target is to grow turnover to US$1 billion by 2007.

These figures don’t look so good when put in perspective:
- according to Gary Cook from Greenpeace USA, for every $100 BP spent on oil exploration and development in 1998, 16 cents was spent on solar energy;
- this year, BP will spend more on branding than it spent last year on its solar division;
- over the next three years, BP plans to spend 50 times more on new oil exploration and drilling projects than on renewable energy;
- a week before BP purchased the Solarex solar power company for US$45 million in 1998, the company purchased the oil company ARCO for US$26,500 million;
- BP spent US$100 million on fees for lawyers and advisers during the purchase of ARCO, more than twice the amount paid to buy Solarex; and
- after the merger with ARCO, BP said it planned to spend US$5 billion over the next five years on oil exploration and production in Alaska, in addition to the combined US$4.5 billion that the two companies had spent in the previous five years.

BP is committed to oil and gas for the indefinite future. The contradiction between BP’s dependence on fossil fuels, and its rhetoric about solar energy, is explained away with the pseudo-argument that “... plentiful supply [of fossil fuels] is essential ... if we are to make a successful transition towards a cleaner environment.”

The contradictions will be sharpest at BP’s new solar-powered petrol stations, with solar panels forming the transparent canopy above the petrol pumps. BP’s hullabaloo about “cleaner” fuels fossil fuels also faces a major contradiction: any reductions on business-as-usual emissions of greenhouse gases and other pollutants will be partly or completely negated if BP succeeds in growing its business by 10% annually.

BP aims to reduce greenhouse gas emissions from its operations by 10% from 1990 to 2010. However, BP's main role in causing climate change is not from its own operations, but from the oil and gas it produces and sells. The burning of fossil fuels from BP-supplied fossil fuels leads to emissions greater than those of Central America, Canada or Britain. BP oil and gas accounts for about two percent of all global greenhouse gas emissions.

BP is constructing an oil drilling plant in the Beaufort Sea, part of the Arctic National Wildlife Refuge, scheduled to begin production in late 2001, This will be the Arctic's first offshore oil project, and threatens the pristine and vulnerable Arctic ecosystem.

“ ‘Burning the Planet’ would be a better slogan for a company opening up a whole new frontier for oil exploration in the very place where global warming's impacts are most acute”, says Greenpeace campaigner Melanie Duchin, referring to BP’s slogan ‘Beyond Petroleum’.

“And until BP cancels [the Arctic project] and starts seriously investing in renewables, a polar bear sitting on a melting ice-cap would be a fitting corporate logo”, she said.

‘Corporate social responsibility’

BP boasts about its “multi-faceted ethics programme”, its “Global Social Investment”, and its “corporate social responsibility”

In March, BP and the United States Agency for International Development announced a joint effort to provide US$1.1 million in humanitarian relief efforts to combat the impact of flooding in Mozambique. In December, the two parties carried out a US$7 million humanitarian relief program to provide food to civilians effected by ongoing warfare in central Angola. Since 1990, BP has supported Save the Children’s Poverty Alleviation and Nutrition Programme in Vietnam.

Such projects look good in isolation, but they need to be put in context. A report commissioned by the Colombian government in 1996 accused BP of collaborating with the military in kidnappings, torture and murder. The report alleged that BP passed on intelligence information including photos and video tapes of local people protesting against oil activities to Colombian military personnel, who then arrested or kidnapped them.

In September 1996, BP signed a three-year, US$60 million agreement with Colombia's Ministry of Defence to create a battalion of 150 officers and 500 soldiers, including an elite mobile unit, to monitor construction of an 880 kilometre pipeline to the Caribbean coast.

All oil companies operating in Colombia pay the military a “war tax” to police their operations. BP has voluntarily paid more, and admits that it has no control over what its donations will fund.

Right-wing paramilitary groups, who say they are protecting the Colombian pipeline from insurgents, were accused of killing 11 people in a report released by the Environmental Defense Fund, the California-based Pacific Environment Resource Centre and other international groups in 1999.

A Turkish secret service intelligence report alleged that BP was involved in backing a military coup that overthrew the democratically elected government of Azerbaijan in 1993. In September 1994, BP and Amoco, separate companies at the time, signed a US$8 billion dollar deal for oil drilling rights in Azerbaijan.

