The Age of Global Warming: A History (43 page)

BP and Exxon Mobil disagreed on virtually every other aspect of global warming.  BP’s Browne supported Kyoto; Exxon Mobil’s Tillerson argued that every nation would need to participate (‘developed nations cannot go it alone’).
[36]
Browne supported emissions trading (‘one of the most promising of all the options’).
[37]
Tillerson thought it would result in volatile prices for emissions allowances, create economic inefficiencies and invite market manipulation. Instead Tillerson supported a revenue-neutral carbon tax.
[38]
  

They differed on investment strategy. BP made a big bet on solar. In 1998, Al Gore opened BP’s first solar manufacturing facility in the US. The next year, BP bought Solarex to become the world’s largest solar energy company.
[39]
BP’s solar capacity increased from just over twenty megawatts in 1997 to two hundred in 2006; in 2007, Browne said that he anticipated this would rise to over seven hundred megawatts. ‘We plan to invest at $1 billion per annum in alternative energy sources such as these,’ Browne pledged.
[40]

Four years later, BP announced the complete closure of the business. ‘We have realised that we simply can’t make any money from solar,’ the company told the
Financial Times
in December 2011.
[41]

Exxon Mobil stuck closer to its hydrocarbon DNA. In July 2009 it signed a deal with Synthetic Genomics of La Jolla, California, to research and develop biofuels derived from algae by using sunlight to convert carbon dioxide into oils and long-chain hydrocarbons.
[42]
Later in 2009, it deepened its commitment to extracting hydrocarbons from shale rock with the acquisition of XTO Energy.

What explains the different responses of the two? Leadership doubtless played a part. But perhaps the most important is the different political environment the two operated in. No American oil company has as intimate relationship with the US federal government as BP’s with the British government. Ever since 1913, when Winston Churchill took a controlling stake in BP’s original predecessor, the interests of BP and the British state were seen in Whitehall as virtually indistinguishable. 

In the 2000s, BP was Blair Petroleum. One of Blair’s top aides, Anji Hunter, left Downing Street to work for Browne. It would have been unthinkable for BP to have opposed Kyoto and the policy of the British government. For a time, being ahead of the curve on climate change appeared commercially smart. 

Investors thought so, too. 

Aggressive cost cutting – necessary to compensate for BP’s green investments that yielded no return – helped propel BP’s share price upwards. From the date of Browne’s Stanford speech in May 1997 to 20
th
April 2010, BP’s share price rose from 359.5p ($5.84) to 655.4p ($10.00) – a seventy-one per cent increase in dollar terms, compared to a thirty per cent increase in Exxon Mobil’s stock price. After the markets closed on 20
th
April, there was an explosion on the Deepwater Horizon drilling rig in the Gulf of Mexico. 

It was BP’s third – and most serious – accident caused by safety shortfalls, the first being an explosion at BP’s Texas City refinery (2005) and then a ruptured pipeline spewed oil across Alaska’s North Slope (2006). 

Six months after the Deepwater Horizon explosion, BP’s share price closed at 377.2p ($5.95), giving up ninety-seven per cent of the dollar gain it had made since Browne’s Stanford speech.

*  Regarding the summaries for policymakers in the Third Assessment Report, the Royal Society had stated in March 2005: ‘Each sentence of which was agreed sentence by sentence at meetings of the governments from member countries of the IPCC.’ The Royal Society,
A guide to facts and fictions about climate change
(March 2005).

29

Dangerous Climate Change

I’m more worried about global warming than I am of any major military conflict.

Chief UN weapons inspector Hans Blix, 13th March 2003
[1]

The world has already reached the level of dangerous concentrations of carbon dioxide in the atmosphere and immediate and very deep cuts in the pollution are needed if humanity is to survive.

Rajendra Pachauri, chairman of the IPCC, January 2005
[2]

The prodigious expenditure of effort and resources corralled by governments trying to cut emissions of carbon dioxide yielded puny results. Unable to make good on their promises to cut carbon dioxide emissions, and as global temperatures remained more or less flat, the rhetoric of alarm was ratcheted up. 

