The environmental divide

The oil and gas industry has split geographically over environmental politics. The division runs north and south down the middle of the northern Atlantic. From positions on global warming to handling of radical pressure groups, there has come to be a European way of looking at things and a very different American way.

Oct. 12, 1998

3 min read

European companies generally treat global warming with environmentalist caution. Because warming might be occurring, might be devastating, and might result from combustion of hydrocarbons, some of them say, governments should raise taxes on and otherwise limit the use of fossil fuels. Some welcome pressure groups such as Greenpeace to board meetings.

U.S. companies tend to think too little is known about the causes, consequences, and even existence of global warming to justify costly precautions. And they think Greenpeace activists are loony scofflaws who should be ignored when acting out their extremism and jailed when breaking laws to attract attention.

Who's right?

These are generalizations to which exceptions abound. But they illustrate how different approaches to environmentalism have evolved on opposite sides of the Atlantic.

On global warming, Europeans think Americans have blinded themselves to what might happen if Planet Earth is indeed overheating. Americans think Europeans haven't examined climate science with sufficient rigor. On Greenpeace, Europeans think Americans too quickly resort to cowboy justice. Americans think Europeans too readily compromise law enforcement to the threat of boycott.

Which side is right?

For public companies, "right" has meaning only in terms of public laws and shareholder interests. Contrary to what Greenpeace activists might insist, this does not preclude responsible behavior with respect to employee and public safety, environmental values, and relations with governments. Shareholders inhabit the same planet as everyone else.

Inevitably, shareholder and consumer interests converge. Here, though, trans-Atlantic differences are stark. The European side embraces environmentally motivated tax hikes on energy consumers. The U.S. side resists them. Are European companies therefore less attentive to consumer interests-and, therefore, wrong on global warming?

Not necessarily. Geographically distinct groups of consumers differ just as companies do and express their differences politically.

European companies are more accommodating than their U.S. counterparts are to Greenpeace because Europeans in general have more patience than Americans with environmental activism. Germany-like the U.K., France, and Italy before it-just elected a center-left party to head a government that might include the environmentalist Green Party. In the U.S., where center-left President Bill Clinton has been politically effective only in support of center-right policies, Greenpeace had to close regional offices this year for lack of funding.

When Europeans tell pollsters they would pay more for fossil energy to boost nonfossil substitutes, they may actually mean it. Survey responses to that effect raise doubt in the U.S., where nothing arouses political ire more than the occasional gasoline price above $1.35/gal. That's half what some highly taxed Europeans pay as a matter of routine. Of course, Europeans think Americans pay too little tax, to which Americans properly respond that taxes in the U.S. are none of their bloody business.

Different views

What the global industry faces, then, are different collections of petroleum consumers with fundamentally different views-reflected in politics-about environmentalism and taxation. The challenge to companies is not to try to settle the political dispute. It is rather to seek responses to hemispherically distinct expressions of consumer interest that can also serve shareholders. In those terms, both sides can be right.