Clement Malin's overview

Re: Clement Malin's "Petroleum industry faces challenge of change in confronting global warming" (OGJ, Aug. 28, 2000, p. 58).

Clement Malin's overview of the global warming challenge for the petroleum industry did not address two crucial issues, namely what does climate-change economics conclude from climate-change science, and what position should the petroleum industry take in the name of corporate responsibility that is sustainable.

Climate alarmism jumps from science to public policy activism and leaves out the findings of a growing body of climate economics research. While the range of scientific uncertainty is great enough to included high-damage economic scenarios from man's potential influence on global climate, the "best guess" scientific estimates and the factual record given today's buildup in greenhouse gases (GHGs) offer an optimistic conclusion. A recent anthology assessing agricultural, forestry, energy, and recreational impacts from anthropogenic climate change by 26 specialists (including researchers from 11 US colleges and universities) found that the United States would benefit on net from the predicted levels of warming, precipitation increase, and sea level rise made by the Intergovernmental Panel on Climate Change (IPCC).

These economic conclusions are driven by several key scientific parameters:

Minimum temperatures are increasing at twice the rate of maximum temperatures.
A large part of the same observed surface warming is taking place in the most frigid land masses at the coldest times of the year (dead warming).
The public prefers a moderately warmer and wetter climate to a cooler and drier one.
Warmth, precipitation, and the CO₂ fertilization effect spur plant growth and productivity and result in a greener biosphere.
There is scant evidence of increasing weather extremes (such as hurricanes) with the 50% GHG buildup to date from pre-industrial levels.

Economists see substantial benefits to offset the damages from climate change. Alarmists emphasize high-end warming scenarios and add a bit of personal idealology (man's intervention with nature is bad per se) and social science error (the hydrocarbon energy age is dispensable).

What should a corporation do given the climate issue that is consistent with social responsibility and sustainable?

First, mandatory GHG programs should be rejected in favor of voluntary approaches. The Kyoto Protocol should be opposed because of its high costs and inconsequential climate effects under even alarmist scenarios. "Kyoto light" early crediting should also be rejected, and proposals to enact unilateral capand-trade programs should be exposed as expensive, ineffectual, and setting up new bureaucracies that will politicize energy markets for decades to come.

There is also the real risk that open international trade could sacrificed at the altar of GHG enforcement.

Second, voluntary actions by corporations should not go beyond innovative win-win initiatives. Control practices that are uneconomic penalize either consumers or stockholders and politicize the issue of corporate responsibility.

Few will be satisfied, and the ineffectual measures will prove to be unsustainable. On the other hand, "no regrets" GHG reductions that occur as a byproduct of meeting urban air quality goals or improving internal efficiency (such as energy outsourcing) should be seized. Public policies such as corporate tax reform to modernize equipment are also win-win propositions whatever the effects of GHGs on the global climate.

Finally, corporations should think very carefully before embracing climate alarmism for short run public relations purposes. Sir John Browne of BP has emboldened the anti-oil lobby by refusing to acknowledge that carbon dioxide emissions could be inconsequential or positive, only potentially problematic. Greenpeace, seizing the moral high ground vacated by BP, has stepped up its activist agenda using Browne's own positions and words against him and his company.

BP's position that it will implement programs to reduce GHG emissions under this rationale is like saying, "I will undertake reforms to not kick the dog on the Sabbath." If finding and retailing increasing amounts of petroleum is really dangerous for the planet, doing it in a slightly different manner matters very little. Greenpeace cries "corporate greenwash" and logically demands that the company stop "kicking the dog" (expanding and extending the petroleum age) period.

BP can probe the boundaries of "no regrets" GHG reductions and also edu-cate the public on the potential net benefits of moderate anthropogenic warming scenarios. Such a mid-course correction would reduce Greenpeace's moral momentum and help the petroleum industry win the intellectual battle over the sustainability of conventional energies.

References

Mendelsohn, Robert, and Neumann, James, The Impact of Climate Change on the United States Economy, Cambridge, UK: Cambridge University Press, 1999.
Bradley, Robert, "Climate Alarmism and Business Responsibility," The Electricity Journal, August/September 2000, pp. 65-71.