Oil, Banks and Green Industries
The Paradox of Big Oil, Big Banks Investing in Green Industries
Is there reason to be suspicious – or, at least, concerned – with the ethical considerations of big oil and big banks investing in alternative energy projects?
Urban myths about giant automakers and big oil buying up innovative carburetor technologies in the 1960s to prevent introduction of fuel efficient vehicles persisted for decades. That myth was augmented by the story, only partially unfounded, of an inventor of a unique battery storage system being bought out by automakers, and the invention being immediately mothballed.
At the 2010 Copenhagen Climate Change Summit, major financial institutions from around the world agreed on a framework of Climate Principles, to help guide them in climate-friendly investment and financing decisions. However, a report by Price Waterhouse Coopers (http://www.theclimategroup.org/_assets/files/Climate-Principles-Progress-Review.pdf) suggests that many of those banks are failing to address the risk of climate change in their investment decisions, and were, in fact, heavily supporting major polluting companies.
For those major institutions, then, to claim that they are supporting green energy growth, while at the same time, delivering a body blow to the environment, may be a clear example of corporate hypocrisy. The study pointed out that only two of the 5 leading banks involved in the development of the Climate Principles have put in place financing solutions for green energy industries.
While the banks may be somewhat reticent in funding, most of the major oil companies have been accused, outright, of obstructing clean energy initiatives. How can that be, you might ask, when oil companies are investing so heavily in alternative fuels?
Indeed, last month, Valero announced that it had purchased Renew Energy, an ethanol producer nearing bankruptcy foreclosure. Shell has announced that it is actively pursuing ethanol facilities throughout Brazil. The few big oil retailer companies regularly make plays on failing or undervalued ethanol and biodiesel facilities. Certainly, this does not seem sane, if the intent is to squeeze out green energy businesses from the fuel market.
Yet, energy specialist and author, David Blume, on February 29, 2009, insisted that there was proof that the oil companies were intent on squeezing the green energy newcomers, by launching a $1 billion campaign to drive up the price of corn, thus rendering ethanol economically unviable. He further claimed that those same oil companies are restricting access to E85 fuels, by limiting supply and pumping facilities at their retail outlets.
Big Oil responds by declaring that they are supporting alternative fuels, as evidenced by their investments, at various levels, in the sector.
The problem for investors in green technology, then, becomes one of being able to isolate and identify those companies that claim to be supporting alternative energy, as opposed to those that actually are supportive. That dilemma is one that becomes more clouded as the smaller “green” operations are hidden in plain view by opponents of the green energy movement, who have purchased those companies to bolster their public claims of “going green.”
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