Michael Klare: Energy Companies Persuade Emerging Economies To Embrace Environmental Destruction, Erm, Growth

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Yves here. One observation that is often made in advanced economies is that having their citizens reduce their greenhouse gas emissions is futile because emerging economies are not willing to adopt the same standards. For instance, China was particularly up in arms about the 2007 IPCC reports, and has taken the position in climate change confabs that since the West emitted lots of carbon in its course of development, younger economies have that right too.

What is not as well known, and what this post focuses on, is how major energy companies are stoking and reinforcing these attitudes, using the same playbook that the tobacco industry deployed so successfully. The article mentions coal exports in particular, and it’s worth noting that coal-burning electrical plants are particularly destructive from a climate change and health perspective (both mercury and particulate emissions).

By Michael T. Klare, a professor of peace and world security studies at Hampshire College and the author, most recently, of The Race for What’s Left.  A documentary movie version of his book Blood and Oil is available from the Media Education Foundation. Originally published at TomDispatch

In the 1980s, encountering regulatory restrictions and public resistance to smoking in the United States, the giant tobacco companies came up with a particularly effective strategy for sustaining their profit levels: sell more cigarettes in the developing world, where demand was strong and anti-tobacco regulation weak or nonexistent.  Now, the giant energy companies are taking a page from Big Tobacco’s playbook.  As concern over climate change begins to lower the demand for fossil fuels in the United States and Europe, they are accelerating their sales to developing nations, where demand is strong and climate-control measures weak or nonexistent.  That this will produce a colossal increase in climate-altering carbon emissions troubles them no more than the global spurt in smoking-related illnesses troubled the tobacco companies.

The tobacco industry’s shift from rich, developed nations to low- and middle-income countries has been well documented.  “With tobacco use declining in wealthier countries, tobacco companies are spending tens of billions of dollars a year on advertising, marketing, and sponsorship, much of it to increase sales in… developing countries,” the New York Times noted in a 2008 editorial.  To boost their sales, outfits like Philip Morris International and British American Tobacco also brought their legal and financial clout to bear to block the implementation of anti-smoking regulations in such places.  “They’re using litigation to threaten low- and middle-income countries,” Dr. Douglas Bettcher, head of the Tobacco Free Initiative of the World Health Organization (WHO), told the Times.

The fossil fuel companies — producers of oil, coal, and natural gas — are similarly expanding their operations in low- and middle-income countries where ensuring the growth of energy supplies is considered more critical than preventing climate catastrophe.  “There is a clear long-run shift in energy growth from the OECD [Organization for Economic Cooperation and Development, the club of rich nations] to the non-OECD,” oil giant BP noted in its Energy Outlook report for 2014.  “Virtually all (95%) of the projected growth [in energy consumption] is in the non-OECD,” it added, using the polite new term for what used to be called the Third World.

As in the case of cigarette sales, the stepped-up delivery of fossil fuels to developing countries is doubly harmful.  Their targeting by Big Tobacco has produced a sharp rise in smoking-related illnesses among the poor in places where health systems are particularly ill equipped for those in need.  “If current trends continue,” the WHO reported in 2011, “by 2030 tobacco will kill more than 8 million people worldwide each year, with 80% of these premature deaths among people living in low- and middle-income countries.”  In a similar fashion, an increase in carbon sales to such nations will help produce more intense storms and longer, more devastating droughts in places that are least prepared to withstand or cope with climate change’s perils.

The energy industry’s growing emphasis on sales to these particularly vulnerable lands is evident in the strategic planning of ExxonMobil, the largest privately owned oil company.  “By 2040, the world’s population is projected to grow to approximately 8.8 billion people,” Exxon noted in its 2013 financial report to stockholders.  “As economies and populations grow, and living standards improve for billions of people, the need for energy will continue to rise… This demand increase is expected to be concentrated in developing countries.”