In 2000, Annex I carbon dioxide emissions were 538 million tonnes lower than in 1990 – a fall of 3.6 per cent. Emissions from the ex-Communist countries of the Soviet bloc more than accounted for this – down 1,752 million tonnes – or forty-four per cent (a figure which excludes the former East Germany).
[3]
The collapse of communism turned out to be the most effective decarbonisation policy of all time.

In 2007, Annex I carbon dioxide emissions were 593 million tonnes higher than 2000 – a rise of four per cent.  The onset of the global recession cut Annex I emissions by 1,3650 million tonnes (a nine per cent fall) – the second most effective global warming policy.
[4]
Virtually all this was offset by increased non-Annex I emissions. The net effect of the worst global recession since the 1930s was a reduction of less than twelve million tonnes of carbon dioxide.
[5]

Kyoto’s bifurcation between ‘rich’ North and ‘poor’ South actually helped push up emissions. According to Dieter Helm, part of Britain’s apparent reduction in emissions came about through de-industrialising. ‘Driving up our energy prices drives energy-intensive production overseas,’ Helm wrote in February 2012.
[6]
This led to higher emissions. In the three years to 2009, non-Annex I countries emitted fifty-seven per cent more carbon dioxide (642g) to generate one kWh of electricity than Annex I nations (408g). And the trends were diverging. While Annex I countries were reducing the carbon-intensity of electricity production – emissions per kWh fell by eight per cent between 2000 and 2009 – non-Annex I countries increased their emissions per kWh by 3.5 per cent.
[7]
     

Doing nothing would have been more rational than what governments actually did.  Rationality was not the yardstick. During the middle years of the first decade of the new century, climate change became
dangerous
climate change.

To UN weapons inspector Hans Blix, climate change presented a bigger risk than a major war.
[8]
In his 2005 valedictory address as president of the Royal Society, Lord May, a zoologist, compared climate change to weapons of mass destruction.
[9]
To Sir Richard Mottram, a former permanent secretary at Britain’s Ministry of Defence and chairman of the Joint Intelligence Committee, ‘Climate change is a vastly greater threat to civilisation than terrorism.’
[10]
*
In January 2004, Sir David King, Tony Blair’s chief scientific adviser, described climate change as a more serious threat than terrorism.
[11]
Eighteen months later, suicide bombers killed fifty-two people and injured seven hundred on the London Underground and on a double-decker bus.

These are all examples of climate change derangement syndrome: otherwise perfectly sane people making statements that in any other context would be regarded as absurd. According to John Ashton, the UK’s first climate change envoy, ‘There is every reason to believe that as the twenty-first century unfolds, the security story will be bound together with climate change.’
[12]
The Foreign Office was given the strategic goal to create the right political conditions to reach international agreement on tackling global warming. It was going to do this by persuading world political leaders that ‘a stable climate is essential for their national security and prosperity’ – similar language to Tony Blair’s justification of the Iraq War.
[13]
It was downgraded after Labour lost the May 2010 election and William Hague became foreign secretary.

James Lee of American University’s Inventory of Conflict and Environment Project predicted that people would respond to climate change ‘by building bomb shelters and buying guns’. The prospect of war between the US and Canada over rights to the Northwest Passage was not farfetched, Lee wrote in the
Washington Post
. ‘Anyone convinced that the United States and Canada could never come to blows has forgotten the war of 1812.’
[14]
When the article appeared in January 2009, Americans were too busy buying record numbers of snow blowers to cope with that winter’s heavy snowfalls to be worrying about invasion from the north.