In March 2000, BP invested hundreds of millions of dollars in PetroChina, a subsidiary of the China National Petroleum Company. According to the April 17 edition of Drillbits & Tailings, China National Petroleum Company has been linked to war crimes in Sudan and is looking to raise capital for the expansion of its oil operations in Tibet.

Consumerism

At the heart of BP’s rebranding exercise is a desire to cash in on the preference of consumers for products from companies believed to be environmentally and socially responsible. Browne says he wants BP to be the “supermajor of choice for the environmentally aware consumer”.

John Stauber, editor of PR Watch magazine, neatly summarised the problems arising from the activities of corporate spin doctors and greenwashers: “Because the commodity spectacle is so all-engaging, ‘light’ green business tends to merely perpetuate the colonization of the mind, sapping our visions of an alternative and giving the idea that our salvation can be gained through shopping rather than through social struggle and transformation. In this respect, green business at worst is a danger and a trap.”

BP - the oil giant that is expensively rebranding itself as a green company - is financing the election campaigns of most of the US congressmen with the worst environmental records, an investigation by the Independent on Sunday reveals.

It has contributed money over the past four years to two-thirds of the senators and members of the House of Representatives who have voted against every key green measure that has come before them, and failed to help most of the legislators who have supported them.

The revelation will gravely embarrass the BP chairman, Sir John Browne - who has become something of a green hero over the past three years - and add fuel to the flames of a growing controversy about the rebranding exercise, perhaps the most ambitious ever undertaken by a British company. The new image will cost the company $100m (£69m) a year, not far short of what it will be spending on solar power, the most striking of the new initiatives that it is advertising.

Gone is the shield that the company has used as its symbol since the 1930s. In its place is the so-called Helios mark, "a vibrant sunburst of green, white and yellow" named after "the sun god of ancient Greece". But opponents denounce the new emblem, which will gradually be introduced at the company's 28,000 service stations worldwide over the next four years, as a symbol of hypocrisy and hype. Even its critics admit that BP has a far better environmental record than almost any other big oil company and is now undertaking a range of pioneering green initiatives. But they point out that it is still increasing oil exploration and production, and is heavily involved in exploiting two of the world's most sensitive fields, in the Arctic and in the Atlantic west of the Shetlands. Greenpeace says that its new slogan, Beyond Petroleum, should instead be Burning the Planet.

The Independent on Sunday's revelations are being made despite obstruction from BP, which refused to supply a list of the contributions it makes to US politicians, although they have to be made public by law. "Why should I want to do that?" said Yusuf Ibrahim, BP's spokesman in America, when asked to provide the information early last week. Why indeed? The details, obtained instead from the Federal Election Commission - and compared with voting records compiled by the League of Conservation Voters - show that the company's contributions conflict sharply with its squeaky-green image.

Over the last four years, it contributed to the election campaigns of 22 of the 36 senators and 37 of the 55 representatives who achieved a zero per cent rating from the league last year for voting against all the environmental legislation that it monitored. By contrast, the company has supported only two of the 38 representatives and two of the 11 senators who scored a 100 per cent rating by voting in favour of all the measures in 1999.

Further analysis shows that three-quarters of the congressmen whose campaigns have received the most money from BP over the last four years have ratings of less than 11 per cent, and that most of them were scored at zero. Among them are Senator Frank Murkowski, the Chairman of the Senate's Energy and Natural Resources Committee, who has received $7000 despite having had a zero per cent record every year since 1994, and Representative Don Young, Chairman of the House Committee on Resources, who has had over $11,000, though he has scored less than 10 per cent in every year over the same period. Both Congressmen are from Alaska and are pressing for legislation to open up the state's protected Arctic National Wildlife Refuge - known as America's Serengeti for the richness of its wildlife - to drilling by oil companies, including BP. The company has contributed similar sums to Senator Trent Lott, the republican leader in the Senate, and Senator Don Nickles, the chairman of its Energy Research, Development, Production and Regulation Subcommittee. Lott has zero scores for six consecutive years and Nickles for three, and both voted for opening up the wildlife refuge.