This assessment, explained Exxon CEO Rex Tillerson, will govern the company’s marketing plans in the years ahead.  “The global business environment continues to provide a mix of challenges and opportunities,” he told financial analysts at the New York Stock Exchange in March 2013.  While the demand for energy in the developed economies “remains relatively flat,” he noted, “energy demand for the economies of the non-OECD countries is expected to grow about 65% to support anticipated growth.”

In recognition of this trend, Exxon has undertaken a wide variety of initiatives intended to boost its sales capacity in China, Southeast Asia, and other rapidly developing areas.  In Singapore, for example, the company is expanding a refinery and petrochemical facility that make up its “largest integrated manufacturing site in the world.”  The refinery is being modified to produce more diesel, so as to better service the growing fleets of trucks, buses, and other heavy vehicles in the region.  Meanwhile, the hydrocarbon processing facility at the chemical plant is being doubled to meet the rising demand for petrochemicals used in making plastics and other consumer goods, especially in China.  (“China alone is expected to represent over half of global demand growth” for these products, Tillerson observed last year.)

To promote its products in China, Exxon has established a “strategic alliance” with the China Petroleum and Chemical Corporation (Sinopec), one of China’s state-owned energy giants.  A key goal of the alliance is the establishment of an “integrated world-scale refinery and petrochemical complex” in eastern China which, Exxon officials noted, is to “become a major marketer of petrochemicals throughout China and petroleum products throughout Fujian Province.”  A major component of this joint effort, the Fujian Refining and Ethylene Integrated Project, came on line in September 2009.

Exxon is also expanding its capacity to supply liquefied natural gas (LNG) to Asia.  In partnership with Qatar Petroleum, it has built the world’s largest LNG export facility at Ras Laffan in Qatar and is building a mammoth LNG operation in Papua New Guinea.  This $19 billion project, which began operation in April, includes a 430-mile pipeline to deliver gas from the island’s interior highlands to an export terminal near Port Moresby, the capital.  “The project is optimally located to serve growing Asia markets where LNG demand is expected to rise by approximately 165% between 2010 and 2025,” said Neil W. Duffin, president of ExxonMobil Development Company.

Next on the company’s agenda is a plan to draw on the natural gas being extracted in ever greater quantities from domestic shale formations in the United States via hydro-fracking and convert it into LNG for export to Asia.  Although various American politicians have been pushing the strategic export of such supplies to Europe to “rescue” that continent from its reliance on Russian gas, Exxon has other ideas.  It sees Asia, where gas prices are higher, as the natural market for its LNG — and U.S. foreign policy be damned.  “By exporting natural gas,” Tillerson told the Asia Society in June 2013, “the United States could shore up the energy security of Asian allies and trading partners and stimulate investment in American domestic production.”

Big Energy’s “Humanitarian” Mission

In promoting such policies, Exxon’s executives are careful to acknowledge that growing concerns over climate change are generating increased resistance to fossil fuel consumption in Europe and other First World areas.  When it comes to the rest of the planet, however, such concerns, they claim, should be outweighed by a “humanitarian” impulse to provide cheap fossil energy to poor people.  Drawing on the arguments of Danish environmental renegade Bjørn Lomborg, author of The Skeptical Environmentalist, they argue that tending to the needs of the poor constitutes a greater priority than curbing global warming.  “We must also recognize that there is a humanitarian imperative to meeting these growing global energy needs,” Tillerson typically asserted in 2013.

Asked why global warming shouldn’t be of greater concern, the Exxon CEO parroted Lomberg’s anti-environmental perspective.  “I think there are much more pressing priorities that we… need to deal with,” Tillerson told the Council on Foreign Relations in June 2012.  “There are still hundreds of millions, billions of people living in abject poverty around the world.  They need electricity…  They need fuel to cook their food on that’s not animal dung…  They’d love to burn fossil fuels because their quality of life would rise immeasurably, and their quality of health and the health of their children and their future would rise immeasurably.  You’d save millions upon millions of lives by making fossil fuels more available to a lot of the part of the world that doesn’t have it.”

