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The climate crisis: Corporations are gambling with our lives

Originally published: Reports from the Economic Front on February 7, 2024 (more by Reports from the Economic Front)

The World Meteorological Organization has declared 2023 “the warmest year on record, by a huge margin.” Annual global carbon emissions also hit a new high, surpassing the previous record set in 2022. We have to act now before critical thresholds or tipping points are crossed, and that means rapidly phasing out the use of fossil fuels. And yet, the U.S. government continues to green light the exploration, production, and use of fossil fuels, even while simultaneously voicing support for an international agreement to phase out fossil fuels at the recently completed COP 28 in Dubai. What gives? And what can we do about it?

The green light

The U.S. is the largest producer of oil and gas in the world. It is also the world’s largest gas exporter, with exports doubling over the last four years. The 2022 Inflation Reduction Act (IRA), considered the most important environmental legislation ever passed by the U.S. Congress, includes a number of significant climate and clean energy provisions but tellingly none that require phasing out fossil fuel exploration and use. In fact, the opposite is closer to the truth.

To win passage of the IRA, Biden agreed to guarantee the completion of the 300 mile natural gas Mountain Valley Pipeline, a project that local communities had opposed for years for multiple reasons, including protection of the environment and climate justice. The IRA itself gives the green light to three major federal oil and gas offshore lease sales that the Biden administration had previously canceled and reinstated a fourth that had been denied by a federal court order. It also requires the government to offer millions of acres of oil and gas leases on public lands and federal waters before it can auction any acreage for wind and solar farms. As an AP News article notes,

The measure’s importance was underscored by Chevron executives during a recent earnings call, where they predicted continued growth in the Gulf and tied that directly to being able ‘to lease and acquire additional acreage.’

So, how does the U.S. government reconcile its domestic policies with its COP 28 position? The answer is that it is talking about the eventual phasing out of “unabated fossil fuels.” As a Carbon Brief report explains:

“Unabated” refers to the burning of fossil fuels where resulting carbon dioxide or other greenhouse gas emissions are released directly into the atmosphere, adding to global warming.

Conversely, “abated” refers to the burning of coal, oil and gas combined with the capture and permanent storage of some proportion of the resulting greenhouse gases. This proportion is a key detail as there is no agreed definition of what “abated” means.

It is easy to see why the government appears willing, further down the road, to support this position: the development of a somewhat workable process of capturing and storing carbon would allow the continued use of fossil fuels and the maintenance of the existing economic system, thus avoiding any clash with the business community.

There are two main forms of carbon capture technology. Carbon capture and Storage (CCS) involves capturing emissions from the source generating them. The captured carbon is then either moved directly to underground storage or used first for other industrial purposes and then stored. Direct air capture (DAC) involves directly removing carbon emissions from the atmosphere.

While many government and business leaders celebrate CCS and DAC as new, cutting-edge technologies that hold the key to a carbon free future, CCS technology is far from new. It was first developed and used in the 1970s to boost oil production. Carbon was captured as a biproduct of the operation of gas processing plants and then pumped into old oil wells to force the remaining oil to the surface, a process known as enhanced oil recovery (EOR). And this remains its primary use, with approximately 80 percent of the carbon captured globally used for EOR.

Perhaps not surprisingly, only a small percentage of the carbon dioxide emitted from gas processing plants is actually captured. Moreover, little to no effort has been made to keep the captured carbon pumped into the ground from escaping back into the atmosphere. Thus, to this point, the technology has been far from the hoped for silver bullet. In fact, its main purpose has been to extend the life of existing fossil fuel projects

Of course, CCS proponents hope for a future where carbon capture devices would effectively capture the great majority of emissions from fossil fuel-dependent factories and power plants, with the captured carbon then safely stored underground. But current efforts are far from encouraging. The Abu Dhabi National Oil Company’s flagship CCS project is a case in point. As Oil Change International reports, the project,

which is supposed to capture emissions from a steel plant, is only designed to capture around 17 percent of that plant’s maximum CO2 pollution. Furthermore, there is no publicly available information about how much CO2 it has actually captured. What the CCS project does capture is used to increase oil production, leading to more emissions when burned.