Analysis of voting on other specific issues reveals a similar pattern: BP has contributed to the campaigns of 33 of the senators who voted against increasing funding for renewable energy, and only 11 of those who voted for it; it has helped 34 of those who blocked reforms to the way oil companies receive royalties, and only nine of those who supported the environmentalists' position.

Perhaps most strikingly, the company has helped to finance the campaigns of 34 of the 65 senators who successfully introduced a motion in 1997 to reject any international agreement to combat global warming, though Sir John Browne and BP have led industry attempts to persuade politicians to tackle the the problem.

BP's spokesman in America refused even to hear the results of the Independent on Sunday's investigation. "I have nothing to say about that," Mr Ibrahim interjected. "We are financing according to American law and we are happy with what we are doing."

The revelations - and BP's response to them - will undermine the rebranding exercise and genuine green initiatives that are being taken by the company. Last month Sir John announced that BP would double its investment in solar power to $500m over the next three years and aimed to make this a $1bn business by 2007. It already has almost 20 per cent of the global market.

It is fitting 200 of its service stations with solar panels and will equip all its new ones with them. It has promised to cut its own emissions of the pollution that causes global warming by 10 per cent by 2010 and aims to sell cleaner petrol in more than 40 cities around the world by the end of this year.

Three years ago Sir John accepted the dangers of global warming and made his company the first to break ranks with the oil industry's united front against cuts in emissions of carbon dioxide from the burning of fossil fuels. In April he joined leading environmentalists in giving one of this year's Reith lectures. "The enlightened company," he said, "increasingly recognises that there are good commercial reasons for being ahead of the pack when it comes to issues to do with the environment."

But Greenpeace points out that Sir John also announced that he expected BP's oil production to increase by 4 to 5 per cent per year, and gas production by twice as much. And capital expenditure on fossil fuel exploration and production will rise to $8bn a year, double what was spent in 1999.

BP is the only company taking oil from one of the world's most controversial areas, the Atlantic Frontier, 100 miles west of the Shetlands. It is also planning to become the first company to extract oil in the even more sensitive Arctic Ocean, off the northern coast of Alaska, as well as backing efforts to open the Arctic National Wildlife Refuge.

Rob Gueterbock, Greenpeace's climate and energy campaigner, says: "BP's rebranding is a triumph of style over substance. At best it is misleading its shareholders and customers; at worst it is engaged in blatant hypocrisy."
BP responds: "The world still wants petroleum and we still aim to provide it. But we are looking at the future, to a world that wants cleaner fuels and solar power. 'Beyond Petroleum' describes not where we are now but where we are looking to be."

"BP Amoco is considering a massive expansion of its renewable energy programme over and above the $250m it has already earmarked to spend over the next five years. In a move that will delight its environmental critics, such as Greenpeace, the oil major plans to approach leading investors to see whether they would support a significant change of tack." (The Guardian, 10/5/00, 'BP bows to solar power pressure’.)

Selling oil or gas is a tough business. For what you have to sell is a product essentially no different from that of your competitors. It’s not like selling clothing or food and drink, where customers distinguish and favour brands according to taste. Oil and gas companies have to find every possible opportunity to differentiate their product and to build up ‘brand’. And climate change provides just one such opportunity for branding.

Since 1995 when John Browne took over as Chief Executive Officer, BP has branded itself as THE environmental oil and gas company. It has won numerous awards, including the 1999 Earth Day award. Far bolder than the other oil companies, which simply sponsor environmental projects (such as Shell’s Better Britain Campaign), BP now:
1. sells environmental products, such as photovoltaic cells, renewable energy e-commerce and emissions trading consultancy; and
2. portrays itself as an intrinsically environmental company, by being the first oil company to withdraw from the anti-Kyoto Global Climate Coalition, and the first to acknowledge climate change; by taking action to reduce its internal CO2 emissions, and by leading the field in environmental reporting.

The Guardian reported BP's intention to approach investors about the expansion of renewable energies. What might those investors think? According to financial analysts at Merrill Lynch (‘BP Amoco - busy busy BP’, 4/4/00), BP Amoco "has transformed itself from a regional, mainly upstream [ie exploration and production] company, to a global energy powerhouse in 2 years".