Although the leaders of the other giant energy firms, including BP, Chevron, and Royal Dutch Shell, are less outspoken than Tillerson, they are pursuing a similar marketing strategy.  “Demand growth [for petroleum products] comes exclusively from rapidly growing non-OECD economies,” BP noted in its recent report on the global energy outlook.  “China, India, and the Middle East account for nearly all of the net global increase.”  Like ExxonMobil, BP and the others are hard at work expanding their capacity to sell fossil fuels in these growing markets.

Nor are only the oil and gas companies pursuing this strategy.  So is Big Coal.  With coal demand declining in the U.S., thanks to the growing availability of low-cost natural gas generated by fracking, the coal firms are shipping ever more of their American output to Asia, which will contribute significantly to increasingly the carbon emissions there.  According to the Energy Information Administration (EIA) of the Department of Energy, U.S. coal exports to China rose from essentially zero in 2007 to 10 million tons in 2012.  Exports to India increased from 1.5 million to seven million tons and to South Korea from virtually nothing to nine million.  Exports to just these three countries jumped by more than 1,000% during these years.

The EIA summarized the situation this way: “Companies in key parts of the U.S. coal supply chain — both producers and railways — have increased sales to Asia because of rising Asian coal demand, overall strong export prices, and lower U.S. consumption of coal to produce electric power.”  Looked at from another perspective, diminished carbon emissions from coal in the United States — much touted by President Obama in his embrace of natural gas — has no significance when it comes to climate change, because of the greeenhouse gases being produced when all that coal is consumed in Asia.

To increase sales yet more, the giant coal companies are promoting the construction of new shipping terminals on the West Coast, including two each in Oregon and Washington State.  The largest of these, the Gateway Pacific Terminal near Bellingham, Washington, will handle up to 48 million metric tons of coal a year, most of it destined for China and other Asian countries.

Although the terminals are often promoted by local officials as sources of new jobs, they are sparking fierce opposition from community activists and Native Americans who view them as posing a severe threat to the environment.  Claiming that coal dust and spills from trains and loading facilities will harm fishing sites they deem vital, members of the Lumni tribe are citing longstanding treaty rights in their efforts to block the Cherry Point Terminal, one of the planned Washington State facilities.

In the Pacific Northwest, opposition to the coal terminals and the rail lines that will be so crucial to their operation — some of which will traverse Indian reservations and pass through green-minded cities like Seattle — is gaining strength.  The process has been similar to the way climate activists mobilized against the Keystone XL pipeline that, if built, is slated to bring carbon-dense tar sands from Canada to the U.S. Gulf Coast.  But the coal companies and their allies are pushing back, insisting that their exports are essential to the country’s economic vitality.  “Unless the ports are built on the West Coast,” said Jason Hayes, a spokesman for the American Coal Council, U.S. suppliers won’t be viewed as “reliable business partners” in Asia.

Although community and tribal opposition may succeed in blocking or delaying a terminal or two, most analysts believe that, in the end, several will be built.  “There are two billion people in Asia who need more power, so eventually more U.S. coal will get onto global markets,” says Matt Preston, an analyst for the energy consultancy firm of Wood Mackenzie.

Perpetuating the Fossil Fuel Era

In the end, all these efforts to boost fossil fuel sales in Asia and other developing areas will have one unmistakable result: a sharp rise in global carbon emissions, with most of the growth in non-OECD countries.  According to the EIA, between 2010 and 2040 world carbon dioxide emissions from energy use — the main source of greenhouse gases — will rise by 46%, from 31.2 billion metric tons to 45.5 billion.  Little of this increase will officially be generated by the planet’s wealthiest countries, where energy demand is stagnant and tougher rules on carbon emissions are being put in place.  Instead, almost all of the growth of CO2 in the atmosphere — 94% of it — will be sloughed off on the developing world, even if a significant part of those emissions will come from the combustion of U.S. fossil fuel exports.

