By George Monbiot, published in the Guardian 14th August 2012

I don’t blame Mo Farah, Pele and Haile Gebrselassie, who lined up, all hugs and smiles, outside Downing Street for a photocall at the prime minister’s hunger summit(1). Perhaps they were unaware of the way in which they were being used to promote his corporate and paternalistic approach to overseas aid. Perhaps they were also unaware of the crime against humanity over which he presides. Perhaps Cameron himself is unaware of it.

You should by now have heard about the famine developing in the Sahel region of West Africa. Poor harvests and high food prices threaten the lives of some 18 million people. The global price of food is likely to rise still further, as a result of low crop yields in the United States, caused by the worst drought in 50 years. World cereal prices, in response to this disaster, climbed 17% last month(2).

We have been cautious about attributing such events to climate change: perhaps too cautious. A new paper by James Hansen, head of NASA’s Goddard Institute for Space Studies, shows that there has been a sharp increase in the frequency of extremely hot summers(3). Between 1951 and 1980 these events affected between 0.1 and 0.2% of the world’s land surface each year. Now, on average, they affect 10%. Hansen explains that “the odds that natural variability created these extremes are minuscule, vanishingly small”(4). Both the droughts in the Sahel and the US crop failures are likely to be the result of climate change.

But this is not the only sense in which the rich world’s use of fuel is causing the poor to starve. In the United Kingdom, in the rest of the European Union and in the United States, governments have chosen to deploy a cure as bad as the disease. Despite overwhelming evidence of the harm their policy is causing, none of them will change course.

Biofuels are the means by which governments in the rich world avoid hard choices. Rather than raise fuel economy standards as far as technology allows, rather than promoting a shift from driving to public transport, walking and cycling, rather than insisting on better town planning to reduce the need to travel, they have chosen to exchange our wild overconsumption of petroleum for the wild overconsumption of fuel made from crops. No one has to drive less or make a better car: everything remains the same except the source of fuel. The result is a competition between the world’s richest and poorest consumers, a contest between overconsumption and survival. There was never any doubt about which side would win.

I’ve been banging on about this since 2004(5), and everything I warned of then has happened. The US and the European Union have both set targets and created generous financial incentives for the use of biofuels. The results have been a disaster for people and the planet.

Already, 40% of US corn (maize) production is used to feed cars(6). The proportion will rise this year as a result of the smaller harvest. Though the market for biodiesel is largely confined to the European Union, it has already captured seven per cent of the world’s output of vegetable oil(7). The European Commission admits that its target (10% of transport fuels by 2020) will raise world cereal prices by between 3 and 6%(8). Oxfam estimates that with every 1% increase in the price of food, another 16 million people go hungry(9).

By 2021, the OECD says, 14% of the world’s maize and other coarse grains, 16% of its vegetable oil and 34% of its sugarcane will be used to make people in the gas guzzling nations feel better about themselves(10). The demand for biofuel will be met, it reports, partly through an increase in production; partly through a “reduction in human consumption.”(11) The poor will starve so that the rich can drive.

The rich world’s demand for biofuels is already causing a global land grab. ActionAid estimates that European companies have now seized five million hectares of farmland – an area the size of Denmark – in developing countries for industrial biofuel production(12). Small farmers, growing food for themselves and local markets, have been thrown off their land and destituted. Tropical forests, savannahs and grasslands have been cleared to plant what the industry still calls “green fuels”.

When the impacts of land clearance and the use of nitrogen fertilisers are taken into account, biofuels produce more greenhouse gases than fossil fuels do(13,14,15). The UK, which claims that half the biofuel sold here meets its sustainability criteria, solves this problem by excluding the greenhouse gas emissions caused by changes in land use(16). Its sustainability criteria are, as a result, worthless.

Even second generation biofuels, made from crop wastes or wood, are an environmental disaster, either extending the cultivated area or removing the straw and stovers which protect the soil from erosion and keep carbon and nutrients in the ground. The combination of first and second generation biofuels – encouraging farmers to plough up grasslands and to leave the soil bare – and hot summers could create the perfect conditions for a new dust bowl.

Our government knows all this. One of its own studies shows that if the European Union stopped producing biofuels, the amount of vegetable oils it exported to world markets would rise by 20% and the amount of wheat by 33%, reducing world prices(17).

Preparing for the prime minister’s hunger summit on Sunday, the international development department argued that, with a rising population, “the food production system will need to be radically overhauled, not just to produce more food but to produce it sustainably and fairly to ensure that the poorest people have the access to food that they need.”(18) But another government department – transport – boasts on its website that, thanks to its policies, drivers in this country have now used 4.4 billion litres of biofuel(19). Of this 30% was produced from recycled cooking oil. The rest consists of 3 billion litres of refined energy snatched from the mouths of the people that David Cameron claims to be helping.

Some of those to whom the government is now extending its “nutrition interventions” may have been starved by its own policies. In this and other ways, David Cameron, with the unwitting support of various sporting heroes, is offering charity, not justice. And that is no basis for liberating the poor.

www.monbiot.com

References:

1. http://www.number10.gov.uk/news/sport-stars-get-behind-olympic-hunger-summit/

2. http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/

3. James Hansen, Makiko Satoa, Reto Ruedy, 2012. Perception of climate change. Proceedings of the National Academy of Sciences, in press. http://arxiv.org/ftp/arxiv/papers/1204/1204.1286.pdf

4. http://www.washingtonpost.com/opinions/climate-change-is-here–and-worse-than-we-thought/2012/08/03/6ae604c2-dd90-11e1-8e43-4a3c4375504a_story.html?hpid=z3

5. http://www.monbiot.com/2004/11/23/feeding-cars-not-people/

6. OECD and UNFAO, 2012. Agricultural Outlook, 2012-2021.
http://www.keepeek.com/Digital-Asset-Management/oecd/agriculture-and-food/oecd-fao-agricultural-outlook-2012_agr_outlook-2012-en

7. Alessandro Flammini, October 2008. Biofuels and the underlying causes of high food prices. UN Food and Agriculture Organisation. http://bit.ly/P7V1Zt

8. Mariann Fischer Boel, European Commissioner for Agriculture and Rural Development, 13th March 2008. Biofuels: not a magic wand, but a valuable policy tool. Speech to the 2008 World Biofuels Markets Congress. http://bit.ly/MTPDdZ

9. R.Bailey, 2008. Response of Oxfam GB to the Gallagher Review. Oxfam. Cited by ActionAid, 2010. Meals per Gallon: the impact of industrial biofuels on people and global hunger. http://www.actionaid.org.uk/doc_lib/meals_per_gallon_final.pdf

10. OECD and UNFAO, 2012. Agricultural Outlook, 2012-2021.
http://www.keepeek.com/Digital-Asset-Management/oecd/agriculture-and-food/oecd-fao-agricultural-outlook-2012_agr_outlook-2012-en

11. as above

12. ActionAid, 2010. Meals per Gallon: the impact of industrial biofuels on people and global hunger. http://www.actionaid.org.uk/doc_lib/meals_per_gallon_final.pdf

13. PJ Crutzen, AR Mosier, KA Smith and W Winiwarter, 1 August 2007. N2O release from agro-biofuel production negates global warming reduction by replacing fossil fuels. Atmospheric Chemistry and Physics Discussions 7, pp11191–11205. http://www.atmos-chem-phys-discuss.net/7/11191/2007/acpd-7-11191-2007.pdf

14. Joseph Fargione, Jason Hill, David Tilman, Stephen Polasky, Peter Hawthorne, 7th February 2008. Land Clearing and the Biofuel Carbon Debt. Science. Doi 10.1126/science.1152747.

15. Timothy Searchinger, Ralph Heimlich, R. A. Houghton, Fengxia Dong, Amani Elobeid, Jacinto Fabiosa, Simla Tokgoz, Dermot Hayes, Tun-Hsiang Yu, 7th February 2008. Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land Use Change . Science. Doi 10.1126/science.1151861.

16. “This figure may not include all emissions from direct land use change and excludes the emissions from indirect land-use changes considered in the ‘Gallagher Review’.” http://www.dft.gov.uk/statistics/releases/verified-rtfo-biofuel-statistics-2010-11/

17. Grant Davies, 2012. Removing Biofuel Support Policies: An Assessment of Projected Impacts on Global Agricultural Markets using the AGLINK-COSIMO model. DEFRA. http://www.decc.gov.uk/assets/decc/11/meeting-energy-demand/bio-energy/5134-removing-biofuel-support-policies-an-assessment-o.pdf

18. http://www.dfid.gov.uk/What-we-do/Key-issues/Food-and-nutrition/

19. http://www.dft.gov.uk/statistics/releases/verified-rtfo-biofuel-statistics-2010-11/

By George Monbiot, published in the Guardian 3rd July 2012

The facts have changed, now we must change too. For the past ten years an unlikely coalition of geologists, oil drillers, bankers, military strategists and environmentalists has been warning that peak oil – the decline of global supplies – is just around the corner. We had some strong reasons for doing so: production had slowed, the price had risen sharply, depletion was widespread and appeared to be escalating. The first of the great resource crunches seemed about to strike.