Yet this transformation has nothing to do with renewable energy. Rather it refers to the expansion of BP’s downstream activities, especially in petrol retailing. This might seem like a risky move for an oil company: with production moving increasingly into 'frontier' areas, where indigenous peoples and fragile ecosystems are threatened, there is the danger of the next big environmental or human rights campaign hitting consumer sales. However, in business it is from risk that money is made. And with BP's environmental branding, it is in a position to gain advantage over its competitors from these threats to the industry's image.

The reality of BP's commitment to renewables can be seen in the figures: its much-trumpeted £750m investment in photovoltaics company Solarex in 1998 amounts to just 0.8 % of its recent oil and gas buying spree: £67 bn spent on Amoco in 1998, £16 bn on ARCO and £1bn on Mobil Europe's downstream assets in 1999, £3bn on Burmah Castrol and £600m on a stake in PetroChina in 2000.

The real shift is not to renewables but to gas. According to Merrill Lynch again: "Perhaps the most dramatic turnaround has been in natural gas... [BP] is now potentially one of the top 3 gas players globally." Indeed, the Financial Times (‘BP hits the gas’, 13/5/00) reports that BP's gas output is set to rise FIVEFOLD from 1998 to 2002. Gas is by far the biggest growth market in the energy sector, as countries switch to gas-fired power stations from the more expensive coal, and this trend is encouraged by global liberalisation of the electricity industry. Thus gaining gas extraction assets was the major motivation behind BP's acquisition of ARCO, a deal which has also given the company a key presence in Asia, well-placed for the boom market in China. Branding is really about looking at what you do and ‘selling’ it in an attractive way. Thus John Browne tells us that such emerging economies are "where the cutting edge of the environment issue will be over the next decade. Many of those economies use vast amounts of coal which is heavy in emissions. Our objective is to provide an alternative - a choice - in the form of natural gas which can change the fuel mix and radically reduce the level of emissions" (speech at Hay-on-Wye Festival, 30/5/99).

In the UK, virtually the entire gas supply comes from the North Sea, and of that 30% comes from fields operated by BP (Department of Trade & Industry, Digest of UK Energy Statistics 1999, and Development of the oil & gas resources of the UK, 1999). This is not just in your cooker or boiler - it's also in your lightbulb or computer screen, with 29% of electricity now generated in gas-fired power stations. (Digest of UK Energy Statistics 1998, supplement - Proposals for change) Whoever you pay your bills to, a vast chunk of your energy comes from BP. The original political motivation for the 'dash for gas' in the UK was to break the power of the miners, rescuing Britain from the grip of Arthur Scargill. In achieving this, the Tory government in fact delivered us into the hands of John Browne. Its Labour successor saw political capital in promising a 20% reduction in CO2 emissions (more than double its Kyoto commitment) - which it could achieve largely because gas only emits about half as much CO2 as coal (Sustainable Energy & Economy Network, <www.seen.org/wbreport1/summary-tables.en.html>) - in the same way as BP has made climate change capital from its own dash for gas.

BP is a vast capital concern just like any other corporation, be it a bank or a global grain producer, whose essential function is the reproduction of capital: the generation of profit. Its pursuit of the lead position in the global gas market, and its intention to become the worlds largest PV producer, is driven by the search for profit, not by a concern for the global atmosphere. However, trumpeting a concern for climate change has clearly succeeded in diverting environmental criticisms (as the quote from The Guardian above shows) whilst at the same time setting the company apart from its competitors, making the brand itself a more profitable commodity.

It is said that power lies in the ability to ensure that others carry the burden of change.

Certainly the greatest burden of climate change will fall on the powerless in poor countries of the world. But the changes to the climate create an imperative for change at another level - change on the other side of the wealth divide, change in the patterns of production and consumption of fossil fuels.

Change is necessary to capitalism, as a corollary of growth. Success in capitalism lies not in avoiding or preventing change, but in managing it.

Solutions old

BP and Shell, in contrast to Exxon - the other of the "Three Sisters" in the oil industry super-league - both publicly admit that climate change is a real threat.

Both companies are cutting their emissions of greenhouse gases, by 10% from 1990 levels - Shell by 2002 and BP by 2010. As a key part of its strategy for achieving this, on 1st January 2000, BP became the first company in the world - way ahead of any nation state - to introduce a company-wide emissions trading system, whereby one part of the company can 'sell' part of its quota for emitting greenhouse gases to another part of the company which is struggling to meet its target. Shell followed soon after.