In the view of most scientists, an increase of carbon emissions on this scale will almost certainly lead to a global temperature rise of at least four degrees centigrade and possibly more by the end of this century.  That’s enough to ensure that the changes we are already seeing, including severe droughts, stronger storms, raging wildfires, and rising sea levels, will be eclipsed by exponentially greater perils in the future.

Everyone will share in the pain from such warming-induced catastrophes.  But people in developing lands — especially the poorest among them — will suffer more, because the societies they live in are least prepared to cope with severe catastrophes.  “Climate-related hazards exacerbate other [socioeconomic] stressors, often with negative outcomes for livelihoods, especially for people living in poverty,” the UN’s Intergovernmental Panel on Climate Change observed in its most recent assessment of what global warming will mean for planet Earth.  “Climate-related hazards affect poor people’s lives directly, through impacts on livelihoods, reduction in crop yields, or destruction of homes, and indirectly through, for example, increased food prices and food insecurity.”

Certainly, the giant fossil fuel companies bear a moral, if not as yet in our society a legal, responsibility for the intensification of climate change and the lack of serious response to it.  Beyond this, their carefully planned strategy of selling carbon products to those most at risk can only be viewed as outright immorality.  Just as health officials now condemn Big Tobacco’s emphasis on cigarette sales to poor people in countries with inadequate health systems, so someday Big Energy’s new “smoking” habit will be deemed a massive threat to human survival.

Above all, Big Energy is insuring that one small ray of good news when it comes to climate change — the contracting use of coal, oil, and gas across the developed world — will prove meaningless.  The economic incentive to sell fossil fuels to developing countries is undeniably powerful.  The need for increased energy in developing countries is no less indisputable.  In the long run, the only way to meet these needs without endangering our global future would be through a mammoth drive to expand renewable energy options there, not by shoving carbon products down their throats.  Rex Tillerson and his cohorts will continue to claim that they are performing a “humanitarian” service with their new “tobacco” strategy.  Instead, they are actually perpetuating the fossil fuel era and helping to create a future humanitarian catastrophe of apocalyptic dimensions.

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  1. trish

    odious if unsurprising. of course this was happening. and the TPP with it’s investor-state dispute settlement clause allowing corporations to challenge these countries laws, trump national sovereignty, certainly plays into this.

    and it seems that corporate agriculture has followed this path, as well- squeeze profits anywhere across the globe they can, wreak environmental havoc, who cares if the worlds’ people- especially the poor- suffer.

  2. John

    Dirty Energy has very effective campaign methods even here in Europe. Take Belgium for example. The government has eliminated solar panel subsidies. Belgium, like other countries, have set targets for CO2 reductions by a certain date in to the future. Since the subsidy elimination in 2012 energy production from solar panels has flatlined. Green energy growth has stalled.

    For every 1KW of “Green Certificate” or Renewable Energy Certificate the government pays a certain amount back to the generator.

    After doing a bit of digging it was found Dirty Energy was behind the scenes fiercely lobbying the local parliament members to get the subsidies eliminated and fast. What has become clear green energy was taking away a sizable chunk of their revenues.

    Our socialist Flemish minister of energy falsely claimed the subsidy distribution was not fair and other sources of “energy” was being shortchanged. The other “sources” she was referring to was Dirty Energy. At Dirty Energy request she pulled the plug on the solar panel Green Certificate program, wiping out thousands of jobs in the green energy sector all to protect her Dirty Energy friends. You can’t make this stuff up.

    Folks paying attention to the European election results will find the socialists took a beating. They use to be a party that promoted progressive policies, but that is no longer the case. They’ve become tools for Big Business, like Freya van den Bossche, our socialist minister of energy. Unbelievably, even the socialists in Walloon were shown the exit.