Among environmentalists it was never clear, even to ourselves, whether or not we wanted it to happen. It had the potential both to shock the world into economic transformation, averting future catastrophes, and to generate catastrophes of its own, including a shift into even more damaging technologies, such as biofuels and petrol made from coal. Even so, peak oil was a powerful lever. Governments, businesses and voters who seemed impervious to the moral case for cutting the use of fossil fuels might, we hoped, respond to the economic case.

Some of us made vague predictions, others were more specific. In all cases we were wrong. In 1975 MK Hubbert, a geoscientist working for Shell who had correctly predicted the decline in US oil production, suggested that global supplies could peak in 1995(1). In 1997 the petroleum geologist Colin Campbell estimated that it would happen before 2010(2). In 2003 the geophysicist Kenneth Deffeyes said he was “99 per cent confident” that peak oil would occur in 2004(3). In 2004, the Texas tycoon T. Boone Pickens predicted that “never again will we pump more than 82 million barrels” per day of liquid fuels(4). (Average daily supply in May 2012 was 91 million(5)). In 2005, the investment banker Matthew Simmons maintained that “Saudi Arabia … cannot materially grow its oil production.”(6) (Since then its output has risen from 9 million barrels a day to 10, and it has another 1.5 million in spare capacity(7,8)).

Peak oil hasn’t happened, and it’s unlikely to happen for a very long time. A report by the oil executive Leonardo Maugeri, published by Harvard University, provides compelling evidence that a new oil boom has begun(9). The constraints on oil supply over the past ten years appear to have had more to do with money than geology. The low prices before 2003 had discouraged investors from developing difficult fields. The high prices of the past few years have changed that.

Maugeri’s analysis of projects in 23 countries suggests that global oil supplies are likely to rise by a net 17m barrels per day (to 110m) by 2020. This, he says, is “the largest potential addition to the world’s oil supply capacity since the 1980s.” The investments required to make this boom happen depend on a long-term price of $70 a barrel. The current cost of Brent crude is $95(10). Money is now flooding into new oil: a trillion dollars was spent over the past two years, a record $600bn is lined up for 2012(11).

The country in which production is likely to rise furthest is Iraq, into which multinational companies are now sinking their money, and their claws. The bigger surprise is that the other great boom is likely to happen in the US. Hubbert’s Peak, the famous bell-shaped graph depicting the rise and fall of US oil, is set to become Hubbert’s Rollercoaster.

Investment there will concentrate on unconventional oil, especially shale oil (which, confusingly, is not the same as oil shale). Shale oil is high-quality crude trapped in rocks through which it doesn’t flow naturally. There are, we now know, monstrous deposits in the United States: one estimate suggests that the Bakken shales in North Dakota contain almost as much oil as Saudi Arabia (though less of it is extractable)(12). And this is one of 20 such formations in the US. Extracting shale oil requires horizontal drilling and fracking: a combination of high prices and technological refinements has made them economically viable. Already production in North Dakota has risen from 100,000 barrels a day in 2005 to 550,000 this January (13).

So this is where we are. The automatic correction – resource depletion destroying the machine that was driving it – that many environmentalists foresaw is not going to happen. The problem we face is not that there is too little oil, but that there is too much.

We have confused threats to the living planet with threats to industrial civilisation. They are not, in the first instance, the same thing. Industry and consumer capitalism, powered by abundant oil supplies, are more resilient than many of the natural systems they threaten. The great profusion of life in the past – fossilised in the form of flammable carbon – now jeopardises the great profusion of life in the present.

There is enough oil in the ground to deepfry the lot of us, and no obvious means by which we might prevail upon governments and industry to leave it in the ground. Twenty years of efforts to prevent climate breakdown through moral persuasion have failed, with the collapse of the multilateral process at Rio de Janeiro last month. The world’s most powerful nation is once again becoming an oil state, and if the political transformation of its northern neighbour is anything to go by(14,15), the results will not be pretty.

Humanity seems to be like the girl in Guillermo del Toro’s masterpiece Pan’s Labyrinth: she knows that if she eats the exquisite feast laid out in front of her, she too will be consumed, but she cannot help herself. I don’t like raising problems when I cannot see a solution. But right now I’m not sure how I can look my children in the eyes.

www.monbiot.com

References:

1. http://www.hubbertpeak.com/hubbert/natgeog.htm

2. Colin J. Campbell, 1997. The Coming Oil Crisis. Multi-Science Publishing Co. Ltd, Brentwood, Essex.

3. Quoted by Bob Holmes and Nicola Jones, 2nd August 2003. Brace yourself for the end of cheap oil. New Scientist, vol 179, issue 2406.

4. T. Boone Pickens, 9th August 2004. On the Kudlow and Cramer Show, MSNBC.

5. International Energy Agency, 13th June 2012. Oil Market Report. http://omrpublic.iea.org/

6. Matthew Simmons, 2005. Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Wiley.

7. http://earlywarn.blogspot.co.uk/2011/02/latest-saudi-arabian-oil-production.html

8. See the note at the bottom of pages 4-5, Leonardo Maugeri, June 2012. Oil: The Next Revolution. The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World. http://belfercenter.ksg.harvard.edu/files/Oil-%20The%20Next%20Revolution.pdf

9. Leonardo Maugeri, June 2012. Oil: The Next Revolution. The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World. http://belfercenter.ksg.harvard.edu/files/Oil-%20The%20Next%20Revolution.pdf

10. http://www.oil-price.net/

11. Barclays’ Upstream Spending Review, 2012, cited by Leonardo Maugeri, as above.

12. Maugeri writes (page 47): “In 2011, Continental has estimated the Bakken OOP alone at 500 billion barrels. In terms of oil in place (not all of which is recoverable), both the Price and the Continental estimates would put the Bakken formation ahead of the largest oil basins in the world, making it the biggest one—a sort of Saudi Arabia within the United States. (In 2005, Saudi Oil Minister Al Naimi publicly estimated the OOP of Saudi Arabia to be around 700 billion barrels).”

13. https://www.dmr.nd.gov/oilgas/stats/historicaloilprodstats.pdf

14. Andrew Nikiforuk, 26th June 2012. Canada’s Hard Turn Right.
http://www.adbusters.org/magazine/102/canadas-hard-right-turn.html

15. George Monbiot, 1st December 2009. The Urgent Threat to World Peace is … Canada. http://www.monbiot.com/2009/12/01/the-urgent-threat-to-world-peace-is-%E2%80%A6-canada/

By George Monbiot. Published in the Guardian 20th September 2011

I would rather not be writing this column. To argue against the course of action I’m discussing is to tolerate collusion with a murderous regime. To argue in favour is to risk promoting wider human suffering. The moral lines are tangled and the progressive response is confused: perhaps it is unsurprising that this issue has attracted little public discussion. Should we or should we not support wider economic sanctions on Syria?

I felt obliged to tackle this question when I discovered last week that Shell, the most valuable company listed on the London stock exchange, is directly connected to the economic interests of Bashar al-Assad’s government. It has a 21% share in the Al Furat Petroleum Company, 50% of which is owned by the state(1). Ghassan Ibrahim, CEO of the Global Arab Network and a prominent opponent of the regime, tells me that the government permits foreign companies a share of its booty only if they can offer expertise it does not otherwise possess. As much of the wealth produced by Syrian state companies goes into the pockets of the elite, it seems clear that if Shell were not useful to the regime, it would no longer be there(2).

Shell says “We condemn any violence and the human rights abuse it represents and we have deep concern over the loss of life … we comply with all applicable international sanctions”(3). But, though complying with current sanctions, it is enriching a government that is violently repressing peaceful protest. The regime has killed some 2,600 Syrian people since March(4). Its interrogators have tortured and mutilated its prisoners, cutting off genitals and gouging out eyes(5).

The likely outcome of Shell’s investment is that Assad has more money to spend on soldiers, weapons and prison cells. The argument for forcing Shell and other investors to leave and for finding further means of starving the government of money is a strong one.

But no one with an interest in human rights can be unaware of what happened when western nations applied sanctions to Syria’s neighbour Iraq. No one who has seen it can forget the CBS interview in 1996 with Madeleine Albright, Bill Clinton’s Secretary of State. The interviewer pointed out that half a million children had died in Iraq as a result of economic sanctions. “We think the price is worth it,” Albright replied(6). The sanctions on Iraq could scarcely have been better designed to cause mass mortality. But even measures that are narrower in scope and applied more humanely will add economic distress to the suffering of Syria’s people. Sanctions broad enough to hurt the government’s ability to deploy troops will also be broad enough to hurt the people they are meant to protect.

And if not sanctions, then what? So far the only alternatives on offer are vacuous condemnation and demands from the likes of Nick Clegg that “it’s time for Assad to go.”(7) Which, in terms of efficacy, is like being mauled by a giant sock.

