UKC

More corporate hypocrisy on climate change

New Topic
This topic has been archived, and won't accept reply postings.
 stp 19 Sep 2008
Can you believe the absurdity of these corporations...

The Prince of Wales's UK Corporate Leaders Group on Climate Change said "deep and rapid" cuts were needed in greenhouse gas emissions.

The group includes the bosses of Tesco, BAA, Shell and energy group E.ON.

Greenpeace accused some of those involved of "hypocrisy of a previously unknown magnitude".



AND

But Greenpeace communications director Ben Stewart said: "It's astounding that E.ON would call for action on climate change when they're agitating to build Britain's first coal-fired power stations in decades.

"It makes an environmentalist's jaw drop to see the BAA logo on this letter when they're trying to expand airports across the nation."


http://news.bbc.co.uk/1/hi/uk/7624494.stm
 AntiGrav 19 Sep 2008
In reply to stp: Why is anyone surprised by corporate hypocrisy?
OP stp 19 Sep 2008
In reply to AntiGrav:

I just think this really plumbs new depths. As Greenpeace said: hypocrisy of a previously unknown magnitude.
 Postmanpat 22 Sep 2008
In reply to stp:
Given that BAA's raison d'etre is provide airport facilities and E.ON's to provide energy (as customers demand) how else would you suggest the the environmental impact of this be reduced than via regulations put in place to restrict them?
 MJH 22 Sep 2008
In reply to stp: Why can businesses not admit that there is a problem without necessarily being in a position to do something themselves???

BAA provides airports not flights...nor are they responsible for how efficient the planes used are.

Eon would quite happily provide more renewable energy I suspect IF people were prepared to pay...oh and you still need baseload generation (which is going to have to come from coal/oil/gas/nuclear).
 anonymouse 22 Sep 2008
In reply to MJH:
> (In reply to stp) Why can businesses not admit that there is a problem
It may not be hypocrisy, but it does strike me as bizarre that these companies are in effect saying, "Please stop us because we can't stop ourselves."

> Eon would quite happily provide more renewable energy I suspect IF people were prepared to pay...
Unless they actually provide it, how will they know if people are prepared to pay?
Matt R Horn 22 Sep 2008
In reply to anonymouse:

Eon do provide wind power http://www.eon-uk.com/generation/windfarms.aspx
The trouble is neither they (nor anyone else) can build them fast enough to cover demand.
 MJH 22 Sep 2008
In reply to anonymouse:
> (In reply to MJH)
> [...]
> It may not be hypocrisy, but it does strike me as bizarre that these companies are in effect saying, "Please stop us because we can't stop ourselves."

That is not what they are necessarily saying.

> Unless they actually provide it, how will they know if people are prepared to pay?

I would have thought relatively simple market testing and comparisons with competitors. Fact is renewables are generally relatively expensive (though obviously oil/gas prices have a large influence at the moment) and are not the complete answer to the energy mix.
 tony 22 Sep 2008
In reply to anonymouse:
> (In reply to MJH)
> [...]
> It may not be hypocrisy, but it does strike me as bizarre that these companies are in effect saying, "Please stop us because we can't stop ourselves."
>
It is a wee bit bizarre, but there is some logic to it. Essentially there's no incentive for anyone to do the right thing (i.e. build more low-carbon generation capacity) if it harms their business model. In the case of coal-fired generation, the only way to make substantial reductions in carbon emissions is to build carbon-capture into the process. This is expensive to do, and this would have to be reflected in the price charged by E.ON for their electricity. This in turn would make their electricity less attractive to the market, so they'd be faced with the double whammy of a more expensive product and reduced demand. so, not good business if they go it alone.

However, if all generation companies have to do the same thing, the playing field is levelled and the competitive disadvantage is removed. In the longer term, there will be considerable advantage in companies like E.ON being able to provide low-carbon electricity. New low-carbon generation capacity will become more attractive to the market, and companies with a decent low-carbon generation portfolio will be better placed than the dinosaurs we currently have to put up with.

