Chevron’s man – News Wrap – Sept. 30

John S. Watson, incoming Chevron Corp. CEO/Chairman

Perhaps a sign of the times: Chevron Corp. has followed Royal Dutch Shell in picking for its next CEO someone primarily from a finance background to succeed an engineer.

In a well-flagged succession, Chevron confirmed on Wednesday that current vice chairman of the board John S. Watson, 52, will replace the retiring CEO/Chairman David O’Reilly, 62, as head of Chevron – both men have been Chevron lifers. Mr O’Reilly, a native of Dublin, Ireland, was an engineering graduate who worked his way through various operational positions during his climb at Chevron. Mr Watson was an MBA graduate from Chicago and had an early career in the finance department, particularly in mergers & acquisitions, before stints in senior operational management.

It was Mr Watson who was put in charge of the integration of Texaco when the company finally bought it at second attempt in 2000.

The succession of Mr Watson is not likely to see as radical a shift as Shell is undergoing with Peter Voser, also a former chief financial officer. Mr Voser’s reorginisation is resulting in thousands of job cuts, including a big shake out of its management and an attempt to root out a culture of sclerotic bureaucracy (See Shell-acked).

Mr Watson chaired the last annual meeting at Chevron and gave no indication that he might have a similar root-and-branch strategy up his sleeve. As might be expected, he emphasised financial performance and the US$8bn given back to shareholders in 2008, plus a 12% increase in the dividend and the 14.8% average annual stockholder return over the previous five years, a significant out-performance versus the S&P500. He said the company will spend about the same in 2009 as it did the previous year on large projects (US$22.8bn) and continue to emphasise its strength in international upstream developments – it is the most “oily” of the so-called supermajors and will remain so.

Ed to the rescue – News wrap – Sept. 28

Yvo de Boer

Yvo de Boer

Having saved the world economy from disaster, the UK will now turn its attention to climate change. At the behest of the US, Ed Milliband, the UK’s earnest energy minister, will host the next Major Economies Forum (MEF) in London in October; a discussion that his ministry says will provide a “valuable contribution towards Copenhagen” by bringing together rich and poor countries to  seek “a shared understanding and build consensus on some general principles.”

Is now the time for talk of “general principles”? After all, the clock conveniently reminds us that the Copenhagen summit is fast approaching.

As delegates from UN member states meet in Bangkok this week for the penultimate sit down prior to Copenhagen, Yvo de Boer, head of the UN Climate Change Secretariat, told attendees that time “is not just pressing” but  “has almost run out.”  

The first task ministers face is deciphering the initial draft of the Copenhagen agreement. Running at more than 200 pages, the framework document contains all of the contradictions and sticking points that have been picked apart in the media over the last few weeks, namely how the burden of cutting emissions will be shared between the developed and developing world. A deal will likely boil down to how much cash the developed world is willing to cough up to convince emerging markets that a deal is worth doing.

Everyone is wrangling for the best deal possible, from the EU to China, by pushing, pulling and extending emissions benchmark dates. The likelihood that the US will not pass a bill limiting emissions by December also looms large over the negotiations in Thailand. Recent flooding in the nearby Philippines also serves as a reminder, if any were needed, the risks of delaying a deal on curbing climate change.

Mind the gap – News wrap – Sept. 23

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After the high-toned speeches to open the UN General Assembly gathering in New York, which has climate change talks as its central theme, a dose of realism: As a new Standard & Poor’s report points out, there are wide gaps between the largest players in the climate change talks – the Major Economies Forum (MEF), comprised of the 17 countries that account for 75% of greenhouse gas emissions – and bridging those policy divides will be necessary before an effective carbon market can be implemented as the main tool to coordinate and implement CO2 emissions reduction.

S&P’s report argues:

“The post-Kyoto protocol could introduce binding commitments on climate change among industrialized nations and act as the precursor for the international trading of carbon. However, obtaining a consensus is a daunting task. [The policy gaps within the MEF] partially explains the increasing level of pessimism about whether an agreement will be reached in Copenhagen later this year.”

S&P notes that the EU emission trading scheme and climate change package is seen by and large by industry as fairly balanced, but notes that the full participation of major developing countries and the US will be necessary for international implementation. However, as the New York Times notes in its analysis of Tuesday’s speeches by the leaders of the US and China, the two key international players emphasised their own needs when setting CO2 policies.

There’s still a lot of work to do in the run-in to Copenhagen in December.

Carbon spin overdrive -News Wrap- Sep. 22nd

Obama_And_Ki_MoonThe always muddled world of CO2 politics and public relations this week becomes even more abstruse. Why? Two key staging posts on the road to Copenhagen, the UN summit on climate change in New York and the G20 meeting in Pittsburgh are upon us, sending forth a bedazzling blur of statements and press releases from politicians, companies and the associated mess of sceptics and wide-eyed climate evangelicals.

It is reassuring then that not everyone has lost their sense of humour. As the Guardian reported, some enterprising pranksters captured the note of hyperbole that attended the opening of the confabs.

The US president struck the appropriate diplomatic tone. “As we meet here today, the good news is that after too many years of inaction and denial, there is finally widespread recognition of the urgency of the challenge before us,”  he addressed the UN meeting.  He spoke of phasing out fossil fuel subsidies and achieving higher living standards with out endangering the planet. With that familiar flair that’s maybe wearing a bit thin, Obama’s speech was powerful but committed to little.