    Canvasing the European landscape very few candidates promoted green energy jobs in their platforms. Even the Greens were weak kneed. They seem to be afraid to be bold in pushing green programs. Like here in Belgium, my guess is Dirty Energy has a stranglehold on their parliaments — some words are never to be uttered — again.

    Lastly, I found out last week the Flemish government subsidizes CO2 emitting companies to the tune of 60M euros a year. Europe charges a tax to companies for their CO2 emissions (Cap & Trade). However, the Flemish government policy is to soften the tax load on industry polluters and let tax payers shoulder most of the costs. (Bear in mind the preferred tax strategy in Europe is to tax labor to the hilt.) Their stated rationale for this is so companies can stay competitive and not to leave.

    I have other harrowing stories but they deserve a separate blog.

    Anyway, when it comes to Dirty Energy, Europe is joined at the hip with the fossil fuel industry like everyone else.

    1. Banger

      The descent of socialist parties in Europe mirrors the descent of the Democratic Party in the U.S. which was once a social-democratic center-left party, for the most part. When money became the dominant political determinant in the U.S. in the late seventies the DP steered a gradual course to the right so that, today, it can only be defined as a center-right party while the “opposition” party is a far-right party. Sadly what is left of the political left in the U.S. still clings to the DP mainly through its propaganda organs online (DailyKos) and in the media (MSNBC, NPR, NYTimes, WaPost). Like Europeans left-leaning Americans prefer “security” (fear) to Justice (and love/compassion). It is sad to see Europe continue to go to the right but it seems inevitable at this point.

      We need to understand the cause of this drift to the right. While certainly energy companies and the finance oligarchs play a major role they can act with so much success only because public morality (or morality of any kind) is in steep decline and, as such, fear-mongering, bribery and corruption play a major role at all levels of society. If any of us are, indeed, interested in keeping the most extreme and disasterous consequences of climate-change from occurring we must develop some kind of communitarian values. Interestingly, pursuing those values, even at a major cost to our wealth, will help us live healthier and less stressful lives.

      1. Dirk77

        More evidence for publicly funded elections. I wonder that nothing is going to stop the downward spiral until that is done. Does anyone have a good plan for that?

  3. voislav

    I am with the emerging economies on this one. The climate change regulation is trying to freeze current level of total CO2 emissions on per country basis. Less developed economies get the shaft because their per capita emissions are much lower than that of developed economies. So instead of forcing the Americans to give up their SUVs, we are forcing poor Africans to stop burning dung for fuel.

    The only way to proceed fairly is to force the developed economies to cut their CO2 emissions drastically and bring it in line with that from the developing countries. For example, 2009 US per capita CO2 emissions were 17.2 metric tons, while Chinese were 6.2 and Indian were only 1.5. Setting the global standard at 3 metric tons means an 80% cut in the US, 50% cut in China, but a 100% increase in India.

    Chastising developing countries about increased fossil fuel usage and CO2 emissions now that the developed economies have caused global warming is hypocritical and it does not address the real problem, high current CO2 emissions by the developed countries. These are the countries that have both the resources and the technology to drastically cut the CO2 emissions, but they refuse to do so because it would cause a short-term economic pain. So let’s pick on the developing countries, because that’s where the “growth” is.

    1. James Levy

      I think you miss a key component of this: where are the dollars going to come from to buy the carbon. Once these less developed nations get hooked on oil and an oil infrastructure they become slaves to foreign suppliers of both the carbon and the dollars needed to buy it. How do they get the dollars? They either sell off their patrimony via “privatization” or they borrow it from the IMF and become debt peons of the US/Europe, or both. The long-term implications, even ignoring climate change (which is going to hit these countries hardest) are dire. If I’m a diabetic and I tell someone to skip the sundaes and the Fritos and the Supersize Coke perhaps I’m a hypocrite telling them that because I’ve done all those things, but perhaps I’m a wise man warning another human being not to make the stupid mistakes I have.

