On Shell and Exxon having their social license to operate dirty and dangerous gas fields revoked in Groningen in the Netherlands; and on China’s Belt and Road initiative and the bad rap it gets for being environmentally unfriendly. Villain of the Week: Maxime Bernier, leader of the People’s Party of Canada. Hero of the Week (and probably of every week): Greta Thunberg
Photo by Assaad W Razzouk
Today I’d like to mostly talk to you about a story of destruction but also of redemption in a province in the Netherlands called Groningen, which after 30 years removed the social license to operate of Exxon and Shell. Welcome to Episode 21 of the Angry Clean Energy Guy with me, Assaad Razzouk.
I am so happy you’re here. Thank you.
There is this huge gas field in the Netherlands called Groningen. It’s been active since 1959. So Shell and Exxon have been extracting gas from Groningen since 1959 and the gas field is the 10th largest in the world and the largest in Europe. It basically generates natural gas equal to half of what Japan consumes. It’s a very big number. Now there’s a longstanding problem with Groningen and the problem is earthquakes. When you extract natural gas, you do it off of a gas reservoir and then the more gas you extract, the emptier the space underground. Water then comes in, fills up the space and the ground becomes unstable and then that increases the chances of earthquakes. And in Groningen’s case, this induced almost 1,400 earthquakes since 1991.
That’s 1,400 earthquakes.
So clearly, the people living nearby have been complaining for decades, but they were completely ignored. Why?
Because Exxon and shell initially argued that, you know, the earthquakes had nothing to do with them; because the Dutch government was making money out of this; and because the science was being disputed in the same exact way that the science against tobacco was being disputed. So any trick in the book works as long as we can keep making money. And who cares if people get hurt? So the complaints mounted from 1991 until 2014 – that’s 23 years later. It took 23 years for the Dutch government to decide to start cutting output from the gas field and to pay compensation to people whose houses have been destroyed.
And by the way, we’re talking big numbers. There’s been 90,000 homes damaged, there’s been more than $10 billion in damages. And as I said before, there’s been 1,400 earthquakes. So eventually the Dutch government thankfully noticed and started to try and cut production.
But of course they completely ignored the people that were clamouring for production to stop.
And production continued and earthquakes continued as well.
As recently as January, 2015 which is only four years ago, not much had been done about any of the damaged buildings. And that’s even though 200,000 people had their homes damaged because of the gas drilling by Shell and Exxon. Meanwhile, Shell and Exxon were using every trick in the book to cheat residents out of the compensation they were entitled to. Every trick in the book includes denying responsibility, stalling, shifting blame, using legal procedures to bring cases to a halt and what have you.
And Groningen is a case study of how Big Oil doesn’t mind making money over decades while knowing full well that it’s being made on the back of people whose homes are being destroyed. And they certainly don’t mind making money while dodging and shifting responsibility to avoid paying the real price of extracting their natural gas.
The real price of course is not the price at which they sell their natural gas. And certainly not the price at which they booked the profits from selling the natural gas.
Natural gas should be far more expensive than it is because the environmental damage that’s caused from its extraction and processing and transportation should be included. And if it was, it would not be competitive, we would not be using it.
And finally, just a few days ago, the Dutch government decided that they were going to close Groningen in 2022 instead of 2030 and by the way, the 2030 announcement was only last year. So last year the Dutch government said they’re going to close Groningen by 2030 and this year they advanced the date by eight years. And what the Dutch government certainly must not do is compensate Exxon and Shell for any loss of production before Exxon and shell compensate the world and the Groningen residents for all the damage that’s been done.
It took 200,000 people to have their homes damaged because of Exxon and Shell for the Dutch government to finally put a halt to all this.
And what’s the moral of the story? The moral of the story is that extremely slowly, extremely slowly, things are starting to change. Big Oil is being hit by damages and these damages will be orders of magnitude higher than what big tobacco had to pay for all the lies they propagated it for decades. In the case of Big Oil, if the critical factor in effecting change is going to be for them to lose their social license to operate: People extract gas because the citizens around where that activity is taking place are allowing it. People built extremely polluting coal fired power plants because the citizens living around the coal power plants are allowing it. So once the social license to operate is withdrawn because of people pressure, the legal and regulatory measures turn out to be extremely costly for Big Oil and Big Gas and Big Coal and this gives me some hope in the sense that it seems that the tide is turning. Finally, finally, extremely slowly, there has been decisive action because the social license to operate of Exxon and Shell in the Netherlands in Groningen has been taken away by people pressure and that’s a very good thing.
And what we need is for this to spread to the United States, to Asia and to cover natural gas, but also coal and oil. And I’m not pessimistic and the more social licenses to operate are withdrawn for coal and gas and oil, the more the cost of capital of these companies will go up, which means they will afford a lot less new coal plants and new gas plants and new refinery plants and new petrochemical plants because the cost of financing all these plants will be out of reach.
And that’s what we need.
We need their costs of money to go up and it’s most certainly going up because I don’t know how many of you have heard, but Exxon for example, which has been a Top 10 stock in the S&P 500 index since forever is now out of it for the first time ever.
What that means is that its market capitalization has shrunk relative to other stocks in that index, so the signs are all very clear.
What we need is we need change to occur faster, much, much faster, but at least Groningen is I think a key turning point and it’s encouraging.
CHINA’S BELT & ROAD INITIATIVE
Let me briefly turn to China’s Belt and Road Initiative, which I discussed earlier in Episode 6 of the Angry Clean Energy Guy podcast.