Foremost in President Obama’s mind was perhaps the Senate which he said he looked forward to “engaging” on the issue of climate change—his enthusiasm is not widely shared.

China’s president was also bold in tone and managed to garner some headlines that credited him with laying down “a challenge” for others, though a little reflection on Hu Jintao’s speech revealed that it was likewise short on concrete commitments to CO2 emissionss.

Oddly, China has spent much of the week basking in praise. Yvo de Boer, head of the UN Framework Convention on Climate Change, statement that he expected China to become the “world leader” in climate change efforts, might have been based more on hope than hard evidence. Despite the praise, China, as the leader of the block of developing nations, is posturing to get a good deal at Copenhagen.

The feeling lingers that leadership on the issue is conspicuously absent, despite the best efforts of British Prime Minister Gordon Brown and his climate change minister. Prsidents Obama and Hu are the ones who must agree before a meaningful deal can be reached in Copenhagen this December.

Meanwhile, industry wanted its slice of the news cycle, chief among them airlines and big oil. In a move aimed at preempting carbon taxes, the airline industry pledged to cut CO2 emissions by 50% by 2050 through a combination of engine design improvement and biofuels. A closer look shows, however, that the cuts are based on 2005 emissions and 2050 is a long way off for an industry that is the fastest growing source of CO2 emissions.

The reception was less than charitable, with accusations of “green-washing” aimed at British Airway’s chief.

Oddly, it still looks like it could be a good year for emissions reductions, though that has as much to do with how bad it has been generally as it does with climate-saving efforts.

Heating up – News Wrap – Sep. 16th

Reading_Paper_HotSpeculation that Italy’s Eni might launch a takeover bid for Tullow Oil sent the Anglo-Irish explorer’s share price soaring yesterday. Cold water was soon poured on the talk. Eni, which has problems of its own, always seemed an unlikely buyer. Finding another reason for the jump in Tullow’s share price was not hard: Anadarko’s discovery offshore Sierra Leone did the trick. Tullow holds a 10% stake in the project.

 But Tullow was not done. Keen to stoke the fire further; Tullow’s CEO Aidan Heavey weighed-in adding that the chance of another major discovery between Ghana and Sierra Leone was greatly increased by the strike. Cheers all round then as a new oil frontier offshore West Africa is opened.  

Jumping into hot water, the EU clashed with the Obama administration over climate change. Temperatures appear to be rising ahead of December’s sit down in Copenhagen. The disagreement concerns the way national carbon reduction targets would be counted, with the EU accusing the US of seeking to water down Kyoto‘s successor.

The heat over climate change was not confined to politics as the World Bank warned of the crippling impact on developing nations if temperatures rise further. World Bank president Robert Zoellick implored rich nations to deliver an “equitable deal” at Copenhagen that acknowledged their historic responsibility for global warming. The logic goes that only by reducing their own heavy carbon footprints will rich nations be able to convince poorer countries to do likewise.

The report argues for rich nations to invest US$400bn a year by 2030 to help developing nations cut emissions. To date the only offer of climate change investment has come from the UK. But even Gordon Brown’s proposal that rich nations invest US$100bn a year to help poorer nations cut emissions falls short of the new reports recommendations, which will give China and India statistical clout at Copenhagen.

Joining the politicians and economists, it appears that climate change scientist can’t decide if the world is getting hotter or colder. Philip Stott says the will get cooler before getting hotter.

Something of a climate change skeptic, Professor Stott said his main concern is that a cooling could lull the public into a false sense of security with profound political implications, especially if climate change slips out of the public consciousness.

The Met Office’s head of climate change advice Dr. Vicky Pope was on hand to politely disagree. Dr. Pope argued that warming will continue over the next decade, however, even she conceded that periods not displaying strong temperature rises are possible.

Wind report – News Wrap – Sept. 1st

Crikey. According to a story from New Zealand, wind farms can give misleading information to weather forecasters, some of whom have issued false storm warnings as a result. The report explains that “moving wind turbine blades could look a lot like a thunderstorm or even a tornado on the radar.” In one instance in the US, the weather service issued a false tornado report based on the readings, leading to unnecessary disruptions across a whole county.

Thus, concerns over radar can be added to the long list of ammunition for those opposed to big propellers, and just such a hitch led to an inquiry in Scotland dragging on for a full year longer than expected in order to assess the possible implications for radar of one proposed wind farm site.

Wind power has encountered many opponents, particularly in the Britain. Ironically, many of the objectors are conservation groups intent on preserving pristine countryside – to wit, the John Muir Trust’s ongoing objections to the location of wind turbines on the Isle of Lewis, most recently on the grounds that claims about wind power’s benefits are “grossly exaggerated”.

Doubling down on the irony, the Royal Society has a new report that warns that if progress is not made on reducing carbon emissions, mankind may have to resort to “geoengineering the climate”, with possibly dangerous unintended consequences in the form of, for example, altered weather conditions.

Nonetheless, at least there are signs that bankers are starting to back wind projects again, at least in the US, after deserting them at the onset of the recession. The key is, of course, the will of governments –- if governments subsidise enough and exert enough pressure to speed through the approval process then the money will follow.

Meanwhile, the BBC examines in detail widespread “nimbyism” in the UK and what’s to be done about it.