A report by the UK-based New Economics Foundation (NEF) concludes that the astronomical profits recently reported by oil and gas companies would turn into losses if the social costs of their greenhouse gas emissions were taken into account. They found that the $17 billion-plus profits reported by Shell and BP are dwarfed by costs of emissions associated with their products. Working with numbers from a report prepared for the UK government, NEF estimates that each ton of carbon dioxide emitted costs about $35 in environmental damage, which makes from some upside-down numbers for oil companies. According to Andrew Simms, NEF's policy director, "BP's direct activities and the sale of its products leads to 1,458m tons of CO2-equivalent entering the atmosphere, with a damage bill of £29bn ($51bn). Subtracting that from the £11bn ($19bn) annual profit it has just reported puts it £18bn ($31bn) in the red; effectively bankrupt. The same calculation puts Shell £4.5bn ($8bn) in the red, even as it reports an annual profit of £13bn ($23bn)." The report also has some harsh criticism of the way the British government is handling climate change, and some surprising statistics about where the government's revenue comes from.NEF suggests that UK Treasury revenues from oil and gas may be a deterrent in curbing greenhouse gas emissions as well. Andrew Simms continues, "Our new calculations from research in progress with WWF, based on Treasury statistics, show that UK government income from the fossil fuel sector - conservatively estimated at £34.9bn ($61bn) - is greater than revenue from council tax, stamp duty, capital gains and inheritance tax combined. Policies aimed at reducing carbon emissions could therefore have a major impact on the government coffers; a serious disincentive to action." As with the oil companies, NEF concludes that this revenue does not reflect costs associated with climate change resulting from burning oil and gas.
So what to do about all this? Andrew Simms has a lengthy treatment of this subject, in which he says, among many other things, that "the UK appears to be in denial as it becomes more deeply addicted to oil and its profits, raising the real danger that growing oil revenues could become a big disincentive to cut oil use and tackle global poverty." The solution has three parts, according to Simms: "putting human well-being at the heart of the political agenda instead of growth, implementing aggressive plans to cut our own emissions, and pushing for the next phase of the Kyoto Protocol to cap global emissions at a safe level, and give developing countries their fair and equal share of the greenhouse gas emissions pie." Sounds easy enough, but changing the global economy to include these things would be a glacially-slow process. Still, we like this way of thinking about economics; sooner or later, the world will have to realize that there is a price for everything that far exceeds the dollar amount needed to simply procure it. via ::BBC and ::The Green Room