    2. Fiver

      Good comment. It has been evident for what has become a very long time that if there was to be rational response to the entire environmental load of the fossil fuel industry and its products the leadership had to come from the developed world, with the US leading, not impeding and along the lines you describe – it is the only peaceful possibility and starting now, not nearly as far in the future as this fellow is talking about. The other choices are escalating war and collapse, or just plain collapse.

  4. Banger

    Certainly Exxon-Mobil and the energy industry as a whole are colluding to make themselves rich at the expense of the health and well-being of future generations and they know very well what they are doing and will even risk catastrophe to maintain their power and wealth. It is very rare for people to rise to the top of any pyramid to have transcendent values that go beyond today’s little power struggle. And let’s be clear here–I happen to know from someone who spent some quality-time with Exxon-Mobil execs from around the world at a conference that these people are the most competitive audience she ever encountered. If you’ve ever been around people who play a big-time power game you know that the pleasure is in the Great Game more than the monetary rewards–it is exciting, vital and provides meaning to people.

    But, in the end, it is us who are to blame, i.e., those of us in the developed world who allow such companies to have virtually free-reign over our societies–more true in the U.S. than Europe, nonetheless, social morality is degrading in Europe even faster than in the U.S. If the public lacks solid values then the culture is going to be dominated by those that can offer the biggest bribes or have the most muscle. Similarly in developing countries bribery and the use of covert operations by energy companies acting in concert with Western Intel services pretty much determines policies there–a close examination of the political realities of Nigeria, for example, might bring some insights that the mainstream media, flat-out, won’t mention.

    Clare is right that, in the end, pollution will be exported to these countries both in terms of air pollution and toxic waste and Energy companies will actively and ruthlessly try to stop alternative energy development (they have already) in concert with the mainstream media’s refusal to report the full extent of alternative energy possibilities that expand every year as the technology fueled, in part, by the stunning progress in computing power and AI advances. We have, today, the technical capacity to retool but it demands a lot of planning and it also demands a commitment on the part of the public to live lives that go beyond individual self-interest.

  5. mark



    Wikipedia ….”It was reported by Human Rights Watch and has subsequently been admitted by the Angolan government, that US$32 billion in oil revenue (a quarter of Angola’s GDP) has gone missing and cannot be accounted for. ”


    “Nigeria’s President Goodluck Jonathan has ordered a forensic audit of the state oil firm following claims that 20 billion dollars had gone missing. (Central bank governor) Mr Sanusi was suspended last month after he told a senate committee that the Nigeria National Petroleum Corporation (NNPC) had failed to account for $20bn of the $67bn of oil sold between January 2012 and July 2013.

    The presidency said in a statement that Mr Sanusi’s suspension had “absolutely nothing” to do with his “patently untrue” allegations.


    “A former top Halliburton executive will serve 2 1/2 years in prison after pleading guilty in Houston federal court to orchestrating a $180 million bribery scheme to secure $6 billion in natural gas deals in Nigeria, the Justice Department announced Thursday.”


  6. Vatch

    This paragraph from Professor Klare’s article sums things up very well:

    The energy industry’s growing emphasis on sales to these particularly vulnerable lands is evident in the strategic planning of ExxonMobil, the largest privately owned oil company. “By 2040, the world’s population is projected to grow to approximately 8.8 billion people,” Exxon noted in its 2013 financial report to stockholders. “As economies and populations grow, and living standards improve for billions of people, the need for energy will continue to rise… This demand increase is expected to be concentrated in developing countries.”

    Solving the world’s overpopulation problem isn’t sufficient by itself to prevent the tragedy of environmental destruction in emerging economies, but it is an absolutely necessary part of the solution. If we really care about both justice and a healthy environment, then we must stop having so many babies. The Quiverfull ideology is truly hideous.

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