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Copyright 2000 The Economist Newspaper Ltd.
All rights reserved

The Economist

December 2, 2000 U.S. Edition
SECTION: BUSINESS
LENGTH: 483 words
HEADLINE: Big business bows to global warming

BODY:

WHO could deny that the spectacular collapse last weekend of negotiations in The Hague on the Kyoto treaty
on climate change was a setback to those hoping to see concerted action on global warming? And yet, though
ministers may have bungled, there is some reason for hope. That is because a more tenacious, better-funded lot
is now beginning to take the problem seriously: big business.

That may seem surprising, for heavy industry was the loudest critic of the Kyoto deal struck three years ago. In
the past year, however, there has been a shift, with the big chemicals and petroleum giants taking the lead.
DuPont, an American firm, has promised to slash its emissions of greenhouse gases by nearly two-thirds
compared with their level in 1990 within a decade, while holding total energy use ?at and using renewable
resources for one-tenth of its energy worldwide. Britain's BP has also accepted voluntary targets for reduction
of carbon?dioxide emissions. It is using an innovative emissions?trading scheme among its dozens of divisions
worldwide to achieve the cuts ef?ciently--and at a price far lower than originally expected. That, explains Dan
Dudek of Environmental Defence, a green group that is helping BP to design and run its trading scheme, is
because trading unleashes a surprising amount of ingenuity and can actually invigorate corporate growth.
Firms may not need to be afraid of a carbon-constrained world.

The most dramatic example of action is Royal Dutch/ Shell, an Anglo-Dutch energy giant. Its board of
directors recently decided that all big projects must take into account the likely future cost of carbon
emissions, as well as meeting the company's required internal rates of return. Project number-crunchers must
assume a cost of $5 per tonne of carbon dioxide in 2005-09, rising to $20 per tonne from 2010. Shell's Aidan
Murphy explains: "We know that $5 and $20 are surely the wrong price, but everyone else who assumes a
carbon price of zero in future will be more wrong. This is not altruism. We see it as giving us a competitive
edge."

Of course, not all oil companies are so eager to tackle global warming. Exxon Mobil, the biggest, is also the
world's most powerful climate-change sceptic. Lee Raymond, its boss, is ferocious in his criticism of those,
including this newspaper, that think global warming is real and warrants global action.

Despite this public stance, however, Mr Raymond's own ?rm has been quietly investing large sums of money

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 Universe for Development Professionals - Document Page 2 of 2

in technologies that will do much to address climate change: cleaner fuels, energy ef?ciency, fuel cells and the
like. In more conciliatory moments, Mr Raymond even hints he has an open mind about global warming. If the
world's biggest purveyOr of fossil fuels ever accepts openly that global warming is real, that may turn out to be
more important to the planet than any Kyoto deal.

LOAD-DATE: December 8, 2000

 

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