It has been a bad month for big oil. A Dutch court just ruled that Shell must cut its carbon pollution by 45% by 2030. The court’s decision has rightly been celebrated: it is a much more stringent requirement than the ineffective regulations imposed to date. Meanwhile, shareholders are waging rebellions at various oil giants – ExxonMobil shareholders won two seats on the board to pressure the oil company towards a greener strategy, and shareholders at Chevron and ConocoPhillips passed nonbinding resolutions pressuring the companies to disclose their lobbying efforts and emissions amounts.
Private oil and gas companies are finally up against the wall. Shell has promised to appeal the Dutch court decision, but oil prices went negative last month and put companies on bankruptcy notice, and last week the International Energy Agency said to stop digging. Politicians have floated the idea of oil and gas magnates becoming “carbon management companies” as a way for those companies to have a “future in a low-carbon world” while retaining control over oil, gas, and profit in a planet increasingly aware of and hostile to their emissions-generating activity.
But as far as the Dutch court’s ruling or the new bout of shareholder activism goes, neither go far enough. Nor should Shell be turned into a “carbon management company”. Like all private oil companies, Shell should not exist.
Oil and gas companies are a political structure: they possess private, authoritarian dominion over the pace and volume of oil and gas production, and thus of important determinants of global emissions. These emissions and their consequences do not respect any sort of public/private distinction, nor borders, nor the rights to clean air or clean water. For decades, private oil companies have intentionally and recklessly obscured their role in the destruction of countless local environments as well as their role in the global climate crisis.
Private oil companies have propped up an ever-failing business on a complex system of national and international government subsidies, all of which function to privatize the benefits of oil and gas production while socializing its financial, environmental, and social costs – making the public pay in tax dollars, human rights abuses, and an unlivable climate. Now that these companies fear being left behind by a changing political context, their public relations strategy is to insist to a public increasingly aware of the dire need to stop carbon emissions that there is still a place for private oil companies in a “green” world.
There is a role for the workers, their skills and knowledge, and the equipment and infrastructure of oil and gas companies. But there is no longer a role for companies or profit-seeking as an organizing principle of this aspect of human society – not if we want to continue to have human society.
Under continued private management, the most likely scenario is that Shell delays and defers action as long as the company can get away with it, shedding workers without a safety net and leaving extraction sites polluting. Similarly, the success of the small shareholder “coup” at ExxonMobil likely has less to do with genuine desire to save the environment and more to do with the company’s billions in back to back quarterly losses.
But winding down a major industry shouldn’t be constrained by the need to make money. Governments like the Netherlands could better follow through on mandates to reduce emissions if they held control over oil companies themselves. It is time to nationalize big oil.
Public ownership, by itself, does not guarantee that we will fully replace oil and gas with renewable energy in time to avert the worst impacts of the climate crisis. As detractors to public ownership often note, three-quarters of the world’s oil reserves are already owned by states rather than private companies, which are far from immune from corruption. But we don’t advocate public ownership because it is a magic bullet – we advocate it because it is our only shot.
The profit math is just as clear as the climate math: corporations exist to generate profit and enrich shareholders, both of which require them to produce their product. No amount of shareholder activism can possibly do better than slowing or attenuating the rate at which corporations pursue this basic mandate. “Market-based solutions”, in this case, are a contradiction in terms: the market is the problem.
If we are to limit climate change, we have to take the very unprofitable step of virtually eliminating emissions. There is no way to square the pace and depth of needed emissions reductions with the dictates of profit-seeking – Shell’s best scientists have already tried and failed. Government organizations, which respond to more interests than just those of financial profit, are our only recourse. What’s more, companies like Shell or ExxonMobil nationalized today would be taken on with an express mandate to wind down their assets – not to line the coffers of the national government.
This means governments would manage companies’ decline based on social benefit. They could hire Shell’s workers to reverse their infrastructure to lower or even put carbon back into the ground rather than extract it for profit. For instance, workers could retool their skills on offshore oil rigs to build offshore wind production. With what little carbon production there is left, government should decide the most equitable way to distribute that oil and gas and limit harm as much as possible. Even considering responsibilities beyond profit, countries with nationalized production, especially in the Global South, will need good reason to strand the fossil fuel assets that have paid for much of the world’s wealth – especially in countries that are dependent on extraction for public revenue. Debt cancellation, as proposed by the Latin American Ecosocial Pact of the South, could allow oil-dependent countries to build less destructive forms of energy and continue to fund needed social services. Moving this much political and financial capital will be a big task; if we don’t have institutions up for the job, we should make them.
This is also an opportunity to help communities that have been subject, in some cases for decades, to the nasty side-effects of extraction – from Groningen’s fracked-gas earthquakes to Ogoniland’s water contamination – and support them in building a new sort of economy.
Divorcing profit incentives from energy doesn’t only need to be a play for ending fossil fuels. It is an opportunity to build out of an extractive and private supply chain something entirely different – an energy system for the decades to come. Public, community-level control over new renewable energy could also be critical to creating and maintaining an energy system that treats access to clean energy as a human right, supports all families (not just the white and rich) in facing the extreme weather events that may become more and more frequent, and confronts wealth extraction head-on.
Nationalization is the best shot the world has got to decommission a recalcitrant industry in time to stave off climate disaster. And it is an opportunity to build something better in its place.