A 2003 study for the Pentagon hyped up the threat to ‘dramatise the impact’ of global warming.
[15]
There was too much ‘Imagining the Unthinkable’ – the study’s subtitle – and a dearth of ‘Recognising the Obvious’. Abrupt climate change ‘could potentially de-stabilise the geo-political environment, leading to skirmishes, battles and even war due to resource constraints’.
[16]
Drawing on archaeological and ethnographical data from pre-industrial eras, it offered a doom-laden, neo-Malthusian prognosis of resource shortages leading to war. ‘Humans fight when they outstrip the carrying capacity of their natural environment. Every time there is a choice between starving and raiding, humans raid.’
[17]

The Pentagon’s 2010 Quadrennial Defense Review stated that ‘climate change and energy are two key issues that will play a significant role in shaping the future security environment’.
[18]
Intelligence assessments indicated that climate change could have ‘significant geopolitical impacts’ around the world by acting as an ‘accelerant’ of instability and conflict.
[19]

So to flood and drought, famine and pestilence was added the spectre of resource wars. Just as predictions of food shortages become self-fulfilling, threats to the international system and world peace are more likely to come about because of global warming policies than global warming itself. In potentially the most destructive example of the Global Warming Policy Paradox, global warming policies risk undermining the international trading system and the economic structure of mutual advantage that would render a resource war a self-defeating strategy. 

Digging around ancient burial sites for potential causes of war in the twenty-first century, the lessons from the single most important event of the twentieth century were lost. In an open global trading system, wars of conquest are economically insane. The Second World War was a struggle for control of territory and resources, Gerhard Weinberg, one of the conflict’s foremost historians, has written.
[20]

Germany and Japan didn’t need to control a resource to benefit from it. The post-war performance of the German and Japanese economies disproved the efficacy of militarist/economic resource war theories of conquest and national survival. Neither country needed to conquer to obtain resources to prosper. Both performed incommensurately better as part of the international trading system than they had in attempting to overturn the world order. 

Thus the first lesson is economic. Trade is based on voluntary exchange, in which both sides have an incentive to maintain the exchange. The gains from trade are greater than those from plunder.  The plunderer, in the act of expropriation, destroys the incentive of the people who are plundered to keep producing. After the Nazi-Soviet Pact of 1939, the two totalitarian regimes agreed to deepen economic ties. For around a year, the Soviet Union accounted for the bulk of German overseas trade, supplying critical war materials that the Nazi war machine then used against the Soviet Union. Indeed, Germany obtained more from the Soviet Union through trade than it did from pillage.

The second lesson is geo-strategic. Power is not based on control of resources, but the ability of an economy to add value to those resources. The Allies paid for their war supplies. Where they could, the Axis plundered.

The third is political. A country can’t invade and then trade. An economic policy based on conquest will result in the exclusion of that country from the international trading system. Conquering countries to get hold of primary resources – food, minerals or energy – with the idea of re-exporting them in manufactured goods is self-evidently absurd. 

These incentives and penalties pre-suppose an international trading system. Countries which are part of it enjoy the benefits of membership. Those which are not, do not. Its existence therefore constitutes a powerful incentive for good behaviour and for states to resolve their differences peaceably. 

The post-war trading system was the product of one of the greatest acts of statesmanship in history. It was conceived by the US during the Second World War. Cordell Hull, President Roosevelt’s secretary of state, was determined that the disasters of protectionism, which he saw had imperilled peace and prosperity, would not be repeated.  American leadership had to overcome stiff opposition from Britain, which wanted to keep imperial preference, and protectionist interests at home, to incorporate America’s former enemies into an expanding international trading system.

If Roosevelt and Hull were right about the link between peace, prosperity and an open trading system, global warming policies that fragment global markets undermine world peace. At an EU summit in March 2008, the EU threatened the US and China with trade sanctions if they didn’t commit to ambitious cuts in greenhouse gases. Should international negotiations fail, ‘appropriate measures’ could be taken to protect European industry, European leaders declared.
[21]
France’s President Sarkozy went further. A mechanism was needed to ‘allow us to strike against the imports of countries that don’t play by the rules of the game on environmental protection’.
[22]

The EU’s 2008 Climate Action and Renewable Energy Package provides one. In the absence of an effective international agreement, the European Commission is to bring forward proposals for green tariffs equivalent to the price of emissions credits under the Emissions Trading Scheme, even though the EU allocated credits worth tens of billions of euros for free. In 2012, EU plans to extend its Emissions Trading Scheme to non-EU airlines drew threats of retaliation from China. The continent which started the Second World War hadn’t learnt its lessons.