Of course, all this comes back to my idea of building the carbon costs into the cost of electricity at source, but nobody listens to me...
 anonymouse 22 Sep 2008
In reply to tony:
> It is a wee bit bizarre, but there is some logic to it. Essentially there's no incentive for anyone to do the right thing (i.e. build more low-carbon generation capacity) if it harms their business model.
I don't understand this. Surely there is a consumer need for low-carbon energy generation. If there is a need, companies should provide it. If a number of companies do this then there will be competition and therefore incentives to drive down the costs of low-carbon energy sources. What the energy companies want is for the government to build them a great big safety net so that consumers are forced to take the cost of the associated risks and the companies can protect their profits. This just seems like another situation where the notion of the free market has gone wrong.
 tony 22 Sep 2008
In reply to anonymouse:
> (In reply to tony)
> [...]
> I don't understand this. Surely there is a consumer need for low-carbon energy generation.

Is there? I don't really believe this to be the case at the moment. I don't actually think many consumers know that there's a difference in emissions between coal and gas - they might know that there's a difference between coal and gas and renewables, but I think that's about as far as it goes. Despite the fact that all electricity suppliers offer green tariffs, I don't think it's a key driver for all but a small proportion of consumers, especially at a time when prices are very high - the key driver is price, regardless of source.

> If there is a need, companies should provide it.

Why? Why should companies do something if that act depresses their profits?

> If a number of companies do this then there will be competition and therefore incentives to drive down the costs of low-carbon energy sources.

Correct - if a number of companies do this. But if E.ON are the only big company in the market for a big new coal-fired station, why should they stick their necks out with expensive new technology if all the other generators, using old generating plant, are carrying on as they are.

> What the energy companies want is for the government to build them a great big safety net so that consumers are forced to take the cost of the associated risks and the companies can protect their profits. This just seems like another situation where the notion of the free market has gone wrong.

I'm not sure that the case with new coal-fired generation - I think it's more a case of wanting everyone to have to play by the same rules so that competition is fair. However, I'm sure it is the case for new nuclear build, and it's one of the reasons why there are still no concrete proposals for new nuclear build in the UK, despite the Government expressing its support - the generators want the cost of decommissioning to be taken of, and the Government has (so far) demurred from this idea.

 alanw 22 Sep 2008
In reply to anonymouse: The planet and society as a whole needs low carbon electricity but the individual consumer doesn't - they (well most) just want electricity to come out of the socket as cheaply as possible (I guess it's a bit like vaccines - society needs everyone to be vaccinated but no individual child needs to be).

The danger would be if an energy company invested in expensive renewable power, their bills go up and they lose customers and go out of business. A number of mechanisms have been used to stop this happening - ROCs, EU ETS, green tariffs, feed-in tariffs, etc. All that this group are saying is that none of the measures in the UK have not gone far enough - I'd agree even if it does seem hypocritical from some.
 gingerdave13 22 Sep 2008
In reply to Matt R Horn: nor could they cover demand without covering the world with wind turbines.... something that i don't think would go down well..
 anonymouse 22 Sep 2008
In reply to tony:
> Is there? I don't really believe this to be the case at the moment.
If there's no consumer need for it then voters aren't going to want their energy prices pushed up for something they don't believe in. If voters won't go for it, government won't make the necessary changes. If voters want it, that implies, to me, that there is a need. After all people drive those ridiculous hybrid cars.

> Why? Why should companies do something if that act depresses their profits?
If there's a need, there's a profit.

> Correct - if a number of companies do this. But if E.ON are the only big company in the market for a big new coal-fired station, why should they stick their necks out with expensive new technology if all the other generators, using old generating plant, are carrying on as they are.
This was my point. The big companies don't want to take the risks. By asking for this kind of legislation they are asking the consumers to take the risks for them.
 tony 22 Sep 2008
In reply to anonymouse:
> (In reply to tony)
> [...]
> If there's no consumer need for it then voters aren't going to want their energy prices pushed up for something they don't believe in. If voters won't go for it, government won't make the necessary changes. If voters want it, that implies, to me, that there is a need. After all people drive those ridiculous hybrid cars.
>
Has the question been put to the voters? Besides, Governments don't always stick just to what the voters want.