BP and Shell have both also invested in renewable energies. Indeed, BP is now the largest manufacturer of solar photovoltaic panels in the world.

A contradiction

Yet these are oil companies. And BP and Shell are among the most ambitious companies in the world in their targets for increasing their rate of extraction of oil and gas, Shell by 5% a year, and BP by between 5.5 and 7%. The cuts BP and Shell have promised are in greenhouse gas emissions from their own business operations - from gas flaring, from pipeline leakages, from energy usage (eg in powering refineries) - not in those from their core products.

The point is well symbolised in BP's solar-powered petrol stations. The focus is put on CONSUMPTION of fossil fuels (the petrol station has used photovoltaic panels to reduce its consumption), rather than on PRODUCTION, and provision, of fossil fuels. Thus BP avoids not just the burden of climate change, but also the responsibility for it.

There is, of course, a fundamental contradiction in the companies' position. The amount of fossil fuels consumed in the world is necessarily equal to the amount produced. So what is to happen to BP and Shell's increased production of oil and gas, if everyone follows their good example and cuts their consumption in line with the Kyoto Protocol? Do they hope that other oil producers such as Saudi Aramco, with no stated environmental commitment, will cut their production? Of course not. In fact, it seems perhaps consumption is not intended to be cut at all...

The oil companies have been challenged on this since soon after they announced their policies in 1997 - most notably with the "No new exploration" positions of organisations such as Oilwatch and Greenpeace.

Solutions new

Finally, over recent months, this internal logical contradiction has begun to register in the debate. For example, Shell now talks of the "carbon intensity" of its products. It publishes the average amount of carbon released per unit of energy of its products, and plans to reduce this by about 2.5% between 2000 and 2005. This is made possible by the general trend of energy markets towards use of gas in power stations rather than coal (a trend driven mainly by economic factors). Unfortunately, over the same period, Shell plans to increase its hydrocarbon output by 28% (the cumulative effect of a 5% / year increase), which far outweighs the lower "carbon intensity" of that output.

But apart from the rhetoric, the more concrete aspects of the companies' approach are also evolving in response to the production / consumption contradiction, with three new elements, all of which aim to allow increased consumption of fossil fuels.

1) BP and Shell are actively participating in the Clean Development Mechanism (CDM). This is one of the 'flexible mechanisms' within the Kyoto Protocol, whereby industrialised countries can avoid cuts in greenhouse gas emissions, by investing in emissions-reduction projects in developing countries, and claiming 'carbon credits'. Shell, for example, has identified eight projects for potential inclusion within the CDM, and aims to pilot three of these. BP too is exploring four case studies, ranging from rural electrification using solar power, to building gas power stations (where carbon emissions are lower than those from the national average fuel mix). Both companies are strong public proponents of the CDM. Shell's outgoing chairman, Mark Moody-Stuart, has commented, "We believe it is essential to ensure that each of these mechanisms [emissions trading and CDM] is structured in such a way as to attract private capital. It is crucial to make people - and companies - want to do these things".

2) They are investing in forests, to be used as 'carbon sinks', which it is hoped will take carbon dioxide (CO2) back out of the atmosphere through photosynthesis. Shell has had a plantation forestry division for 20 years, used mainly for pulp and paper manufacture, but with an increasing interest in building materials, furniture, and use of wood for energy (biomass burning). In relation to this last use, the forestry business has now been consolidated with Shell Renewables. Shell is now incorporating forestry into its strategy on climate change: one of its action points is to "directly contribute to a reduction in atmospheric CO2 by expanding our forestry business and planting more trees". Shell estimates that its 135,000 ha of plantations sequester 1.2 million tonnes of carbon a year*. BP sold off its forestry businesses during the 1980s and 1990s, and does not aim to develop a production business from it; however it is now exploring options for gaining carbon credits from forestry, and is running a pilot project in southwest Australia, planting 500,000 trees a year.