So far the European Union has imposed travel bans on members of the regime and frozen some of their assets. The impact is likely to be limited, not least because Assad and his close associates are said to have stashed far greater sums beyond the reach of the EU (and beyond the reach of any kind of scrutiny or accountability) in Swiss banks(8). It wasn’t until May that European governments decided to impose an arms embargo on Syria(9), which tells us more than is comfortable about their priorities. But better late than never.

More recently, Europe banned the import of Syrian oil. As the EU imported over 90% of Syria’s oil, as oil provides 25% of state revenue(10) and as the state has a monopoly on its sale, this would have stung – had Italy not insisted that the ban be delayed until mid-November. This gives the government time to find new customers. An investment ban, which would reduce the value of assets that enrich the political elite, could hit the government much harder.

The obvious means of resolving this question is to ask the Syrian people what they want. But there is no clear consensus. Of the three opponents of the Assad regime I’ve consulted, two are in favour of wide-ranging sanctions, one is against. Chris Doyle, director of the Council for Arab-British Understanding, who has spoken to a much larger number of dissidents, tells me that “Syrians are hugely divided on this issue”(11). Almost everyone in the protest movements supports sanctions aimed specifically at members of the regime and their businesses, but they are split over wider measures, such as the EU’s oil embargo.

Ghassan Ibrahim told me that opponents of the government recognise that “freedom is very expensive and you have to pay the price. Let’s pay it once and for good.” He argues that sanctions are likely to be more effective than they were in Iraq, as the regime’s resources are smaller. Even today it can scarcely afford to sustain its army. The government’s oil revenues provide few benefits for the Syrian people. Samir Seifan, a prominent economist who sought to reform the regime, argues in favour of a wider embargo, including sanctions on investments in the oil and gas sector. This would, he concedes, hurt people because of its impact on industry, farming, transport and electricity, but it also restricts “army movements which are using a huge amount of oil products.”(12) Others have argued, Doyle says, that as well as hurting the people more than the regime, sanctions would give Assad an excuse to blame the Americans and Europeans for the economic crisis he has caused.

So I posted the question on Comment is Free, in the hope that Guardian readers would help to resolve it(13). There was a big response. It provided no clear answers, but it helped to clarify some of the issues.

The most widespread objection to the sanctions was that the governments imposing them are selective in their concerns and lacking in moral credentials. This is true on both counts. This column is discussing sanctions on Syria only because they are being imposed there, rather than on Saudi Arabia or Bahrain, which are also run by violently repressive regimes. Far from restraining them, the UK and other European nations continue to supply them with a hideous array of weapons(14). Though both the UK and the US committed the crime of aggression in Iraq(15), there is no prospect of sanctions against them. This is the justice of the powerful.

But these concerns, while valid, do nothing to resolve the question. You could just as well argue that because the grisly Russian and Chinese governments oppose further sanctions, they must be a good idea. The brutality of Assad’s government is not altered by the nature of the states that oppose him, or by the incoherence and self-interest of their foreign policy. We must make our own moral judgements.

The division on this question among Syrians, the difficulty in predicting the outcome of measures that might help and will harm, a repulsion from collaboration pitched against a fear of aggravation, lead me to an unusual place for a fire and brimstone polemicist. There is no right answer.

www.monbiot.com

References:

1. Syria Shell Petroleum Development has a 32% share in Al Furat, but the the China National Petroleum Corporation has a 35% share in Syria Shell Petroleum Development, leaving Shell with an overall stake of 21% in Al Furat. http://www.afpc-sy.com/new/history.htm

2. By phone, 18.9.11

3. By email, 19.9.11

4. http://www.guardian.co.uk/world/2011/sep/12/russia-refuses-more-syria-sanctions

5. http://www.guardian.co.uk/world/2011/aug/30/syria-crackdown-amnesty-deaths-detention

6. http://www.youtube.com/watch?v=FbIX1CP9qr4

7. http://www.guardian.co.uk/world/2011/aug/22/assad-go-syria-nick-clegg

8. This is what I was told by a well-connected Syrian, who asked not to be named.

9. Foreign and Commonwealth Office, by email, 19.9.11

10. Foreign and Commonwealth Office, by email, 19.9.11

11. By email, 16.9.11

12. By email, 17.9.11

13. http://www.guardian.co.uk/commentisfree/2011/sep/16/sanctions-syria-regime

14. http://www.ft.com/cms/s/0/65a7634e-dd27-11e0-b4f2-00144feabdc0.html

15. http://www.monbiot.com/2010/01/25/a-bounty-for-blairs-arrest/

By George Monbiot. Published in the Guardian 19th July 2011

Rejoice, the boom is back! After a drought of investment, last week BP announced that it was spending £3bn to redevelop fields in the deep waters to the west of Shetland. The government was delighted: this shows, it says, that its policies are working. It promised to “continue to work alongside oil and gas companies to support growth and jobs in the UK.”(1)

Great. But hold on a minute, didn’t the government tell us, just two days before, that its priority is to decarbonise the economy?(2) Well it depends who you’re talking to, and at which point in the cycle of crashing contradictions you catch them.

Let me give you a few examples of joined-up government. In January, Chris Huhne, the secretary of state for energy and climate change, reminded us that “a shift towards non-fossil fuels is in our long-term national interest, as well as the interests of the planet.”(3) The following month his deputy, Charles Hendry, travelled to the International Energy Forum in Riyadh to beg Saudi Arabia to increase the supply of oil(4).

At the end of June, Huhne told us that “the Coalition is determined to reduce our reliance on fossil fuels”(5). Five days later, the Treasury expanded the tax breaks for companies prospecting for new oil and gas reserves(6). With Brent crude at a mere $118 a barrel, the poor dears need all the help they can get. Last week, in its white paper on electricity planning, the government called for steep reductions in energy demand. In the same document it proposed “maximising the economic recovery of our remaining indigenous resources of oil and gas by launching a new offshore licensing round in 2012″(7).

What we don’t understand, the government tells us, is that new oil and gas extraction is a “transitional investment”(8). As Hendry explained in October, “whilst in the long-term, we want to decarbonise our energy system, we have moved swiftly to offer these licences” for new oil and gas(9). This investment is transitional in the sense that switching from 20 cigarettes a day to 40 is a step towards giving up.

Labour also encouraged companies to extract as much fossil fuel as possible, while imploring us not to use it. In fact, with the exceptions of Saudi Arabia and Ecuador, all the governments sitting on reserves are seeking to maximise production, while most also claim to be minimising consumption.

So you could be forgiven for believing that governments aren’t serious about climate change. There would be no clearer statement of an intent to prevent climate breakdown than declaring part of our fossil fuel reserve off limits in perpetuity: a kind of underground national park. There is no clearer statement of an intent to fiddle while the world burns than to keep pushing up supply while trying to reduce demand.

We now have a clearer idea of how big the underground park would have to be. A new report by the Carbon Tracker Initiative seeks to discover how much of the global fossil fuel reserve could be burnt without committing us to two degrees of global warming(10). Before discussing the figures, let me remind you of the difference between reserves and resources. A resource is the total quantity of a mineral found in the earth’s crust. A reserve is the fraction of the resource which has been identified, quantified and is cost-effective to exploit.

Researchers at the Potsdam Institute in Germany estimate that, to keep the chances of exceeding two degrees to 20% or less, between 2000 and 2050 the world can afford to release no more than 886 billion tonnes of carbon dioxide. As we produced 321 billion tonnes between 2000 and 2010, that leaves only 565 billion for the next 40 years.

But if current fossil fuel reserves were all extracted and burnt, they would produce some 2795 billion tonnes: five times as much. (These figures, being averages, suggest a precision that no one intends). Around 40% of the CO2 produced this century will remain in the atmosphere until at least the year 3000(11). This means that current reserves contain roughly twice as much carbon as we can afford to burn in the millennium. In a world that took climate change seriously, most fossil fuel reserves would be worthless.

The government claims it can resolve this contradiction through carbon capture and storage (CCS): trapping CO2 produced by burning fossil fuels and piping it into underground stores. But much of the fuel that companies intend to extract will be burnt in cars, planes or domestic boilers, from which the emissions cannot be captured. Even the promise of CCS in power stations relies on technologies which have not yet been proven in combination, at scale. To pin so great a hope on so uncertain a prospect suggests that we have learnt nothing from the magical thinking that caused the financial crisis.

In fact, reading last week’s white paper, it looks as if the primary purpose of CCS is not to prevent climate change but to permit the construction of a new generation of coal plants. The paper proposes an emissions performance standard for new electricity plants, which means a limit to the amount of carbon dioxide they can release per unit of power they produce. The limit it sets is a ridiculous 450 grams per kilowatt hour: ridiculous because this is slightly higher than the current average, which is bumped up by the creaky old coal plants built in the 1970s and 1980s.

