Power without responsibility?

Leading companies are starting to take climate change seriously. So why, asks Dax Lovegrove, are the energy majors lagging so far behind?

Climate change: the phrase is on the lips of princes, pollsters, primates and premiers, and increasingly it’s part of public parlance too. Google lists no fewer than 37.4 million online references. It’s also being heard more and more in executive suites and shareholder meetings across the world – as corporate boardrooms at last seriously acknowledge the importance of the issue.

With the Corporate Leaders Group engaging on public policy to support the drive towards climate change solutions, there’s also a real sense that businesses are starting to embed meaningful climate strategies and greener business models, in line with national moves towards a low-carbon future. Indeed, National Grid, Cadbury, and other leaders are well on track to cut their emissions by 80% by 2050, in line with the latest climate science.

WWF is working on this single issue with more companies, business organisations, government departments and local authorities than ever. Our partnerships with big hitters such as HSBC and M&S are well known and continue to develop. It’s with those kinds of companies – the ones who are prepared to significantly improve their own environmental performance, and engage the world around them with a reform agenda – that WWF is keen to be involved, to accelerate what must inevitably be a low-carbon economy.

But where is the energy sector in all this? In contrast with the many positive actions among government and other industry sectors, many of the energy giants plod along maintaining outdated business models, investing, for example, in excessively carbon-intensive unconventional oil projects, or submitting applications for new coal-fired power plants with at best vague promises that the carbon emissions may be captured in future.

BP and Shell are undermining any previous low-carbon moves with their involvement in the Canadian Alberta Tar Sands. The extraction, refining and other production processes involved in obtaining oil from this source uses significantly more energy, and emits correspondingly more carbon, than exploiting conventional oil. Extraction of tar sands in Alberta, which affects an area the size of France, is set to increase to five times the current level at a phenomenal cost to the local environment and to Canada’s Kyoto commitments.

Meanwhile, the extreme lack of environmental credentials in the Shell-led Sakhalin II project recently led to the collapse of its submission for support from the UK government’s Export Credit Guarantee Department. A WWF-UK application for judicial review, with Corner House, led to the Sakhalin Energy Consortium withdrawing its bid for financial underpinning. Nearer to home, Shell’s withdrawal from the London Array wind farm project is yet further evidence of the company’s increasingly unsustainable practices.

In Kent, E.ON is seeking planning permission for a new coal-fired power station at Kingsnorth. WWF’s view is that new coal plants without active carbon capture facilities from the outset have no role in a low-carbon economy. E.ON’s plans to build new coal power stations fly in the face of its Wind of Change marketing campaign which focuses on renewable energy.

Part of the problem is the distinct lack of leadership in the power sector. Although operating under tough constraints, the preoccupation with compliance isn’t going to cut it in the changing climate (no pun intended).

The recent report, 80% Challenge: Delivering a low carbon Britain, published jointly by WWF-UK, the Institute for Public Policy Research (IPPR) and the RSPB, shows that our climate and energy security rely on a major change in the way the energy sector works. Businesses in this space now need to push the energy services business model, get into demand management, raise their game on renewables, diversify away from fossil fuels and help to drive new regulatory frameworks and market systems.

Speaking a few months ago at a WWF seminar in London, the prime minister declared: “The climate change crisis is the product of many generations, but overcoming it must be the great project of this generation.” With business and industry – including, we hope, the energy sector – on board, we intend to play our full and positive part in that great
project.

– Dax Lovegrove is WWF-UK’s head of business & industry relations.

WWF-UK is a Forum for the Future partner.

28 June 2008

Dax Lovegrove