Watching Government: CO2 battles just beginning

March 26, 2001
Climate change is a divisive issue for the oil industry.

Climate change is a divisive issue for the oil industry. The reason is simple: it's not easy being green, especially when companies are madly chasing capital just to keep the drillbit going. Oil companies, after all, are in the business of finding and selling fossil fuels, because that is what most of the world runs on. It's also a fact that burning fossil fuels creates carbon dioxide. That's Chemistry 101. And an increasing number of scientists agree humans are to blame for greenhouse gases such as CO2 building up too much in the atmosphere.

But what are the chances those gases will precipitate an environmental crisis? No one knows for sure, although there are a growing number of scientists who endorse the view that CO2 emissions could alter climate patterns enough to damage property, ruin crops, and spread water-borne illnesses.

Lobbying pays off

But investing in more-expensive clean energy technology is a hard sell to most US companies these days, and a decision by US President George W. Bush not to impose mandatory emission reductions for CO2 will make it harder. US energy companies that have not made major investments in renewables successfully made the argument that placing new rules on CO2 could make energy costs even more expensive by limiting coal use in power plants, forcing businesses to rely on more-expensive natural gas.

Yet what about those companies that did make investments? Despite what environmental groups like to say about "Big Oil," the industry does not speak with one voice on the issue.

Many companies, oil interests among them, think the scientific evidence is compelling enough to justify spending money, provided their competitors also will have to face the same regulatory hurdles. Bush's decision, therefore, represents a major disappointment and could have a chilling effect on future clean-energy projects.

Companies that have pledged to meet CO2 emissions reduction targets include companies instantly recognizable within the energy world, including American Electric Power Co., BP PLC, Enron Corp., Entergy Corp., Royal Dutch/Shell Group, and Sunoco Inc.

The road ahead

Does this mean Bush's move will punish the companies that made "progressive" decisions, assuming he would regulate CO2?

US officials insist the president is still interested in encouraging voluntary emissions reductions and is seeking "a dialog" with these companies to explore ways to keep clean energy part of the fuel mix.

But companies that took a public pledge to reduce greenhouse gases in the late 1990s don't have the luxury Bush now has to change his mind on the issue. The president has hinted that additional tax incentives may not help soften the blow, either.

In the end, public opinion may come to the rescue. Outside the US, countries are looking to build up infrastructure with clean technology, with or without an international global warming treaty.

The Kyoto treaty may, in fact, be dead, but companies and policy-makers still can't ignore the climate change issue.