Perhaps the events of 26th May will come to be seen (as many commentators have already suggested), as a watershed day for Big Oil.
In different settings, but for much the same reasons, Shell, Exxon and Chevron had (in Texas Wildcatter lingo) their “asses handed to them”! Even if Big Oil invites little love and admiration, it was in jaw dropping fashion that these formerly fearsome corporate titans were humbled.
The world has changed “in the blinking of an eye” and those who have helped to keep us warm and mobile are these days an easy target for the change agenda – the soft underbelly, the low hanging fruit!
Yet these events, nor others that will undoubtedly ape them, may not be much cop when it comes to disarming fossil fuels, nor may they presage any meaningful step forward for the Net Zero Carbon movement.
Perhaps these oil companies will reinvent themselves and dance the new, new dance yet it barely will matter other than their to shareholders, as it is unlikely that less fossil fuels will be produced or burnt across the globe as a consequence.
Others (NOC’s, private entities, etc.) will choose to step in to produce as much incremental oil, gas and coal as the less developed world will increasingly demand. This is the same less developed world who might legitimately question the moral authority of those who would make more difficult their exit from poverty, and all the good things that the developed world have enjoyed (while polluting the planet).
But let’s not just castigate those predominantly Asian and African countries and consumers as the consumer closer to home is likely to prove to be an equally tough nut to crack in the drive to Net Zero Carbon. Many of those who are “talking the talk” may well fall short of “walking the walk”, when the bill arrives for the heat pump, the new electric car, the carbon storage sink and the distribution and infrastructure required to move the new clean product around the houses. None of this is even close to being priced in at carbon prices of €50/tonne plus or minus. A senior commodities veteran recently asked on a Goldman Sachs call, who would be paying the potential $150/tonne carbon price and what that would mean for inflation. One thinks of the rebellious consumers portrayed in the anarchistic Dario Fo play, “Can’t Pay Won’t Pay”!
However the critical need to progress to a Net Zero Carbon world is unassailable and consumers will need to counterintuitively accept to pay much more in return for being delivered less and for accepting a lower standard of living (less warmth at home, fewer flights, less meat consumption et al) – as is all well laid out in the recent IEA report.
It is almost certain that governments will need to revert to law, edict and strong messaging (psych-ops!) in order to promulgate progress. The forceful weapon of authoritarianism, so clearly experienced in the current pandemic, appears, in these current circumstances to have encountered a sanguine and pliant public who have been accepting of instruction with equanimity. This is encouraging for the Net Zero Carbon agenda as it seems unlikely that there will be the necessary nexus between aspiration and realism anytime soon.
It is the demand side that will be the key to carbon targets being attained globally, not populist wins against the supply side. However, until governments start relying less on vacuous hyperbole and get ahead with imposing mandates on consumers, through price or permitting (or both) , the prize will remain tantalisingly difficult to obtain.