The oil and gas industry needs to stop debating the science of global warming and protect its business with an “insurance policy,” says a distinguished Harvard professor who will visit Calgary.
Petroleum companies should prepare themselves for a “carbon-constrained” world that is inevitable and fast approaching, said Daniel Schrag, professor of earth and planetary sciences at Harvard University.
Government regulation, public pressure and marketplace competition will force companies to reduce carbon dioxide and other greenhouse gas emissions blamed for increasing global temperatures, he said.
Schrag, a recipient of a prestigious MacArthur Foundation national research award in the U.S., will be a keynote speaker at the FGL Open Global Business Society’s forum on global business issues next Tuesday, Feb. 19. Business Edge is one of the sponsors of the forum.
“I would argue that even oil and gas companies . . . ultimately will have to look at this (climate change issue) in their business plans like an insurance company would,” Schrag said in an interview.
Companies like Shell and BP, which are investing in clean renewable energy such as wind power, will be able to respond faster and cheaper when operating in a carbon-constrained world, he said. “They’re taking a leadership role in alternative energy. They’re hedging their bets.”
Oil and gas companies that fail to respond with a similar insurance policy will get left behind by smarter competitors, Schrag said.
The federal government says it remains committed to ratifying the Kyoto treaty on climate change as early as this summer, despite U.S. President George W. Bush’s rejection of the accord.
The treaty would compel Canada to reduce its greenhouse gas emissions by nearly 200 million tonnes from the projected 770 million in 2010. Alberta is expected to be responsible for about half those reductions.
But the oilpatch is strongly opposed to a carbon tax or other mandatory measures to cut emissions.
Charlie Fischer, president and chief executive of Nexen Inc., told Business Edge last week that Ottawa is moving toward ratifying Kyoto without understanding the costs or consulting adequately on the rules.
Schrag acknowledged that scientists will never be able to prove that global warming will cause the dramatic worldwide climate disruptions that many researchers expect – including more severe and prolonged droughts in Alberta.
“You can’t prove evolution happened. But you’d probably be foolish to ignore it. The same is true with climate change.”
The geological record does show that a relatively small increase in average worldwide temperatures triggered rapid and dramatic climate change about 40- to 50 million years ago, he noted.
Part of the rationale for taking an insurance-policy approach and reducing emissions is that “we don’t want to have a situation where it gets much, much worse very quickly and we have no way to stop it,” Schrag said.
Other participants at the FGL forum, “Green and Competitive: Ending the Stalemate,” include speakers from EPCOR in Edmonton, the Natural Resources Defense Council in the U.S. and B9 Energy, a renewable energy firm in Ireland. The luncheon speaker is Calgary journalist Andrew Nikiforuk, author of Saboteurs: Wiebo Ludwig’s War Against Big Oil.