On 18
th
November 2004, UN secretary-general Kofi Annan received the Russian Federation’s instrument of ratification. Ninety days later, on 16
th
February 2005, the Kyoto Protocol came into force. The EU had traded Russia’s membership of the World Trade Organisation, ironically swallowing the continuation of energy subsidies for Russian businesses, for its desire for Kyoto to take effect.

Russia’s ratification unleashed a wave of climate change alarmism. Finding a successor to Kyoto became the focus of international climate change negotiations. The thirty-four months to the Bali conference in December 2007 marked the most febrile phase of the fever. The UN Environment Programme’s Klaus Töpfer spoke of a terrifying vision of a ‘planet spinning out of control’. Global temperatures could rise by 5.8
o
C by the end of the century, Töpfer said, a recently published report in
Nature
claiming the rise might be even higher as early as the middle of the century.
[23]

Kyoto going live isolated two non-ratifiers – George W. Bush and Australia’s John Howard. ‘Until such time as the major polluters of the world, including the United States and China, are made part of the Kyoto regime, it is next to useless and indeed, harmful, for a country such as Australia to sign the Kyoto Protocol,’ a defiant Howard told the Australian Parliament.
[24]
‘The more I studied it, the more I became convinced that Kyoto was very Eurocentric,’ Howard told the author in 2011, down to the choice of the 1990 base year. The collapse of the command economies meant that the progressive Left had to find other causes to fight, climate change fitting the bill, becoming a substitute religion.
[25]
  

Unlike Australia, US participation in a son-of-Kyoto was essential. The UK held the presidency of the G8 in 2005 and between July and December also the EU presidency. The opportunity for Tony Blair’s brand of messianic Salvationism was irresistible.

Before Russian ratification, Blair focused his efforts on Putin. In July 2004, the Russian Academy hosted a seminar in Moscow on climate change and Kyoto with a British delegation led by Sir David King. It was an ill-tempered affair. At a press conference, Andrei Illarionov, Putin’s principal economics adviser, denounced the British and singled out King. ‘At least four times during the course of the seminar ugly scenes were staged that prevented the seminar from proceeding normally.’
[26]
  

By this stage, Illarionov was on the losing side inside the Kremlin. Illarionov criticised Putin’s decision to ratify Kyoto as ‘motivated purely by politics – not by science or economics’.
[27]

Having squared Putin, Blair switched his focus. ‘To describe George as a sceptic on climate change would be an understatement,’ Blair wrote in his memoirs. ‘As time progressed he shifted his thinking, but did so too slowly – a quality of conservatives I don’t admire.’
[28]
As Paula Dobriansky, undersecretary of state for democracy and global affairs, put it, Blair and Bush had a ‘vibrant and active exchange’ during the British G8 presidency.
[29]
 

Despite Blair’s characterisation, Bush showed a stronger grasp of the problem than Blair. His administration’s policy was a determined, cogent and well-developed effort to press the reset button on the two components of the international climate change negotiations that were visibly failing – its heavy reliance on emissions reductions and the Annex I bifurcation. What Blair and other world leaders achieved was to push Bush – against his better instincts – into accepting the principle of Kyoto-style emissions caps.

Bush’s attempt to bridge the Annex I bifurcation was taken forward by his successor. It was defeated at Copenhagen. But the policy Bush inherited had come to a dead end. He had to try something different. To have carried on where Clinton had left off would have meant falling into Einstein’s definition of insanity – doing the same thing over and over again expecting a different result.

The Bush reset began with a speech in June 2001, just before his first trip as president to Europe. ‘America’s unwillingness to embrace a flawed treaty should not be read by our friends and allies as any abdication of responsibility,’ Bush said. ‘To the contrary, my administration is committed to a leadership role on the issue of climate change.’
[30]
He pledged to work within the UN framework – and elsewhere – to develop an ‘effective and science-based’ response to global warming. He also spoke of the uncertainties: