Apparently, the lords of finance are now concerned that fossil-fuel companies are planning too much for the transition from carbon, at the risk of leaving dollars in the ground.
[Shell chief executive Ben] van Beurden told investors last month that Shell is no longer an oil and gas group, but is an “energy transition company” — a nod to its shift towards a low-carbon energy system. It is a statement that would have been unthinkable just a few years ago. But persistent cost-cutting and mounting climate concerns have left many in the sector worried that the industry is making a miscalculation. They fear it is turning its back on many big oil and gas projects before efficiency gains, renewables, electric cars and efforts to conserve fossil fuels are able to cap consumption.
By “the sector,” to be clear, what the Financial Times writer means is the sector of finance with claims against energy producers.
I don’t believe energy executives have any principled commitment to the survival of the planet. But they may have a commitment which is cognate to it: to the survival of their businesses as ongoing entitities, which means committing money today to prepare for a post-carbon world. That’s where the conflict with finance comes from. Here’s Nick Stansbury, representing some financial conglomerate that owns a big chunk of Shell and BP:
Oil groups should, he says, avoid projects that take 10 or more years to become profitable… Instead they should focus on maximising returns to shareholders, including eventually returning capital rather than trying to transform themselves into renewable companies.
Funny how that’s so often the answer.
Not sure if this is applicable to this post. On the Naked Capitalism blog there was this comment in regards to our societies obsession with plastics and plastics contribution to our environmental issues such as pollution, toxins, etc.
“Apparently, much of the petroleum extracted by the fracking industry is intended for use in creating plastics. Given the level of debt said industry has in order to operate, I venture to think we will not be seeing a reduction in plastics production any time soon”.
Let’s see. The earth and human existence vs. making sure the predatorial hedge funds, private equity firms, bond holders, etc. and as mentioned here stockholders get paid. I wonder how many countries, cities, municipalities, etc. are in debt up to their eyeballs that it will limit adaptation to climate change.
Thanks for the comment.
I’ve been hoping to write something for a while, arguing that contrary to what a lot of people on both sides think, serious efforts to deal with climate change will imply faster growth and higher living standards for most people. The problem isn’t resources, it’s a deeply rooted hostility to economic planning.
Having spent most of my work life in plastics engineering, I have been curious as to how many Mechanical Engineers there are in the US. From the BLS: There were about 1.6 million engineers employed in the United States in May 2015. Mechanical, civil, and industrial engineers together made up half of all employed engineers. So a lot. With that many engineers how come we have such poor mass transit, little progress in green technologies, lead in our water pipes, and lacking in other improvements in public space?
In my youth I almost went to Michigan Tech University in the Upper Peninsula. I love the UP of Michigan!. Just for kicks since they are a highly ranked engineering college I went to the career services page of their site. On the career page they list the top industries and employers of their graduates. Number 1? Automotive at 70%. A small percentage of their grads work in fields such as bio-tech, green technologies, etc. Imagine if that knowledge and skill went to improving public health, mass transit, green technologies, etc? As you said it would “imply faster growth and higher living standards for most people”. But no we have the smartest people in our society making Facebook apps, algorithms for hedge funds, and another crappy Chevy that has the ignition switch fall off. Sigh.
I agree with you. It may be overstating it a bit but without some form of economic planning we are doomed. But as soon as you mention economic planning people hysterically think socialism and their heads explode.
Lastly can you recommend any good Econ books. Not 101 but more macro and progressive. Please not Mankiw. Not a fan of his. Can MMT and some of its “printing money” ideas to fund public projects help with funding climate change tech?
“Funny how that’s so often the answer.”
Why is it so strange?
We are talking about the capitalist system where the profit motive drives the game.
If participants (producers and consumers) in the capitalist system were brought to book and were required to share in the cost of externalities, then things might change. Then the questions of how these externalities might be assessed and valued arises and how these costs might be distributed arises.
These days, the average man in the street might ostensibly be all for climate change abatement yet balks when he has to fork out higher electricity charges to support renewable energy production.
So it’s not only the big traditional energy corporations and their financiers which are the problem.