Now China’s Belt and Road Initiative is essentially a hundreds of billions of dollars program to invest in the infrastructure of countries along the old Silk Road. That would be investments in ports, in airports and roads and power assets.
For example, in Episode 6, I referred to a new opinion survey in many countries that are covered by China’s Belt and Road Initiative and that survey showed clearly that the people in those countries, Vietnam for example, or Turkey, overwhelmingly want renewable energy, any green infrastructure. The findings were very clear and by a huge margin, 70% to 30% or 80% to 20% and in some cases 90% to 10%.
Now a recent study was released to say that if this infrastructure boom funded by the Chinese is not in green infrastructure assets, then we could lock in over two degrees of warming and render the goals of the Paris climate agreement unreachable.
Talk about stating the obvious.
Now we know that the issue isn’t that the Chinese want to build coal plants and black infrastructure. The issue is that the countries that are accepting China’s investments in their infrastructure have their say and they aren’t asking the Chinese for the correct investment.
China doesn’t really care whether it’s building a coal plant or a solar power plant and that’s unfortunate, but that’s what it is at the moment. The Chinese will change and they will push green infrastructure. But for now it’s up to Vietnam and Indonesia and Turkey and Pakistan and other countries to make sure that Chinese investment is directed to green infrastructure.
And I have two observations on that.
The first one is why don’t they? If we ask ourselves why don’t they, the problem is always political in the country concerned. It may have a strong coal lobby, it may have people like Shell and Exxon lobbying behind the scenes.
And as you know, if you build a coal fired power plant, you spend billions and then after that you’ve got to buy coal for 40 or 50 years, which means that more billions will change hands and therefore that’s an opportunity for lots of people to either take a slice of those billions or make money in a corrupt way.
Whereas when you build a solar power plant, you build it cheaper than you build the coal plant. But then after that there isn’t any need to buy any sun and therefore there’s no money that goes around from which someone can take a slice or line up their pockets. And that’s not just a Chinese problem. That’s a problem in any country which is accepting Chinese infrastructure investments, but then directing them into polluting infrastructure.
And the second observation I have is China might be the world’s second largest economy and soon perhaps the first one but as far as I know, China by in large, hasn’t really invaded anybody in the last 5,000 years.
What the Chinese want is the Chinese want to do business and they want to make some money, and so they’re making an enormous amount of money available and expertise as well and technology to countries that need that money and the expertise and the technology. And because they don’t generally interfere in other countries’ affairs, they’re leaving it up to that country to work with them to select where the money goes.
And so criticisms of China’s Belt and Road Initiative which state the obvious instead of addressing the root causes of why we’re still building fossil fuel infrastructure miss the mark hugely in my view. We’ve to do far better than that instead of fear-mongering about the Chinese.
And the Chinese themselves anyway, want a green infrastructure worldwide. Look at what they’re doing in their own country. They’re now number one in solar power, number one in wind power, number one in the manufacturing of solar panels, number one in the manufacturing of wind turbines, number one in electric cars and generally by a big margin. So let’s work with the Chinese and let’s make sure that we don’t shift blame to China when the problem is generally speaking, dysfunctionality and politicians that aren’t doing their job in many of the countries that are the recipients of Chinese largest
VILLAIN OF THE WEEK
Thank you so much for listening to me this far.
My villain of the week is a Canadian politician who is actually quite a piece of work. His name is Maxime Bernier and he is head of a party called the People’s Party of Canada, which when I looked at their agenda, not surprisingly, turned out to be basically fascists in a nutshell.
Now the reason he is my Villain of the Week is because he sent a Twitter rant a few days ago attacking the teen Swedish climate activists, Greta Thunberg, and he attacked her on completely crazy, crazy grounds. You should actually just Google his Twitter rant and read it because I’m not going to give it the time of day.
Now there are good people in the world and then there are evil people and Maxime Bernier is one of those evil people. He is a coward, attacking a teenager standing for all the teenagers of the world precisely because people like him are both enabling the destruction of planet earth and spreading hate and propaganda at the same time.
Shame on you, Mr. Maxime Bernier
HERO OF THE WEEK
Then not surprisingly, my hero of the week, probably my hero every week is Greta Thunberg because she is absolutely amazing.
I mean what she’s done in a year in terms of raising awareness for climate action beats what has been going on around the world for 40 years, and this is culminating soon in the climate strikes of 20 September because the one thing that we’ve learned is that even though fossil fuels are destroying earth and are destroying our habitat and our ability to survive in this habitat, nothing is being done to speak off to roll them back. The data is very clear: Emissions are continuing to rise, and all of the climate action to date over the past 40 years has led to basically nothing since emissions continue to rise. Then comes Greta who actually is a Joan of Arc-like symbol who does everything incredibly well with no hypocrisy whatsoever, expresses herself wonderfully and galvanizes the generation that is going to probably be most affected by climate change and shakes the generation that has done nothing about it over the past 30 or 40 years. So thank you Greta Thunberg, you are my hero of this week and every week.
On that note, thank you so much for listening and have a great couple of weeks.
There is so much to be angry about, if you are a clean energy guy.
Every day, so many things that happen around the world make me angry when I look at them with lenses colored by the climate change chaos unfolding everywhere around us. And I am especially angry because I know we can solve the climate change crisis if we were only trying.
Each week, I will share with you a few topics that struck me and that I was very angry about – and this will generally have to do with climate change, solar or wind power, plastic pollution, environmental degradation, wildlife, the oceans and other related topics.