Even so, most new coal would be hard to build to this standard, as coal produces more carbon per kilowatt hour than other fossil fuels. But there’s a get-out clause: if your new coal burner is a “CCS demonstration plant”, it’s exempted from the emissions standard. This seems, at first, incomprehensible: surely the power stations with CCS should have the lowest emissions? The purpose of the exemption, the government tells me, is “to ensure we have the flexibility to select the most appropriate demonstration projects”(12). This elucidates precisely nothing.

But there’s a likely explanation. The demonstration plants need to capture only part of their output of carbon dioxide: the gas arising from just 300 megawatts of what could be a 4000-megawatt power station. The CCS exemption resembles nothing so much as a means of keeping polluting coal-burners in business.

All this reminds us that Rupert Murdoch’s corporation is not the only one whose power subverts the purpose and priorities of government. Corporate lobbying poisons all democratic politics. The threat of climate change has so far done little to disrupt the fossil fuel companies’ business plans, or their grip on policy. The assault on Murdoch’s empire is just the beginning of the necessary challenge to corporate power.

www.monbiot.com

References:

1. http://www.guardian.co.uk/business/2011/jul/14/bp-expands-north-sea-oil-fields

2. DECC, July 2011. Planning our electric future: a White Paper for secure, affordable and low-carbon electricity. White paper. http://www.decc.gov.uk/en/content/cms/legislation/white_papers/emr_wp_2011/emr_wp_2011.aspx

3. http://blogs.ft.com/energy-source/2011/01/07/chris-huhne-answers-your-questions-part-two/#axzz1SX0hpB4U

4. http://www.decc.gov.uk/en/content/cms/news/pn11_015/pn11_015.aspx

5. http://www.decc.gov.uk/en/content/cms/news/ch_ccc_report/ch_ccc_report.aspx

6. http://www.hm-treasury.gov.uk/press_72_11.htm

7. DECC, July 2011, as above. Page 26.

8. DECC, July 2011, as above. Page 26.

9. http://www.decc.gov.uk/en/content/cms/news/pn10_112/pn10_112.aspx

10. Carbon Tracker Initiative, July 2011. Unburnable Carbon: Are the world’s financial markets
carrying a carbon bubble? http://www.carbontracker.org/wp-content/uploads/downloads/2011/07/Unburnable-Carbon-Full-rev2.pdf

11. Susan Solomon, Gian-Kasper Plattner, Reto Knutti, and Pierre Friedlingstein, 10th February 2009.
Irreversible climate change due to carbon dioxide emissions. PNAS, vol. 106, no. 6, pp1704–1709.
Doi: 10.1073/pnas.0812721106. http://www.pnas.org/content/early/2009/01/28/0812721106.full.pdf+html

12. DECC, 15th July 2011, by email.

By George Monbiot. Published on the Guardian’s website, 16th June 2011

In public, the last government shrugged off the prospect of peak oil. In private, we know now that it had a different view.

A powerpoint presentation released at last by the Department of Energy and Climate Change, in response to freedom of information requests by the indefatigable Lionel Badal, shows that in 2007 the government spent six months secretly gaming the likely impacts of declining global oil supplies. The results were not pretty.

The officials who conducted the assessment found that “it is not possible to predict with any accuracy exactly when or why oil production will peak”. They believed that “a permanent decline in global oil production – i.e. peak oil – is unlikely to take place before 2020. However, if it were to happen, the consequences for economic prosperity and security are likely to be serious”. Among these consequences were:

- “Impacts on UK security of oil supply”

- “Disruption of the UK economy especially the transport sector”

- “Possible geopolitical implications”.

If peak oil hit the UK economy, the officials found, it could take “several years or even decades” for the government and the economy to adjust.

I find these revelations deeply puzzling, not least because, in 2008 and 2009 – after the officials had submitted their confidential report – I made a series of FoI requests of my own. I asked the government what contingency plans it had made for the eventuality that global supplies of crude oil might peak by 2020.

It replied that it agreed with the analysis by the International Energy Agency, that “global oil (and gas) reserves are sufficient to sustain economic growth for the foreseeable future”. As a result “the Government does not feel the need to hold contingency plans specifically for the eventuality of crude oil supplies peaking between now and 2020.” Its existing policies already put the UK “in a good position to deal with the longer-term challenge of declining global oil reserves.”

There are three inconsistencies between what the department told me and what it knew:

1. The civil servants charged with investigating this issue for the government concluded that it was “not possible to predict with any accuracy” when peak oil would occur. This statement clashes with the confident prediction – there was nothing to worry about – with which I was fobbed off.

2. That confident prediction was based on International Energy Agency (IEA) projections. But the powerpoint presentation shows that the IEA’s predictions were an extreme outlier. All the other assessments the officials examined in compiling their report were more pessimistic. So why had the government chosen – in public at any rate – to rely primarily on the IEA?

3. The government had been warned by its officials that peak oil could cause major problems for the UK, and a long and “potentially painful” period of transition. In public it maintained that the country was already in “a good position” to deal with it.

It gets worse. At the end of 2008, the IEA radically changed its own assessment. Rather than relying on guesswork, as it had done until then, it had just conducted the world’s first comprehensive study of the annual rate of decline in output from the world’s 800 largest oilfields. The results forced the agency radically to reassess its optimistic assumptions. It raised its estimate of the annual decline rate from 3.7% to 6.7%. For the first time in one of its World Energy Outlook reports, it mentioned the word “peak”.

(International Energy Agency, World Energy Outlook 2008.)

On the day of the report’s publication, I interviewed the IEA’s chief economist, Fatih Birol, and asked him to be more specific about when the decline in global oil supplies might begin. This is what he told me:

“in terms of non-OPEC, we are expecting that in three, four years’ time the production of conventional oil will come to a plateau, and start to decline. … In terms of the global picture, assuming that OPEC will invest in a timely manner, global conventional oil can still continue, but we still expect that it will come around 2020 to a plateau as well … I think time is not on our side here.”

So I sent the government another request: in the light of what the IEA has revealed, what contingency plans has the UK now made? The response amazed me: “With sufficient investment, the government does not believe that global oil production will peak between now and 2020 and consequently we do not have any contingency plans specific to a peak in oil production.”

The organisation on which the British government claimed to be relying had now pulled the rug from under its feet. Yet still the government maintained that there was nothing to worry about, despite the fact that its own officials were telling a different story. Either their warnings had been brushed aside by ministers or the government was knowingly misleading the public.

All this is further complicated by the remarkable claim Fatih Birol made, out of the blue, a few weeks ago:

“We think that the crude oil production has already peaked, in 2006.”

This is all the more surprising in view of the fact that until 2008 (two years after the IEA now says it happened), the agency continued to dismiss the possibility that peak oil would occur before 2030, if at all.

In public, the last government claimed to be relying on assessments which, with good reason, its own officials did not trust, and which, by the end of 2008, it already knew were wrong. What on earth was going on?

www.monbiot.com

By George Monbiot, published in the Guardian 14th March 2011

Did you hear it? The clamour from western governments for democracy in Saudi Arabia? The howls of outrage from the White House and Number 10 about the shootings on Thursday, the suppression of protests on Friday, the arrival of Saudi troops in Bahrain on Monday? No? Nor did I.

Did we miss it, or do they believe that change is less necessary in Saudi Arabia than it is in Libya? If so, on what grounds? The democracy index published by the Economist Intelligence Unit places Libya 158th out of 167, and Saudi Arabia 160th(1). At least in Libya, for all the cruelties of that regime, women are not officially treated as lepers were in mediaevel Europe.

Last week, while explaining why protests in the kingdom are unnecessary, the foreign minister, Prince Saud Al-Faisal, charmingly promised to “cut off the fingers of those who try to interfere in our internal matters”(2). In other parts of the world this threat would have been figurative; he probably meant it. If mass protests have not yet materialised in Saudi Arabia, it’s because the monarchy maintains a regime of terror, enforced with the help of torture, mutilation and execution.

Yet our leaders are even more at ease among the dyed beards and man-boobs of the Saudi autocracy than they were in the eccentric court of Colonel Gaddafi. The number of export licences granted by the UK government for arms sales to the kingdom has risen roughly fourfold since 2003(3). The last government was so determined to preserve its special relationship with the Saudi despots that it derailed British justice, by forcing the Serious Fraud Office to drop its inquiry into corruption in the Al Yamamah deals(4).

Why? Future weapons sales doubtless play a role. But there’s an even stronger imperative. A few days ago the French bank Société Générale warned that unrest in Saudi Arabia could push the oil price to $200 a barrel(5).

Abdullah’s kingdom is the world’s last swing producer: the only nation capable of raising crude oil production if it falls elsewhere, or if demand outstrips supply. As a result, political disruption there is as threatening to the stability of western governments as it is to the Saudi regime. Probably more so, as our leaders wouldn’t get away with gunning us down in the street.

Few governments of nominal democracies are likely to survive the economic dislocation that a sustained price of $200 would deliver: like Brian Cowen they would be out on their butts quicker than you could cycle past a petrol station. You’re as likely to hear David Cameron call for the overthrow of the House of Saud as you are to hear King Abdullah call for the overthrow of the House of Lords.