At present there are only 42 operational commercial projects using CCS in the world. Their total storage capacity amounts to only 49 million metric tons or 0.13 percent of the world’s annual carbon dioxide emissions. Moreover, only 12 of these projects are designed to permanently store carbon dioxide without first using it for EOR. It remains to be seen if any will prove profitable; several CCS projects have already been temporarily shut down for financial reasons.

There are also financial and environmental concerns about developing permanent storage sites and safely moving the captured carbon dioxide there. For example, Reuters reports that in October 2023 “a $3 billion CCS pipeline project . . . in the U.S. Midwest—meant to move carbon from heartland ethanol plants to good storage sites—was canceled amid concerns from residents about potential leaks and construction damage.” No wonder the International Energy Agency warns against “excessive expectations and reliance” on carbon capture as a solution to our climate crisis.

Direct air capture remains a far more experimental and expensive process. At present only 27 DAC plants have been commissioned world-wide and their climate contribution is insignificant, currently capturing only 10,000 metric tons of carbon emissions each year. The Abu Dhabi National Oil Company and Occidental Petroleum are jointly working to build what would be the largest DAC facility in the U.S. However, its purpose has little to do with fighting global warming. Instead, the captured carbon is to be used for enhanced oil recovery. As Occidental Petroleum’s chief executive noted, while speaking at an industry conference, this technology “gives our industry a license to continue to operate for the 60, 70, 80 years that I think it’s going to be very much needed.”

What’s going on?

Capitalism is based on the privileging of property rights over most other rights, in particular the right of corporations and other businesses to employ their assets as they see fit in pursuit of profits. Because efforts to limit those rights has the potential to trigger a disrupting business strike, government policy-makers have generally viewed the development of markets, and when needed subsidies and taxes to influence their outcome, as the best way to encourage a climate-favorable economic transition.

That is a big reason why Biden included open-ended tax credits to encourage business investment in CCS projects in the IRA, with estimates of their potential cost ranging from $32 billion to $100 billion. Separately, the government is offering billions in grants to help establish two DAC hubs in Texas and Louisiana. Tragically, the pursuit of such efforts is likely to set us back, since the years spent attempting to develop an effective technology will be years of unchecked fossil fuel use.

But what about the business community? What explains its resistance to meaningful action to reduce emissions and combat global warming? At one point, it might have been possible to believe that the business community, especially the fossil fuel industry, just didn’t believe in global warming and therefore saw no reason to accept limitations on its freedom to pursue private profits. However, we now know, thanks to a series of investigative reports, that leading fossil fuel companies have long been aware of the problem of global warming and concerned about their role in driving it.

An investigation by Inside Climate News into what Exxon knew and when, revealed that the company (now ExxonMobil) was taking climate change seriously as far back as 1977. That was the year Exxon’s senior scientist James Black told Exxon’s management committee that “In the first place, there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels.” And a year later he warned the committee that that “present thinking holds that man has a time window of five to 10 years before the need for hard decisions regarding changes in energy strategies might become critical.”

As Scientific American explains in its summary of the Inside Climate News investigation:

Exxon didn’t just understand the science, the company actively engaged with it. In the 1970s and 1980s it employed top scientists to look into the issue and launched its own ambitious research program that empirically sampled carbon dioxide and built rigorous climate models. Exxon even spent more than $1 million on a tanker project that would tackle how much CO2 is absorbed by the oceans. It was one of the biggest scientific questions of the time, meaning that Exxon was truly conducting unprecedented research.

The Union of Concerned Scientists conducted their own investigation which resulted in the publication of a set of seven Climate Deception Dossiers. The collection, drawing on a variety of “internal company and trade association documents that have either been leaked to the public, come to light through lawsuits, or been disclosed through Freedom of Information (FOIA) requests” makes clear that Exxon was not an outlier. Other prominent fossil fuel producers—including Chevron, ConocoPhilips, BP, and Shell—shared its concerns. The collection also highlights the ways in which these companies actively financed public campaigns and legislative efforts designed to discredit the work of climate scientists and block climate action.