> [...]
> This was my point. The big companies don't want to take the risks. By asking for this kind of legislation they are asking the consumers to take the risks for them.

What risks are you talking about? I'm not sure what is being suggested here.

 anonymouse 22 Sep 2008
In reply to tony:
> What risks are you talking about? I'm not sure what is being suggested here.
The companies won't use renewables because of the damage it would do to their profits. The only way to get around this as far as they can see is to force up the price of non-renewables, which takes away the risk before they try in earnest. It should be noted, I have no idea how these things work.
 alanw 22 Sep 2008
In reply to anonymouse: You're right, it is all about risk and companies naturally want to keep the risks as low as possible, especially in their core business.

If a company invests in an expensive low carbon technology (say CCS) they only have a few options: pass the extra cost on to the customer and risk losing them; absorb the extra costs themselves giving lower profits and pissing off the share holders; getting some sort of subsidy from Gov to cover the extra cost, or just not bother in the first place.

Each of these options involve a degree of risk to either the company, individual customers, or society and the environment as a whole. The question is which is fairest and the most effective. Expecting businesses to take all the risk is surely a bit naive, especially if the option not to bother will make them more money. Forcing them all to take the risk is certainly fairer but as its society that stands to gain, maybe sharing some of the risk in the form of subsidies (eg. feed-in tariffs) would seem reasonable to me.
OP stp 22 Sep 2008
In reply to Postmanpat:
> (In reply to stp)
> Given that BAA's raison d'etre is provide airport facilities and E.ON's to provide energy (as customers demand) how else would you suggest the the environmental impact of this be reduced than via regulations put in place to restrict them?

No new airport expansion and no new coal fired power stations.

OP stp 22 Sep 2008
In reply to anonymouse:

> but it does strike me as bizarre that these companies are in effect saying, "Please stop us because we can't stop ourselves."

Well certainly the case of BAA there not saying that. They are actively lobbying for airport expansion.
 Postmanpat 23 Sep 2008
In reply to stp:
> (In reply to Postmanpat)
> [...]
>
> No new airport expansion and no new coal fired power stations.

and how would you achieve this without new regulations?

 anonymouse 23 Sep 2008
In reply to alanw:
> Expecting businesses to take all the risk is surely a bit naive, especially if the option not to bother will make them more money.
It's a gamble isn't it: a) you win you make billions, b) you lose you disappear forever. Large companies seem to feel that it should all be a) and never b). That it should be free markets and so on, when it's in their favour and government intervention and handouts when it's not.
 alanw 23 Sep 2008
In reply to anonymouse: The recent financial crisis does seem to suggest that you're right, particularly with large businesses, but there are plenty of small companies that have gone bust over the years. In the energy sector the big utilities will be fine but it's the small companies looking to develop renewables that need the help. It is, however, a fine line as the recent ROC windfalls from windfarms have shown.

I'm really not sure what the problem is with this report. It should be welcomed even if there is an element of calling their bluff. They're calling for tougher action on climate change so lets give them that and if the likes of BAA complain at some point down the line we can simply say that we're only doing what they asked.
 anonymouse 23 Sep 2008
In reply to stp:
> Well certainly the case of BAA there not saying that. They are actively lobbying for airport expansion.
I was going on the info in the OP, which states that BAA is one of the names on the letter. They are lobbying to build more airports and asking to be stopped, or slowed, at the same time. Odd.
 anonymouse 23 Sep 2008
In reply to tony:
> Has the question been put to the voters? Besides, Governments don't always stick just to what the voters want.
No it hasn't, but we all know how popular an avoidable rise in energy prices would be.
> What risks are you talking about? I'm not sure what is being suggested here.
One could make a profit from selling renewable energy, but most consumers are likely to opt for cheaper sources. Just like they tend to choose cheap food and cheap clothes. Not everyone does though. There are people out there willing to pay a extra for renewable energy. Now there's a risk in trying to exploit that market for large companies because they're set up to deliver energy in the usual carbon-rich way. It would reduce their profits to produce renewable energy because of the larger cost involved in renewable energy production. It's a gamble because they're not sure people will buy it, or because they don't know how to persuade people to buy it.