3) They are exploring new technological fixes, in particular 'end-of-pipe' mechanisms, which are designed to capture CO2 at point of emission. Shell, for example, is developing a carbon-neutral gas-fired power station in Norway, which aims to catch CO2 emitted from the chimneys, and pipe it back to the gasfield in the North Sea, where it will be pumped back underground. BP is further behind on this, but has sponsored Princeton University to study options for carbon capture.

The approach now is at least logically consistent. But while it gives the oil companies a set of policy options which do not undermine growth in their core business, whether they will actually help to mitigate climate change is open to question (see box).

Politics

While BP and Shell engage heavily in the public debate, they participate in the Kyoto process through the two lobby groups, the International Chamber of Commerce (ICC) and the World Business Council for Sustainable Development (WBCSD). Through these two groupings, Shell had 40 representatives present - more than any other corporation.

In general, the WBCSD and ICC play a good cop-bad cop routine. WBCSD is more solutions-focused, and engages in the detail of how they are to work, albeit from a business perspective. For example, on the CDM, "Trying to allocate projects on an equitable basis among host countries would severely restrict the supply of CDM projects. The emphasis must be on the efforts of host countries to provide the right conditions to attract investors". The ICC deals with the bigger picture - and lobbied hard that "the use of KMs [Kyoto mechanisms - emissions trading, joint implementation and CDM] should be permitted in governmental of the Kyoto Protocol, without limits or ceilings", and that sinks should be accepted starting fully in the first commitment period as means to meet emissions obligations".

BP and Shell, by working through ICC and WBCSD, have not needed themselves to publish lobbying positions, so their individual roles in the process have not been public. They would probably like to keep it that way, as the policy options they practice themselves, and the ICC and WBCSD lobby for, are exactly those which stalled the COP-6 negotiations in the Hague last November. The talks fell apart because the USA / Umbrella Group's position was unacceptable to other governments, for being too flexible in allowing countries to meet their targets outside their borders (through the flexible mechanisms), and for insisting on too much allowance of carbon sinks to offset emissions.

The importance of the oil companies' role in the two lobby groups is shown by the choice of chair for WBCSD and ICC's joint initiative to influence Rio plus 10 next year: Shell's Mark Moody-Stuart.

The Kyoto process' problems in the Hague in November have been dwarfed by its further obstacles this year, as George Bush has rejected it altogether. Much of the blame for this has been attached to American corporations. We tend to think of BP and Shell as European companies. Yet 36% of BP's shares are held in the USA. 26% of Shell too is American. And BP gave $937,000 to Bush's Republicans last year - the third largest political contributor from the energy sector, after Enron and ExxonMobil.

To be an oil company

But what of BP and Shell's investments in renewable energy - aren't they genuine? Well, in a sense they are, in that they are being treated as real businesses. However, clearly the use of renewable energy will not in any way prevent climate change in itself - it will only do so in so far as it allows a decrease in the use of fossil fuels. A Shell scenario for future energy supply reckons that renewable energy will provide around 15% of world energy by 2030; however this is within the context of expanding total energy consumption - and oil and gas production will almost double over that period (Shell has quietly withdrawn its more optimistic scenario of 50% renewable energy by 2050). Clearly, despite the renewables growth, we still have a massive problem.

Perhaps we should ask whether it makes sense for the organisations providing the solution - expanding renewable energy supply - to have an interest in perpetuating the problem - expanding fossil fuel supply.

But perhaps the expansion of fossil fuel output is not necessary? Couldn't a progressive oil company make a transition into a renewable energy company? Greenpeace, for example, has argued that "if today's companies want to remain going concerns they will have to transform themselves into sustainable energy companies... Renewable energy will be the growth market of the 21st century and that's where the smarter investors will be putting their money".

In theory, this may be possible. In practice, though, to shift from oil and gas to solar or wind power (markets with very different financial structures, not to mention different physical technologies) would mean writing off a vast amount of capital. Not just the physical capital (oilrigs, pipelines etc), but also 'relationship capital' (the companies' contacts and relationships with people, organisations, companies and governments), 'intellectual capital (knowledge of geology, of markets, of how to extract; skills, training and strategy); and even 'emotional capital' (their belief in the value of what they are currently doing).

The difficulty is compounded by the fact that - in financial terms - BP and Shell compete as much with Vodafone and GlaxoSmithkline (in providing returns on capital) as they do with ExxonMobil or Chevron. Thus even if there were long-term advantages to shifting the energy base, even if to be a renewable energy company were an attractive proposition, investors would not allow an oil company to absorb the costs of converting to one.

