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6 July 2018

In Sustainability, there's always an excuse to do nothing...

Terra Infirma's most powerful competitor is almost certainly "do nothing". Given where we work – near the cutting edge, we like to think – we provide our clients with a choice: spend some money and get some great benefits, or, spend nothing and trundle along as usual with your fingers crossed. Unfortunately in these days of economic uncertainty, clinging to business as usual is often more tempting than taking a small risk to make the organisation sustainable in both senses of the word.

So I read with a wry smile that Royal Dutch Shell CEO Ben van Beurden saying that the company wasn't going to set carbon reduction targets because it could lead to litigation from shareholders. “This is not a practical way to run the company.”  he added.

Where to start?

First up: a stretch carbon target sets the direction and ambition of the company. Set a bold target and every stakeholder from NGOs through shareholders to the receptionist at head office knows the company is serious about where it is going and how quickly. In a fossil fuel company, the energy transition is going to require a huge number of people making different decisions to those they would make otherwise. No target = drift at best.

Second: I thought the whole purpose of a publicly trading corporation was to meet the needs of its shareholders, not hide from them?

Third: what better driver for progress than the 'threat' that the people who actually own the company will hold the executive to account on the biggest issue of our time?

Sorry, Mr van Beurden, your logic is risible.

 

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16 May 2016

Will the Oil Industry collapse?

Oseberg_ship_head_postI'm reading 'Collapse' by Jared Diamond at the minute – the tale of how many civilisations just suddenly disappeared off the map. While the most famous of these was the Easter Islanders, the story of the Greenland Vikings is the one which is most baffling. Surrounded by seas brimful of fish, they persevered with trying to grow enough hay in short summers on fragile meadows to maintain their cattle in barns over the long and increasingly severe winters, until their luck ran out and they simply starved to death, their last meals consisting of garden birds and their pet dogs in a vain attempt to make it through.

I got a real resonance between the blind obstinance of the Vikings and the recent warning from Chatham House Prof Paul Stevens that the International Oil Companies (IOCs) face a stark choice:  a managed decline or sudden death. While his paper stretches my grasp of economics to the limit, Prof Stevens' argument is that the IOCs are clinging to the business models that saw them thrive in the past, but the assumptions that underpin those models are looking incredibly shaky.

The fish in this case are the renewable energies. At the turn of the millennium, BP and Shell invested in renewables and then gradually let them go again, losing lots of talent in the process. Today we get news that Shell is investing in green energy once more, although the amounts are modest.

The Vikings would have survived in Greenland if they had adapted their lifestyle to fishing for their dinner, but they refused. Will the oil companies adapt to the new reality? Or will they cling to what they know, dooming themselves?

 

Photo: Copyright: Museum of Cultural History, University of Oslo, Norway

 

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23 January 2012

What Kodak's demise tells us about cleantech

Poor Kodak. You couldn't make it up. A classic brand invents a great new technology (digital photography) but decides it would cannibalise their own products, so they ditch it. Someone else takes up the baton and they get eaten up anyway while desperately trying to claw back a piece of their action.

This isn't a new story - when transistors arrived on the market, the valve manufacturers decided not to embrace the new technology and paid the price - they've all gone. You could argue the same has happened to Zavvi and the struggling HMV - they're suffering at the hands of newer business models. The tragedy for Kodak is they weren't blindsided by someone's innovation, they had the ball and gave it away.

To my mind, Apple is one of the few examples of a major business which had its niche (desktop computers), then rode a wave of innovation and ended up dominating the new markets of mobile computing and digital media. But that took the particularly twisted genius of a certain S Jobs Esq.

So what's the lesson for Green Business in general and clean tech in particular?

Well you can see the same thing happening in the energy market. A while ago Big Oil redefined themselves as Energy Companies, invested in renewables, messed about with them for a while, then ditched them and headed for the familiar grounds of oil and (fracking) gas. They appeared fearful of commercialising technologies which might 'cannibalise' their traditional business, but if they don't do it someone else will. BP's "Beyond Petroleum Generation" of bright young things are almost all working for cleantech start ups now. I'm sure most of them would want to crush their former employer in the energy marketplace.

The only thing that protects the traditional energy sector is the lack of true competition in the market, but, with the UK Government trying to break the near-monopoly of electricity producers and introducing the carbon floor price, those advantages might be starting to slip away. If I were a fossil fuel based company, the Kodak story would make me very worried indeed.

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8 June 2009

Green Energy Investment Overtakes Fossil Fuels

In 2008 wind, solar and other clean technologies attracted $140bn (£85bn) compared with $110bn for gas and coal for electrical power generation (source: Guardian). There was a slight drop in investment at the start of 2009, but this is apparently recovering.

Given this background, it makes the decision by many 'big oil' companies to pull out of renewables an odd one. I'm sticking with my prediction that they will become the vacuum tube manufacturers of the 21st Century - the fossilised energy industry.

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