To remove this risk they want government to effectively subsidise renewable energy production, or push up the cost of regular energy production. Either way the companies profits are maintained and the extra cost associated with that risk is passed on to the consumers and taxpayers.

Now my understanding is a bit shaky, but I thought that free markets and competition were supposed to lead to increases in efficiency and innovation. i.e. in a renewable energy market that's working properly competition drives down prices as far as they will go till the only way they can drop any further is via clever reductions in cost.
OP stp 23 Sep 2008
In reply to Postmanpat:
> (In reply to stp)
> [...]
>
> and how would you achieve this without new regulations?


Well if they are genuinely concerned about climate change it would be a natural choice for them to make; same way as many individuals are choosing to limit how much, or even cease, flying they do.

 alanw 23 Sep 2008
In reply to anonymouse:
> Now there's a risk in trying to exploit that market for large companies because they're set up to deliver energy in the usual carbon-rich way. It would reduce their profits to produce renewable energy because of the larger cost involved in renewable energy production. It's a gamble because they're not sure people will buy it, or because they don't know how to persuade people to buy it.

It's actually easier for a big company to invest in renewable energy as they can spread the risk a lot thinner. It also pays them to look a lot further ahead than most governemnts as they will generally intend to still be in business way beyond the next general election.

So, if you take the case of the big oil companies, you saw the likes of BP and Shell invest heavily in biofuels, wind, solar, etc. Their core business was always oil but it made sense to chuck a few million at the alternatives because the oil companies are well aware that the oil will run out at some point and when that happens they still want to be in the energy business.

Recently this trend has changed. BP have dropped much of their interest in renewables, Shell have pulled out of the huge London Array windfarm. The question is why has this happened. Are they actually just interested in the immedaite bottom line and not getting the profits they expected? Have they realised that there's plenty of oil still left (now that the arctic is opening up - eek!)?

Whatever the reason, it's a worrying trend and suggests that relying on the free market to get us out of the hole we're in might not be the best idea.
OP stp 23 Sep 2008
In reply to anonymouse:

> They are lobbying to build more airports and asking to be stopped, or slowed, at the same time. Odd.


I think it's simply corporate greenwash. I mentioned (on another thread) legal services company DLA Piper who hosted a massive conference on climate change in Sheffield last year at which Al Gore headlined. This year they've signed the petition for Heathrow expansion.

There must be a logic to the holding such disparate ideas at the same time. My guess is it's the logic is marketing and PR. Green is the new 'cool', symbolic of a caring company. The fact that it's completely insincere doesn't reduce it's effectiveness as a marketing strategy since most people won't notice.
 Wibble Wibble 23 Sep 2008
In reply to anonymouse:
> Now my understanding is a bit shaky, but I thought that free markets and competition were supposed to lead to increases in efficiency and innovation.

Only if you internalise external costs to the environment, society, health, etc. which are not paid for by, say, your huge coal fired power station. Now the tricky bit is that no one has put an effective cost on these, so renewables look expensive. This is what carbon trading is meant to achieve.

The unfortunate thing about the free market is that it operates on narrow timescales and with climate change (and energy provision and security in general) you're talking about strategic decisions to invest in whole energy infrastructures for the next 2 or more generations. This requires vision and leadership from politicians who are elected on a 4 or 5 year cycle. In other words, we are f*cked.
 Wibble Wibble 23 Sep 2008
In reply to alanw:
> (In reply to anonymouse)
> [...]
>
> Recently this trend has changed. BP have dropped much of their interest in renewables, Shell have pulled out of the huge London Array windfarm. The question is why has this happened. Are they actually just interested in the immedaite bottom line and not getting the profits they expected? Have they realised that there's plenty of oil still left (now that the arctic is opening up - eek!)?

Yes. So much for the Shell ads where they're whizzing round in speed boats hugging seals.
 alanw 23 Sep 2008
In reply to Wibble Wibble: It is indeed the timescales that are really worrying and beyond anything mankind has faced to date. I remember seeing David King give a talk where he lamented the fact that the only thing with greater inertia than the climate system is the global political system.
 DougG 23 Sep 2008
In reply to alanw:

> (now that the arctic is opening up - eek!)?

Literally, maybe.
http://www.independent.co.uk/environment/climate-change/exclusive-the-metha...
 DougG 23 Sep 2008
In reply to tony:

> Of course, all this comes back to my idea of building the carbon costs into the cost of electricity at source, but nobody listens to me...

Yep, that would help. Not just electricity, of course. If the carbon cost of transporting an Alaskan salmon to Aberdeen was factored into its retail price, it would be a lot cheaper to eat local produce. As things stand, it's (evidently) not, so people go for the exotic alternative.
Removed User 23 Sep 2008
In reply to stp:

I think Tony has already explained why there is a difference between what companies aspire to and what they actually do. However you maybe missed his point so I'll put it slightly differently.

Boards of Directors of companies are not free to do as they choose. They have a duty to their investors to maximise the return on their investment in that particular company. At the same time they have a duty to make sure their company works within the law. As almost every large company is in competition with other large companies they have to work very hard to maximise return on investment to make sure they don't make less profit or poorer stock performance than their rivals.

This leaves little room for indulging in activities that don't have a positive effect on the bottom line. Therefore, if we want companies to change the way they behave we'll have to change the rules that they all work to. That way we make sure that they channel their energies into doing things we think are good.

To give another example. Europe has already put legislation in place to reduce the amount of harmful chemicals in consumer products sold in the EU and force a level of recycling. No doubt many company directors knew previous to legislation that it would be a good thing to restrict the use of harmful chemicals and recycle more but no one was going to make their company uncompetitive with their less scrupulous competitors. All that would happen would be that the companies that didn't do the environmentally friendly thing would be more profitable, would gain market share and probably end up buying the environmentally friendly company.

Now that there's legislation in place everybody has to behave the same way and therefore the disincentive to behave in an environmentally friendly way is removed.
 alanw 23 Sep 2008
In reply to DougG: Yeah, I saw that. Bugger.
OP stp 25 Sep 2008
In reply to Removed User:

Yeah I see what you're saying and understand the point.

But I think if an energy company wanted to it could simply argue that building such plants may actually be against investor's interests since these plants could get closed down in the future with new legislation. Kingsnorth's life extends up to 2015 which is about the same time that some scientists are saying is the time we have to make big reductions in CO2. There is also the argument that says by taking an early lead on future (ie green) technology will give a competitive advantage in the future.

The other argument seems to be that if one company goes for more expensive green electricity another company may come along and undercut prices with dirty energy. However looking at the UK energy situation I don't think that argument holds much water. We're in a position when it's doubtful that will be enough energy in the future at all. There's not enough power stations and as oil and gas supplies diminish there will be even greater demand for electricity. So if consumers are faced with the choice of green energy or no energy obviously they'll choose the former.

A much more difficult problem may be the government's attitude to Britain's competitiveness in the world markets. If our businesses have to pay more for energy because it's green they won't be able to compete with countries that choose cheaper dirty energy. I guess this is where EU legislation might come in. But the UK government has been working against that, trying to water that down.

 Simon4 25 Sep 2008
In reply to stp:

> I guess this is where EU legislation might come in

Why? Shouldn't think there are enough bribes for corrupt Brussels bureaucrats to line their pockets with.

> But the UK government has been working against that, trying to water that down

The UK people, which are far more important than the failing and flailing UK government, would still like their promised say about the Brussels constitution, and the Brussels tyranny generally.


New Topic
This topic has been archived, and won't accept reply postings.
Loading Notifications...