Even if it took business leaders in other sectors of the economy longer to understand the causes and consequences of global warming, it seems safe to dismiss climate ignorance as a major reason for corporate resistance to meaningful climate action. A far more likely explanation is that they don’t see it as a serious threat to their own personal lives or business pursuits. And for good reason: to this point, it is the people in the global South, especially in Africa and Asia, that are suffering the most from the worsening climate crisis.

For example, Carbon Brief found that “in 2023, every part of the [African] continent was affected by extreme weather disasters, ranging from catastrophic flooding in Libya to intense heat in Malawi.” South Sudan is one of the many countries experiencing both:

An unprecedented flooding crisis has swallowed large swathes of the country while other parts are grappling with devastating drought. For some, the floods have resulted in extreme food scarcity and forced some families to depend on wild foods like water lilies to cope. 64 percent of the country’s population (7.7 million people out of 12 million total) are experiencing severe hunger.

A similar story can be told about many countries in Asia. Pakistan, for example, experienced widespread flooding in 2023, one year after an even more massive storm left one-third of the country underwater. The cause: heavier than usual monsoon rains and melting glaciers that followed a severe heat wave. Farmers in India similarly suffered major crop loss in 2023 because of the combination of extreme weather conditions, including destructive heatwaves.

Of course, Americans have not been spared. But, as the U.S. Environmental Protection Agency points out,

the most severe harms from climate change [in the US] fall disproportionately upon underserved communities who are least able to prepare for, and recover from, heat waves, poor air quality, flooding, and other impacts.

A last factor, and no doubt an important one: business leaders have every reason to believe that if and when the costs of global warming become a significant political problem, the government will open the public purse still wider to compensate them for any changes that might prove necessary in their business practices. In the meantime, “steady as you go” ensures big profits.

In sum, it appears that our business leaders are more than willing to gamble with our lives. Carbon dioxide remains in the atmosphere for a long time, between 300 to 1000 years. And it can take years or even decades for us to experience the heat trapping consequences from higher emission levels. This means that we do not have the luxury of waiting until sometime in the future to take meaningful climate action. As the New York Times explains,

Every 10th of a degree of global warming represents extra thermodynamic fuel that intensifies heat waves and storms, adds to rising seas and hastens the melting of glaciers and ice sheets.

What to do?

A starting point is to work in our communities to help people better understand the ways in which the logic of capitalism is both driving the climate crisis and blocking meaningful responses to it. We also need to continue our organizing work, for strong unions; expanded and affordable public transportation; universal health care; the retrofitting of existing homes, offices, and factories; safe and affordable public housing; and, of course, the rapid phase out of fossil fuel use. However, for reasons highlighted above, there are limits to what we can hope to achieve as long as our political-economy remains as is. Thus, we also have to find ways to strengthen connections between our many efforts at social change to help spur a larger popular movement, one with the capacity and vision to fight for an economy that is able to provide a sustainable, egalitarian, and humane way of life for us and for others.

The creation of such a new economy will involve, by necessity, a lot of moving parts that have to be managed and coordinated. Some goods and services, and in some cases entire industries, especially those dependent on fossil fuels, will have to be dramatically downsized. We will have to develop mechanisms for humanely and efficiently repurposing newly created surplus facilities and released workers. At the same time many existing industries will have to be restructured and new ones rapidly built. And we will need to create a variety of agencies to determine investment priorities and ownership arrangements, decide where to locate new facilities, develop appropriate programs for worker training and education, and ensure that the materials required for the new activity are produced in sufficient quantities and made available at the appropriate time.

As difficult as this sounds, we do have historical experience to draw upon: the experience of World War II. Then, the U.S. government, facing remarkably similar challenges to the ones we are likely to confront, successfully converted the U.S. economy from civilian to military production in only three years, all the while managing relations with a reluctant capitalist class. It was government planning and direction of economic activity, anchored by a dramatic increase in public investment and ownership of critical enterprises, that made that conversion possible.

While that experience does not provide a readymade blueprint for the transformation we seek, there is much we can learn from studying it. Perhaps most importantly, it demonstrates the feasibility of achieving a rapid, ecologically responsive conversion of our economy if we are willing to challenge the corporate dominated logic of our existing economy.

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