TCS Daily

The Green of Green Government

By Christopher C. Horner - November 7, 2005 12:00 AM

The Financial Times recently carried an op-ed by Harvard professor John Quelch that gushed over corporations electing the green business model (or at least green rhetoric). This paean to the erstwhile British Petroleum -- now BP: Beyond Petroleum -- epitomizes the disconnect between academic idealizing and real-world truths.


Quelch writes not even the mighty Exxon-Mobil with its army of hired-gun lawyers and lobbyists unilaterally achieve everything it needs to maximise shareholder value -- not least the goodwill of a justifiably sceptical public. By contrast, John Browne, BP's quiet leader, has embraced the company's responsibilities to address global warming and invest in alternative energy sources beyond petroleum.


This is an embarrassing entry in the competition to bestow an aura of responsibility upon capitalists with a green hue even if one ignores for the moment that BPs Washington army of hired-gun lawyers and lobbyists is in fact twice as large as ExxonMobils (33 to 17 according public filings). It seems not to matter to the author that, certainly in BPs case, their rhetorical positioning -- beyond petroleum -- is laughably at odds with their revenue streams. A BP ad on my parking garage boasted, Solar, natural gas, hydrogen, wind. And oh yes, oil. Its a start. Its also -- as BP positions itself to become the largest oil and gas producer in the world -- a lot of hogwash.


What of BPs investments in alternative energy sources? Like the profit-maximizing capitalist he is, John Browne has embraced the companys responsibilities -- albeit not to address global warming. Rather, Browne is following the by now familiar path of government rent-seeking that many companies have long tread.


To illustrate the phenomenon, consider those embarrassing internal memos revealed during the energy giant Enron's collapse. They were well-reported in the U.S. press if ignored in Europe.


Consider in particular an August 1, 1997 prep-memo for Enron CEO Ken Lay's August 4th meeting in the Oval Office with President Clinton, Vice President Gore, and BP's own Sir John Brown.


The message for the meeting was clear: a) mak[e] sure there is a treaty capping carbon dioxide emissions, b) including an international trading scheme so that Enron et al could "make a market" in trading tons of hot air otherwise unmarketable due to a lack of rationing or scarcity; and c) the treaty should take it easy on the methane leaking from their pipeline networks, even though methane bears a "greenhouse potential" greater than 20-times that of carbon dioxide emitted by these lobbyists' coal-driven competitors.


You see, companies such as Enron and BP realize there is a lot of green in green government policies. Enron's post-Kyoto assessment memo crowed:


[i]f implemented, this agreement will do more to promote Enron's business than will almost any other regulatory initiative outside of restructuring the energy and natural gas industries in Europe and the United States...This agreement will be good for Enron stock!!


This glee over Kyotos greenhouse gas rationing was quite understandable, from their perspective. Enron, coincidentally, had just concluded a massive investment in the giant wind energy company, Zond. This is comparable to BPs own investment in the same energy source that, in the hydrocarbon age and notwithstanding decades of promises by windmill manufacturers to the contrary, still can only be justified with a cocktail of mandates and lucrative subsidies.


The same is true for the joint Enron/BP-Amoco joint venture in the worlds largest solar energy venture. These are investments eschewed by companies like Professor Quelchs bogeyman, ExxonMobil, for precisely the same reason: interventionist boondoggles like Kyoto are required to sustain them.


When reading such praise as Professor Quelchs for BP, think instead of nuclear power. This is an industry that was smashing atoms long before it was cool to hype global warming or even cooling. Claims of calamity arent why they got into the business, but would sure work to justify their chosen, constantly beleaguered industry. Yet nuclear producers are remarkably if not entirely restrained in touting climate change, choosing instead to fight largely on their own merits. Now, thats a lesson a professor might consider teaching.


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