But even if the regime remains unchallenged, it’s not clear that it can keep delivering. The Wikileaks cables showed American diplomats questioning the kingdom’s ability to keep raising production. One cable suggested that its reserves have been overstated by 40%(6). If so, that wouldn’t be surprising. The production quotas assigned to OPEC states are a function of the size of their stated reserves: all members of the cartel have an incentive to exaggerate them. Saudi Arabia posts the same figure as it did in 1988(7,8,9). Fact or fiction, who knows? The true condition of its oil fields is a state secret(10).

Another cable questioned the Saudi ability to keep moving the market. “Clearly they can drive prices up, but we question whether they any longer have the power to drive prices down for a prolonged period.”(11)

Western governments rely for their production forecasts primarily on the International Energy Agency. It has recently had to retreat both on its forecasts of future supply and on its mocking dismissal of those who have warned that global oil output might one day peak(12). In 2006 the IEA predicted that world oil supply would rise from 82 million barrels a day to 116 million in 2030(13). In 2008 it reduced the forecast to 106m(14), in 2009 to 105m(15) and in 2010 to 96m (by 2035)(16).

It might have to be downgraded again. The IEA’s new prediction relies on an assumption that Saudi output will rise from 9m barrels to 14.6m in 2035(17). The embassy cables report the alleged opinions of Dr Sadad al-Husseini, the former head of Exploration and Production at Saudi Aramco. “Sustaining 12 million barrels/day output will only be possible for a limited period of time, and even then, only with a massive investment program.”(18) Once Saudi Arabia has produced 180bn barrels (in about 2021) “a slow but steady output decline will ensue and no amount of effort will be able to stop it.” When the cables were released, Al-Husseini denied that he said this(19). But the figures in the report are detailed and precise.

Unlike the last British government, this one does at least admit that there might be a problem. Chris Huhne, the energy secretary, argues that “getting off the oil hook is made all the more urgent by the crisis in the Middle East. We cannot afford to go on relying on such a volatile source of energy.”(20) Partly to this end, he has published a new carbon plan(21). Some of the commitments, particularly on electricity and home heating, are better than expected. But the plan’s weakest point is transport, where it offers incentives without regulation. Huhne’s response to the oil crisis will save plenty of coal and gas, but precious little oil.

That’s not surprising when you see who else sits at the cabinet table. A fortnight ago, as the oil price was soaring, Philip Hammond, the transport secretary, proposed raising – yes, raising – the motorway speed limit from 70 to 80mph(22). George Osborne, the chancellor, has hinted that he will drop the planned rise in fuel duty in next week’s budget(23). I can understand why he wants to dampen prices, but it could also be argued that when supply is tightest fuel duty should be highest. The government also plans to introduce what it calls a Fair Fuel Stabiliser(24). This policy might be blessed with the best abbreviation since the proposed City University of Newcastle-on-Tyne was rechristened, but it’s likely to ensure that demand remains strong. There is, as yet, no government programme which will sharply reduce our craving for oil.

Oil dependency means dependency on Saudi Arabia. Dependency on Saudi Arabia means empowerment of its despotic monarchy. Forget, if you must, the trifling issue of climate breakdown. Forget the incidental matter of economic depression. An oil-dependent economy means an impregnable tyranny in Saudi Arabia. That alone should prompt us to rethink the way we travel.

www.monbiot.com

1. http://graphics.eiu.com/PDF/Democracy_Index_2010_web.pdf

2. http://arabnews.com/saudiarabia/article309980.ece

3. The figure for the whole of 2003 was 63. The figure for the first two quarters of 2010 was 116.
http://www.caat.org.uk/resources/countrydata/?country_selected=Saudi+Arabia

4. http://www.guardian.co.uk/world/bae

5. http://www.reuters.com/article/2011/03/07/businesspro-us-oil-socgen-idUSTRE72636S20110307

6. http://www.guardian.co.uk/business/2011/feb/08/oil-saudiarabia

7. http://www.independent.co.uk/news/business/analysis-and-features/oil-the-power-to-shock-768113.html

8. http://www.opec.org/opec_web/en/data_graphs/330.htm

9. http://en.wikipedia.org/wiki/File:Venezuela_Oil_Reserves.png

10. See Chapter 4 of Matthew Simmons, 2005. Twilight in the desert: the coming Saudi oil shock and the world economy. John Wiley and Sons.

11. http://www.guardian.co.uk/world/2011/feb/08/saudiarabia-oil

12. In 2005, the IEA’s executive director, Claude Mandil, dismissed those who warned of peak oil as “doomsayers”. He wrote that “the IEA has long maintained that none of this is a cause for concern.” International Energy Agency, 2005. Resources to Reserves: Oil and Gas Technologies for the Energy Markets of the Future, page 3. IEA, Paris.

13. IEA, 2006. World Energy Outlook. Table 3.2, Page 93. http://www.iea.org/textbase/nppdf/free/2006/weo2006.pdf

14. IEA, 2008. World Energy Outlook. Page 40. http://www.iea.org/textbase/nppdf/free/2008/weo2008.pdf

15. IEA, 2009. World Energy Outlook. Page 84. The full report is not yet available online.

16. IEA, 2010. World Energy Outlook, Executive Summary. Page 6.
http://www.worldenergyoutlook.org/docs/weo2010/WEO2010_es_english.pdf

17. As above, Page 6.

18. http://www.guardian.co.uk/business/2011/feb/08/oil-saudiarabia

19. http://www.guardian.co.uk/environment/blog/2011/feb/15/oil-saudi-arabia-reserves

20. http://www.guardian.co.uk/business/2011/mar/05/oil-uk-energy-sources

21. http://www.decc.gov.uk/assets/decc/What%20we%20do/A%20low%20carbon%20UK/1358-the-carbon-plan.pdf

22. http://www.dailymail.co.uk/news/article-1361168/Government-considering-raising-motorway-speed-limit-80mph-shorten-journey-times-help-economy.html

23. http://www.guardian.co.uk/business/2011/mar/07/george-osborne-hints-fuel-duty-budget

24. http://www.leftfootforward.org/2010/12/what-has-become-of-the-fair-fuel-stabiliser/

By George Monbiot. Published in the Guardian 27th September 2010

Forget, for a moment, the fragility of the Arctic environment and the likely consequences of a spill there. Forget the dangers of deepwater drilling in a strait plagued by storms and icebergs, and the difficulties –greater than in the Gulf of Mexico – of capping a leaking well there. There’s an even bigger question raised by a British company’s discovery of oil off the coast of Greenland(1). It’s the same question that’s invoked by the decision the British government is expected to make today (Tuesday): to allow exploration wells to be drilled in deep waters to the west of the Shetland islands(2). Why the heck are we prospecting for new oil anyway?

It’s not a difficult issue to grasp. If we burn just 60% of current global reserves of fossil fuels, we produce two degrees of warming(3). We cannot afford to use what has already been discovered, let alone to find more. Yet no one in either the current or past governments has been prepared to engage with it. Before the election, I confronted the environment spokesmen of the three major parties with this question(4). Only Ed Miliband seemed fully to grasp the point, but even he brushed it aside. The other two blustered and stumbled, while failing to resolve a fundamental contradiction in their manifestos: they were seeking simultaneously to reduce demand for fossil fuels and increase supply.

Before the election, the Conservatives promised to wean us off hydrocarbons – and to extract remaining oil reserves in the North Sea “to the fullest possible extent”(5). The LibDems made the same two promises, announcing that they would “secure the maximum long-term benefit to the UK economy of the remaining North Sea reserves.”(6) The new energy secretary, Chris Huhne, has repeated the pledge(7). The government has promised new tax breaks for oil companies working in UK waters in next year’s Finance Bill(8).

There are three possible ways of defending this contradiction. The first, as Ed Miliband did when I confronted him, is to argue that UK reserves are declining anyway, and if we restrained fossil fuel production here we would merely replace it by raising imports. The same argument could be made everywhere, with the result that no one budges. Only one country – Ecuador – currently intends not to exploit its oil(9). If the UK government is serious about preventing more than two degrees of warming, and seeks to avoid the charge of hypocrisy, the only consistent position is to stop prospecting and to decide which 40% of existing fossil fuel reserves should be left in the ground. Otherwise we leave other nations to make the hard choices we intend to duck.

The second is to argue, as the current government does, that new reserves will help to bridge the gap between old and new technologies: Lord make me chaste, but not yet. But it doesn’t matter how much renewable energy we produce: if we burn more than 60% of current fossil fuel reserves we get more than two degrees of warming. If we burn all of them and still look for more, we’ll get four, five or six degrees, regardless of our spending on nuclear power, wind or sunlight. You cannot stop climate breakdown only with investment. There needs to be disinvestment too. Developing new fossil fuel reserves also delays the transition to non-fossil energy, as it keeps the price of hydrocarbons down while ensuring that the value of green investments remains uncertain.

The third defence is to insist that the link between fossil fuel burning and global warming can be broken by means of carbon capture and storage (CCS): burying the emissions produced by power stations. In theory, and to some extent, it could. But the chances that large-scale CCS will happen are becoming more remote. A new study by the National Technical University of Athens suggests that the carbon price in Europe between now and 2030 is likely to remain so weak that the subsidies for CCS currently offered by European governments won’t be big enough to make it happen(10). As Chris Huhne observed last week, “there is no money left”(11). Pouring more state funds into a particularly expensive low-carbon technology isn’t an option.

Even if it were, CCS could do nothing to help reduce emissions from burning oil, almost all of which, in the UK, is used for transport and heating. There is no viable means of capturing carbon dioxide from these sources. We now obtain twice as much energy from oil in this country as we do from coal(12).

So how do we decide which 40% to leave in the ground? The answer is obvious: it should be those reserves whose exploitation is likely to cause the highest environmental and social impacts. That would rule out extraction in both the Arctic and the waters to the west of Shetland.

As I write, four Greenpeace campaigners are treading water in the open seas 100 miles off the Shetland islands(13). They are trying to prevent a drilling ship commissioned by Chevron from reaching its destination. Their case is sound. The West of Shetland task force, a federation of oil companies and government officials, classifies the area in which Chevron is trying to drill as an “extreme / hostile environment.”(14) The company intends to hunt for oil in 1570 metres of water(15) – roughly the depth at which the Deepwater Horizon was working – in an area of high winds and strong currents.

In June Chris Huhne claimed that “the impacts of the explosion on the Deepwater Horizon give us pause for thought, particularly given the beginning of exploration in deeper UK waters West of Shetland.”(16) The pause lasted for a millisecond. Even as he raised these concerns, his department was discussing tax breaks and exemptions with the companies hoping to work there. At a summit in Norway last week the UK government scuppered German proposals for an international review of deepwater drilling(17). BP is now lined up behind Chevron to prospect a region even harder to exploit safely than the deepwater fields in the Gulf of Mexico.

The government insists (I’m writing this on Monday afternoon) that it hasn’t yet decided whether to grant exploration licences for the seas to the west of Shetland. I suggested to its spokesperson that Chevron would not be spending its money and risking its reputation by dispatching an exploratory vessel to the drilling grounds unless it had received a pretty strong steer from the government that its application would be approved when it got there. “You could say that,” she replied(18). Since 2006, oil companies have been carving up this region with the government’s approval, in discussions to which we have not been party(19).

Preventing runaway climate change means getting out of fossil fuels. It means renouncing two fifths of existing reserves. It also means a global moratorium on prospecting, not just in deep water, but everywhere. If we can’t use it, we should stop looking for it.

www.monbiot.com

References:

1. http://www.cairnenergy.com/uploadedFiles/Media_and_News/News/Articles/21.09.10%20-%20Greenland%20Operational%20Update%20%28Final%29.pdf?n=5582

2. http://www.guardian.co.uk/business/2010/sep/27/government-conflict-greenpeace-shetlands-drilling

3. You can find the explanation of this figure, plus references, here: http://www.monbiot.com/archives/2009/05/06/how-much-should-we-leave-in-the-ground/

4. I spoke to them after this hustings: http://www.guardian.co.uk/environment/2010/apr/22/climate-change-environment-debate-election

5. Conservative Party, February 2010. Rebuilding Security: Conservative energy policy for an uncertain world, page 50.

6. Liberal Democrat party, Manifesto 2010, p26. http://network.libdems.org.uk/manifesto2010/libdem_manifesto_2010.pdf

7. On 20th May 2010, Chris Huhne said the following:

“There could be 20 billion barrels of oil equivalent left to exploit but the UK competes against every other basin in the world for investment and I am committed to make sure that we have a licensing regime and investment environment that attracts quality companies and investment to fully exploit the remaining potential. We will work closely with the industry to ensure that we can achieve just that.”

https://www.decc.gov.uk/en/content/cms/news/pn10_060/pn10_060.aspx

8. http://www.hmrc.gov.uk/budget2010/bn09.pdf

9. http://www.energybulletin.net/stories/2010-09-14/deep-ecuador%E2%80%99s-rainforest-plan-forego-oil-bonanza

10. http://planetark.org/enviro-news/item/59563

11. http://www.libdems.org.uk/news_detail.aspx?title=Chris_Huhne%3A_Green_Deal_will_be_a_revolution_&pPK=88186f4a-e1d5-4b34-9fc9-83cff3bf195d

12. http://www.decc.gov.uk/en/content/cms/statistics/publications/dukes/

13. Email from Greenpeace, received 11.59, 27th September 2010.

14. West of Shetland Task Force, 22nd February 2007. Industry Seminar Presentation, Ardoe House, Aberdeen.

15. DECC, pers comm, 27th September 2010.

16. http://www.decc.gov.uk/en/content/cms/news/energy_summit/energy_summit.aspx

17. http://www.guardian.co.uk/environment/2010/sep/23/government-soften-scrutiny-offshore-oil-drilling

18. DECC, pers comm, 27th September 2010.

19. And probably long before that. But this is the year in which the West of Shetland Task Force began to put some of it down on paper.

By George Monbiot, published in the Guardian 22nd June 2010

Call me a hard-hearted bastard, but I’m finding it difficult to summon up the sympathy demanded by the institutional investors now threatening to sue BP. They claim that the company inflated its share price by misrepresenting its safety record(1). I don’t know whether this is true, but I do know that the investors did all they could not to find out. They have just been presented with the bill for the years they spent shouting down anyone who questioned the company.

They might not have been warned by BP, but they were warned repeatedly by environmental groups and ethical investment funds. Every year, at BP’s annual general meetings, they were invited to ask the firm to provide more information about the environmental and social risks it was taking. Every year they voted instead for BP to keep them in the dark. While relying on this company for a disproportionate share of their income (BP pays 12% of all UK firms’ dividends), they refused to hold it to account.

It’s not as if the warning signs were hard to spot. One of them is splashed across the front page of BP’s 2009 annual review: the title is “Operating at the Energy Frontiers”(2). Like all multinational oil companies, BP has been shut out of the easy fields by the decline of its old reserves and the rising power of state-owned companies. So, to keep the money flowing, BP takes risks that other companies won’t contemplate. “Risk”, the review states, “remains a key issue for every business, but at BP it is fundamental to what we do. We operate at the frontiers of the energy industry, in an environment where attitude to risk is key … We continue to show our ability to take on and manage risk, doing the difficult things that others either can’t do or choose not to do.”(3)

Among the risky situations that BP claimed to have mastered was deepwater drilling: “we are exceptionally well placed to sustain our success in the deepwater Gulf of Mexico over the long term.” But the risk here was scarcely higher than on the other frontiers. It is now producing oil from the Rumaila field in Iraq, as a result of a contract agreed in controversial circumstances. It has recently started shipping liquefied natural gas out of the Tangguh project in West Papua. The licence was provided by the Indonesian government, which brutally annexed the country to which the gas belongs, and committed genocide there(4). If West Papua achieves independence, BP will have a lot of explaining to do.

It is pouring money into deepwater oil off the coast of Brazil, and ultra-deepwater drilling off the coast of Angola(5). Having previously refused to invest in Canadian tar sands on the grounds of ecological risk, in 2007 it reversed this position, plunging into the world’s biggest environmental battleground. Its pipeline across Alaska keeps leaking oil into sensitive habitats(6). Its pipeline between Azerbaijan and Turkey was built with the help of land seizures(7) and a contract which effectively grants BP executive power over the Turkish government(8). For how long will that be allowed to stand?

According to a response it sent to a group of ethical shareholders earlier this year, BP appears to have based its expectations of future earnings on unconstrained energy demand. The figures for world energy growth it cited come from the International Energy Agency’s reference scenario, which the agency defines as “a baseline picture of how global energy markets would evolve if governments make no changes to their existing policies and measures”(9,10). The IEA predicts that this unconstrained demand would lead to six degrees of global warming. If governments do decide to take climate change seriously (and the Deepwater Horizon spill gives Barack Obama leverage on this issue that he didn’t possess before), BP’s expectations become as realistic as Gordon Brown’s prediction of uninterrupted economic growth.

The question was not whether one of these risks would materialise, but which and when. The question is unchanged. The next disaster will happen sooner or later, but whether it will take place in Angola or Alaska or somewhere in between is anyone’s guess. What BP presents as brave and visionary looks to its victims like a brazen disregard of life and livelihoods. Its expectations of future profit were based on the assumption – which until now has proved relatively safe – that other people would pick up the bill.

In 2002, after one of its analysts conducted his own research into the safety risks that BP was taking in Alaska, Henderson Global Investors dropped BP from its socially responsible investment funds (this begs the question of what it was doing there in the first place, but never mind)(11). Henderson published its decision and the result was a stampede out of BP stocks by … nobody. The other investment companies chose to ignore Henderson’s warning and rely instead on the oil firm’s assurances.

Far from viewing BP and the other oil companies as risky options, the institutional investors have treated them as foundation stocks: boring, dependable investments. As James Marriott of the pressure group Platform points out, part of the reason is that they expected governments to step up and defend any oil company that got itself into trouble: even, if necessary, to go to war on its behalf. They were seldom disappointed – until now.

So whenever greens or ethical investors warned them about BP’s cavalier behaviour, instead of thanking them, the big fund managers reacted with hostility. On 15 April, five days before the Deepwater Horizon explosion, a group of investors led by Co-operative Asset Management tabled a resolution at BP’s AGM requesting more disclosure of the risks it was running in its tar sands operations(12). It was one of the most successful ethical resolutions ever, but all that means is that funds holding 15% of the shares either supported it or abstained. The other 85% supported the company’s right to keep bamboozling them.

As a report last year by FairPensions warned, pension funds typically delegate the responsibility for assessing environmental and social risk to fund managers(13). The fund managers are either unwilling or unable to discharge it, explaining that the pension funds don’t press them. FairPensions surveyed the UK’s 30 leading occupational schemes, with dire results. Only five funds published their voting records; just six had signed up to the UN’s Principles of Responsible Investment. Even funds representing workers at companies which trumpet their ethical credentials – Aviva, Marks and Spencer and the Co-operative Group – performed dismally. The Universities and BT pension funds did well. The Coal pensions scheme and the IBM, Unilever, BAe and Lloyds TSB funds each scored nought out of 20 for responsible investment(14).

So it’s not BP, or not BP alone, which has damaged the pensions of the millions of people whose retirement funds are invested in the company; it’s the fund holders now attacking it for deploying the dangerous strategies they endorsed. They have chosen the wrong target: they should be sueing themselves.

www.monbiot.com

References:

1. http://www.guardian.co.uk/business/2010/jun/18/bp-class-action-oil-spill-damages

2. http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Review_2009.pdf

3. ibid.

4. http://www.monbiot.com/archives/2005/05/03/in-bed-with-the-killers/

5. Page 14, http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Review_2009.pdf

6. http://news.yahoo.com/s/mcclatchy/20100508/sc_mcclatchy/3499283

7. http://www.bakuceyhan.org.uk/publications/turkey_ffm_2004.pdf

8. http://www.bakuceyhan.org.uk/publications/preliminary_legal_analysis_oct_02.pdf

9. http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/set_branch/set_investors/STAGING/local_assets/downloads/pdf/IC_AGM_oil_sands_resolution.pdf

10. Page 4, http://www.worldenergyoutlook.org/docs/weo2009/WEO2009_es_english.pdf

11. http://www.henderson.com/content/sri/publications/statementsletters/bphendersonsociallyrespinvtfunds.pdf

12. http://www.fairpensions.org.uk/tarsands/update

13. http://www.fairpensions.org.uk/sites/default/files/uploaded_files/documents/ResponsiblePensions_2009.pdf

14. ibid.

By George Monbiot, published in the Guardian 8th June 2010

Has BP ever made a profit? The question looks daft. The oil company posted profits of $26bn last year(1). There’s no doubt that BP has been pumping money into the pockets of its shareholders. The question is whether this money is what the company says it is. BP calls it profit. I call it the provision the firm should be making against future liabilities.

Despite an angry letter from two US senators(2) and a warning from Barack Obama about spending big money on their shareholders while nickeling and diming coastal people(3), despite the fact that it has no idea what its total liabilities in the Gulf of Mexico will be, BP seems to be planning to pay a dividend this year. It’s likely to amount to more than $10bn. As the two senators noted, by moving money “off the company’s books and into investors’ pockets”, BP “will make it much more difficult to repay the US government and American communities”.

Pollution has been defined as a resource in the wrong place. That’s also a pretty good description of the company’s profits. The great plumes of money that have been bursting out of the company’s accounts every year are not BP’s to give away. They consist, in part or in whole, of the externalised costs the company has failed to pay, and which the rest of society must carry.

Does this sound familiar? In the ten years preceding the crash, the banks posted and disposed of stupendous profits. When their risky ventures failed, they
discovered that they hadn’t made sufficient provision against future costs, and had to go begging from the state. They had classified their annual surplus as profit and given it to their investors and staff long before it was safe to do so.

Last week the British government bumped into another consequence of failing to take future costs into account. Chris Huhne, the new secretary of state for energy and climate change, revealed that nuclear decommissioning liabilities will cost the government £4bn more than it was expecting to pay over the next three years(4). This will cancel out two-thirds of the vicious cuts the government has announced and swallow most of his department’s budget. As Huhne pointed out, “It is a classic example of short-termism. I cannot think of a better example of a failure to take a decision in the short run costing the taxpayer a hell of a lot more in the long run.”(5)

The decommissioning costs imposed on society by nuclear power will be dwarfed by those imposed by the fossil fuel industry. They include, but are not confined to, the money that will have to spent on adapting to climate change. The United Nations estimates this cost at $50–170 billion a year, but a report last year by British scientists suggested that this is around three times too low, as it counts only a small proportion of likely impacts(6).

The UN has hired the consultancy Trucost to estimate the costs dumped on the environment by the world’s 3000 biggest public companies. It doesn’t report until October, but earlier this year the Guardian published the interim results(7). Trucost had estimated the damage these companies inflicted on the environment in 2008 at $2.2 trillion, equivalent to one third of their profits for that year. This too is likely to be an underestimate, as the draft report did not try to value the long-term costs of any issue except climate change. Nor did it count the wider social costs of environmental change.

A paper by the New Economics Foundation in 2006 used government estimates of the cost of carbon emissions to calculate the liabilities of Shell and BP(8). It found that while the two companies had just posted profits of £25bn, they had incurred costs in the same year of £46.5bn. The oil leaking into the Gulf of Mexico from the Deepwater Horizon well is scarcely more damaging, and its eventual impacts scarcely more expensive, than the oil which is captured by neighbouring rigs then processed and burnt as intended.

The full costs imposed by the oil companies, which include the loss of human lives and the extinction of species, cannot be accounted. But even if they could, you shouldn’t expect the companies to carry them. They might be incapable of capping their leaks; they are adept at capping their liabilities. The Deepwater Horizon rig, which is owned by Transocean, is registered in the Marshall Islands(9). Most oil companies pull the same trick: they register their rigs and ships in small countries with weak governments and no international reach. These nations are, in other words, incapable of regulating them.

Flags of convenience signify more than the place of registration: they’re an unmistakable sign that responsibilities are being offloaded. If powerful governments were serious about tackling pollution, the first thing they would do would be to force oil companies to register their property in the places where their major interests lie.

US lawyers are drooling over the prospect of what one of them called “the largest tort we’ve had in this country”(10). Some financial analysts are predicting the death of BP, as the fines and compensation it will have to pay outweigh its earnings. I don’t believe a word of it.

ExxonMobil was initially fined $5bn for the Exxon Valdez disaster, in 1989. But its record-breaking profits allowed it pay record-breaking legal fees: after 19 years of argument it got the fine reduced to $507m(11). That’s equivalent to the profit it made every ten days last year. Yesterday, after 25 years of deliberations, an Indian court triumphantly convicted Union Carbide India Ltd of causing death by negligence through the Bhopal catastrophe(12). There was just one catch: Union Carbide India Ltd ceased to exist many years ago. It wound itself up to avoid this outcome, and its liabilities vanished in a puff of poisoned gas.

BP’s insurers will take a hit, so will the pension funds which invested so heavily in it, but, though some people are proposing costs of $40 or even $60bn, I will bet the price of a barrel of crude that the company is still in business ten years from now. Everything else – the ecosystems it blights, the fishing and tourist industries, a habitable climate – might collapse around it, but BP, like the banks, will be deemed too big to fail. Other people will pick up the costs.

There is an alternative, but it is unlikely to materialise. Just as Norway has treated its oil money not as profit but as provision against a tougher future(13), so the governments in whose territories oil companies work should force them to pay into a decommissioning fund. The levy should reflect the costs economists are able to calculate, plus a contingency for those we can’t yet foresee.

This would outrage the oil firms, as it would render many of them unprofitable. But there’s a simple answer to that: the money currently defined as profit is nothing of the kind.

www.monbiot.com

References:

1. BP Annual Review 2009. http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Review_2009.pdf

2. Letter from Senators Charles E. Schumer and Ron Wyden to Tony Hayward, 2nd June 2010. http://wyden.senate.gov/newsroom/press/release/?id=b2b6660f-9f23-4dbd-a4d2-11a0889edcc8

3. http://www.guardian.co.uk/world/feedarticle/9112408

4. http://www.guardian.co.uk/politics/2010/jun/01/chris-huhne-black-hole-nuclear-power-budget

5. http://www.guardian.co.uk/politics/2010/jun/01/chris-huhne-black-hole-nuclear-power-budget

6. Martin Parry et al, 2009. Assessing the Costs of Adaptation to Climate Change: A Review of the
UNFCCC and Other Recent Estimates. International Institute for Environment and Development. http://www.iied.org/pubs/pdfs/11501IIED.pdf

7. http://www.guardian.co.uk/environment/2010/feb/18/worlds-top-firms-environmental-damage

8. NEF and WWF, 2006. Hooked on oil: breaking the habit with
a windfall tax. http://www.neweconomics.org/sites/neweconomics.org/files/Hooked_on_Oil_1.pdf

9. http://www.guardian.co.uk/environment/2010/may/30/oil-spill-deepwater-horizon-marshall-islands

10. http://www.guardian.co.uk/business/2010/may/31/bp-compensation-claims-us-oil-spill

11. http://business.timesonline.co.uk/tol/business/law/article4212940.ece

12. http://www.guardian.co.uk/world/2010/jun/07/bhopal-disaster-india-seven-convicted

13. The Government Pension Fund. See http://www.regjeringen.no/en/dep/fin/Selected-topics/the-government-pension-fund.html?id=1441

By George Monbiot. Published in the Guardian 16th November 2009

I don’t know when global oil supplies will start to decline. I do know that another resource has already peaked and gone into freefall: the credibility of the body that’s meant to assess them. Last week two whistleblowers from the International Energy Agency alleged that it has deliberately upgraded its estimate of the world’s oil supplies in order not to frighten the markets(1). Three days later, a paper published by researchers at Uppsala University in Sweden showed that the IEA’s forecasts must be wrong, because it assumes a rate of extraction that appears to be impossible(2). The agency’s assessment of the state of global oil supplies is beginning to look as reliable as Mr Greenspan’s blandishments about the health of the financial markets.

If the whistleblowers are right, we should be stockpiling ammunition. If we are taken by surprise; if we have failed to replace oil before the supply peaks then crashes, the global economy is stuffed. But nothing the whistleblowers said has scared me as much as the conversation I had last week with a Pembrokeshire farmer.

Wyn Evans, who runs a mixed farm of 170 acres, has been trying to reduce his dependency on fossil fuels since 1977. He has installed an anaerobic digester, a wind turbine, solar panels and a ground-sourced heat pump. He has sought wherever possible to replace diesel with his own electricity. Instead of using his tractor to spread slurry, he pumps it from the digester onto nearby fields. He’s replaced his tractor-driven irrigation system with an electric one, and set up a new system for drying hay indoors, which means he has to turn it in the field only once. Whatever else he does is likely to produce smaller savings. But these innovations have reduced his use of diesel by only around 25%.

According to farm scientists at Cornell University, cultivating one hectare of maize in the United States requires 40 litres of petrol and 75 litres of diesel(3). The amazing productivity of modern farm labour has been purchased at the cost of a dependency on oil. Unless farmers can change the way it’s grown, a permanent oil shock would price food out of the mouths of many of the world’s people. Any responsible government would be asking urgent questions about how long we have got.

Instead, most of them delegate this job to the International Energy Agency. I’ve been bellyaching about the British government’s refusal to make contingency plans for the possibility that oil might peak by 2020 for the past two years(4,5), and I’m beginning to feel like a madman with a sandwich board. Perhaps I am, but how lucky do you feel? The new World Energy Outlook published by the IEA last week expects the global demand for oil to rise from 85m barrels a day in 2008 to 105m in 2030(6). Oil production will rise to 103m barrels, it says, and biofuels will make up the shortfall(7). If we want the oil, it will materialise.

The agency does caution that conventional oil is likely to “approach a plateau” towards the end of this period(8), but there’s no hint of the graver warning that the IEA’s chief economist issued when I interviewed him last year: “we still expect that it will come around 2020 to a plateau … I think time is not on our side here.”(9) Almost every year the agency has been forced to downgrade its forecast for the daily supply of oil in 2030: from 123m barrels in 2004, to 120m in 2005, 116m in 2007, 106m in 2008 and 103m this year. But according to one of the whistleblowers, “even today’s number is much higher than can be justified and the IEA knows this.”(10)

The Uppsala report, published in the journal Energy Policy, anticipates that maximum global production of all kinds of oil in 2030 will be 76m barrels per day. Analysing the IEA’s figures, it finds that to meet its forecasts for supply, the world’s new and undiscovered oil fields would have to be developed at a rate “never before seen in history.”(11) As many of them are in politically or physically difficult places, and as capital is short, this looks impossible. Assessing existing fields, the likely rate of discovery and the use of new techniques for extraction, the researchers find that “the peak of world oil production is probably occurring now.”

Are they right? Who knows? Last month the UK Energy Research Centre published a massive review of all the available evidence on global oil supplies(12). It found that the date of peak oil will be determined not by the total size of the global resource but by the rate at which it can be exploited. New discoveries would have to be implausibly large to make a significant difference: even if a field the size of all the oil reserves ever struck in the USA were miraculously discovered, it would delay the date of peaking by only four years(13). As global discoveries peaked in the 1960s(14), a find like this doesn’t seem very likely.

Regional oil supplies have peaked when about one third of the total resource has been extracted(15): this is because the rate of production falls as the remaining oil becomes harder to shift. So the assumption in the IEA’s new report, that oil production will hold steady when the global resource has fallen “to around one-half by 2030″(16) looks unsafe. The UKERC review finds that just to keep oil supply at present levels, “more than two thirds of current crude oil production capacity may need to be replaced by 2030 … At best, this is likely to prove extremely challenging.”(17) There is, it says “a significant risk of a peak in conventional oil production before 2020.”(18) Unconventional oil won’t save us: even a crash programme to develop the Canadian tar sands could deliver only 5m barrels a day by 2030.(19)

As a report commissioned by the US Department of Energy shows, an emergency programme to replace current energy supplies or equipment to anticipate peak oil would need about 20 years to take effect(20). It seems unlikely that we have it. The world economy is probably knackered, whatever we might do now. But at least we could save farming. There are two possible options: either the mass replacement of farm machinery or the development of new farming systems, which don’t need much labour or energy. There are no obvious barriers to the mass production of electric tractors and combine harvesters: the weight of the batteries and an electric vehicle’s low-end torque are both advantages for tractors. A switch to forest gardening and other forms of permaculture is trickier, especially for producing grain; but such is the scale of the creeping emergency that we can’t afford to rule anything out.

The challenge of feeding 7 or 8 billion people while oil supplies are falling is stupefying. It’ll be even greater if governments keep pretending that it isn’t going to happen.

www.monbiot.com

References:

1. http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

2. Kjell Aleklett et al, 2009. The Peak of the Oil Age – analyzing the world oil production Reference Scenario in World Energy Outlook 2008. Energy Policy. http://www.tsl.uu.se/uhdsg/Publications/PeakOilAge.pdf

3. David Pimentel, Marcia Pimentel and Marianne Karpenstein-Machan, 1999. Energy Use In Agriculture: An Overview. Agricultural Engineering International: The CIGR EJournal., Volume I. http://www.cigrjournal.org/index.php/Ejounral/article/viewFile/1044/1037

4. I first began pestering the government about this in May 2007, as you can see here: http://www.monbiot.com/archives/2007/05/29/what-if-the-oil-runs-out/

After that, I lodged an FoI request, and returned to the theme in these articles:

5. http://www.monbiot.com/archives/2008/02/12/the-last-straw/

http://www.monbiot.com/archives/2008/05/27/majesty-we-have-gone-mad/

http://www.monbiot.com/archives/2008/12/15/at-last-a-date/

http://www.monbiot.com/archives/2009/04/14/cross-your-fingers-and-carry-on/

6. International Energy Agency, 2009. World Energy Outlook 2009. Page 73.

7. Figure 1.5, page 82.

8. p87

9. http://www.guardian.co.uk/environment/video/2008/dec/15/fatih-birol-george-monbiot

10. http://www.guardian.co.uk/environment/2009/nov/09/peak-oil-international-energy-agency

11. Kjell Aleklett et al, 2009. The Peak of the Oil Age – analyzing the world oil production Reference Scenario in World Energy Outlook 2008. Energy Policy. http://www.tsl.uu.se/uhdsg/Publications/PeakOilAge.pdf

12. Steve Sorrell et al, 2009. Global Oil Depletion: An assessment of the evidence for a near-term
peak in global oil production. UK Energy Research Centre. http://www.ukerc.ac.uk/support/Global%20Oil%20Depletion

13. p134

14. See Figure 2.8. page 24

15. p7

16. International Energy Agency, 2009, ibid, p80.

17. Steve Sorrell et al, 2009, p169.

18. p164.

19. p18.

20. Robert L. Hirsch, Roger Bezdek and Robert Wendling, February 2005. Peaking Of World Oil Production: Impacts, Mitigation, & Risk Management. US Department of Energy. Available at http://www.hubbertpeak.com/us/NETL/OilPeaking.pdf