Green transition is still a mirage for Europe’s big oil companies
7 April 2022Interview with Leticia Canal Vieira, coauthor of a recent article regarding the green transition and the actions needed at the European level for its implementation.
The publication of the article Will the regime ever break? Assessing sociopolitical and economic pressures to climate action and European oil majors’ response (2005-2019) by Leticia Canal Vieira, Mariolina Longo and Matteo Mura, sheds light on the importance of social, political, and economic pressures to push oil companies toward a low-carbon transition. From the study conducted by the three scholars of the University of Bologna and the Centre for Sustainability and Climate Change at BBS, some not very encouraging evidence emerges, primarily the low effectiveness of politics in guiding the decisions of major oil companies. We asked Leticia Canal Vieira to comment on these results and help us understand the correct way in which we should interpret the shared data.
Among the key facts of the article there is a particularly disheartening one: Europe does not have a comprehensive policy framework to support the distribution of available alternative fuels. In your opinion, especially at this moment in history, what could be the alternative avenues to consider in order to continue reducing emissions, despite everything?
First of all, I would like to point out that this figure refers mainly to the transport sector and in particular to the infrastructures needed for certain technologies. Because the technologies are there, such as electric motors and biofuels, the problem is that there is not always a sufficiently extensive network to ensure their distribution. So, the alternatives exist and certainly there are sectors in which the road to a reduction in CO2 emissions is easier. Looking at the data, we have seen that the transport sector in Europe has not only failed to reduce emissions but has actually increased them. One might think that the cause is emissions from aviation or navigation, but we should also note the significant contribution of the cars we use in our cities. From this point of view, we can say that what is missing is the commitment to convert infrastructures with a view to a more efficient distribution.
Regarding the historical moment, we highlight how harmful it is for an economy not to be self-sufficient in its energy supply and how important it is to become so. In the article we mention the fact that Europe imports practically all the oil it uses, which also poses a problem of energy security. At the time we drafted the article the scenario wasn’t the current one, but now we are experiencing exactly what we hoped would never happen and I can only hope that it is a push towards choosing to adopt solutions that are available, but in which too little is still being invested. The article also mentions one of the first European directives that focused on the introduction of renewables, even in the transport sector. This is a 2009 directive, but it was never decisive because, as much as there was incremental adoption of fuels from renewable sources, there was never a real resolve to end dependence on fossil fuels, only to reduce it. Obviously, the various events that led to the fact that there was not a stronger push in this direction are to be taken into account and these are detailed in the article.
Another finding that emerges from the study is that fossil fuel companies are not doing enough. Peter Wadhams, in a recent speech at Bologna Business School, said that we need to stop asking oil companies to commit to changing the system and confront them with a fait accompli, forcing them to divert investment to other sources. If politics doesn’t have the strength to do that, could the public opinion exert more pressure? And, in this regard, how could people’s perception of the problem change, given the crisis we have been experiencing in recent months?
Pressure from the public is important, but so are all the factors involved, bar none. The conceptual framework we used to make this study is based precisely on the need for pressure from different actors for there to be a real transition. All actors need to be involved, actually, because the transition to renewable energy also requires a change in business models and technologies used at various levels. So, pressure from the public opinion, but also political and economic pressure, from investors and customers: commitment and clear willingness are needed from all stakeholders. The study shows that the time when oil companies have committed to investing more in renewables has been when pressure has come from many quarters, including events organized by people‘s associations, specific investor demands and political stance. The ultimate goal is not to get these companies to start producing renewables alongside fossil fuels: the goal is for society as a whole to complete an energy transition to sustainable sources, or at least to stop using fossil fuels. Unfortunately, such a change takes time, and the current crisis can be seen as a window of opportunity to understand how important it is to plan long-term actions that will allow us to reduce our dependence on fossil fuels. In this sense, even in our analysis we note that since aviation, navigation and petrochemicals have a continuous need for fossil fuels, there is an underlying certainty that drives their production and that is that there will always be a market for them. This shows that it is not enough to invest in renewables, we need to change the technologies underpinning entire industries and create alternatives. It will not be a rapid process and it cannot be a change left entirely in the hands of companies, although a different mentality can certainly help: politics must intervene to orient investments in a different way.