Issue management

So what is to be gained by the position on climate change?

Perhaps the greatest clue to understanding how these companies see climate change comes from the 'Shell Report' series. Published annually (the latest - 'People, Planet, Profits' - came out this April), these reports provide the framework for Shell's discussion of environmental and social issues (including climate change), and for reporting on its own progress. It is connected with these reports that Shell has produced a series of adverts, including "Cloud the issue... or clear the air?", which have had enormous newspaper exposure over the last three years.

Six months after the publication of the first Shell Report, entitled 'Profits and Principles - does there have to be a choice?', Shell was named winner of the W Howard Chase Award, by the issue Management Council. Chase, a pioneering PR guru, commented in presenting the award, "The demonstrable excellence and broad impact of the Shell Program represents the epitome of  issue management, producing not only benefits for the organisation in its worldwide business operations, but setting an example for other organisations to follow".

Are BP and Shell "managing the  issue" of climate change?

We can identify three core strategic aims of the companies in relation to climate change:

1) to be seen as progressive on the  issue, especially for the benefit of staff morale and recruitment. Shell, for example, certainly does not want more reputation crises like the Brent Spar or the Ogoni issue. While immediate profits were little hurt by the  issues, Shell acknowledges that the reputation problem led to its employees even being embarrassed to tell people where they work.

2) to prevent any government interference in or regulation of their business - by focusing attention on energy consumers rather than producers, and emphasising voluntary action. For example, the UK's climate change levy is targeted at (industrial) consumption of energy, and has a strong voluntary element for major energy users. What's more, by moving early, the companies will play a key role in influencing the terms of the Kyoto mechanisms. For example, Shell has commented that "With the implementation of STEPS [Shell's emissions trading system}, we are on a steep learning curve, but I believe that our experience will enable the group to be an active participant in the design of national emissions trading systems".

3) to ensure that markets for oil and gas do not at any point decline - in particular to discourage societal  pressure for radical change. Through clever positioning on the issue, the aim is that positive action on climate change will generally be seen as compatible with the use of fossil fuels - in other words, you can save the planet and fill up your car at BP ("I am only one... but I can make a difference").

In these terms, BP and Shell are having fantastic success.

While behind the scenes, the companies have helped to stall government action on climate change, this stalling has contributed to the general public opinion that the companies are moving forward more effectively than governments, and it is to them that people look for a solution. There is little call for mandatory regulation on climate change. The plaudits of environmental groups have helped the companies in their brand-building, and as a result their recruitment and morale.

Meanwhile, the companies remain completely in control of the pace of change. Look for example at the development of renewable energy. BP plans to grow its renewables business at a rate of 20-30% a year. At this rate, if it could sustain its current rate of growth of oil and gas extraction, renewable energy production would match oil and gas in size in 1250 years' time!

However virtuous BP and Shell may be relative to their competitors, they clearly have other agendas as well. And, as one might intuitively expect, there are natural conflicts between being an oil company and providing the solution to climate change. What is desperately needed is for civil society to reclaim management of the climate problem, to wrest control of the issue from the corporations.

* For comparison, carbon emissions from Shell's hydrocarbon products can be estimated at about 180 million tonnes.

BP Amoco

In one year, BP Amoco made quite a name for itself as a nasty oil company:

In February, BP Amoco's Alaska subsidiary -- BP Exploration (Alaska) Inc. -- was hit with a $500,000 criminal fine for failing to report the illegal disposal of hazardous waste on Alaska's North Slope. The company was also ordered to establish a nationwide environmental management system designed to prevent future violations.

BP Amoco has also paid $6.5 million in civil penalties to resolve allegations that the company illegally disposed of hazardous waste and violated federal drinking water law.

The company is now constructing a controversial offshore oil project in the Arctic, and heavily lobbying Congress to open the Arctic National Wildlife Refuge to drilling.

In April, BP Amoco agreed to pay $32 million to resolve claims that it underpaid royalties due for oil produced on federal and Indian lands since 1988.

In July, BP/Amoco agreed to pay $10 million to settle a Clean Air Act case.