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It would be very easy to be sharply critical of BP, given its sudden volte-face on its environmental commitments. Under pressure from a shareholder, Elliott Management, it has abandoned the green ambitions it announced in 2020 and pivoted squarely back to an overwhelming focus on oil and gas.
While easy, it would arguably be unhelpful, and perhaps even misguided. Because viewed in the round, this isn’t really about BP: it’s about capitalism at large, and its inability to respond to the climate crisis in the manner we need.
One thinker who would probably have been somewhat sympathetic to BP is Karl Marx, surprising though that may seem. Marx understood market competition as what he termed a “coercive law”, whereby individual companies are forced to act in certain ways because of their competitors’ behaviour. Competition, he said, compels companies to maximise profits on pain of succumbing to stronger rivals – or, as in the case of BP, to activist shareholders such as Elliott Management.
It stands to reason that BP has refocused on fossil fuels: oil and gas production is simply much more profitable than renewable energy. “No capitalist,” Marx wrote, “ever voluntarily introduces a new method of production, no matter how much more productive it may be … so long as it reduces the rate of profit.” He could just as well have been talking about the transition from fossil fuels to renewables. The CEOs of firms such as Exxon have been telling financial markets exactly the same thing for years.
Like it or not, BP doesn’t have the luxury of saying: “Oh, we’ll do something less profitable but better for the planet.” Capitalism chews you up and spits you out if you do that. “Shareholder value” is not a consulting gimmick, or at least not only that; it is a very real disciplinary force.
All of this, to be clear, is not to absolve BP of responsibility. Rather, it is to make a case about how we should understand the problems we face – that is, not as a problem of greedy individual firms, but a system rigged against positive change.
“The problem,” the political economist Geoff Mann has written, “is not that capitalism is a conspiracy of greedy people. The problem is that capitalism, as a way of organising our collective life, does its best to force us to be greedy – and if that is true, then finger-pointing at nasty CEOs and investment bankers may be morally satisfying, but fails to address the problem.” Substitute “greedy firms” for Mann’s “greedy people”, and this was exactly Marx’s point about capitalism and its coercive powers. Private individuals do not make history under conditions of our own choosing, but neither do businesses.
In short, the problem is not BP or indeed any other individual company. The problem is that BP and its fossil-fuel peers operate within a system that requires them to invest and operate in ways that are deleterious to the environment.
In the half-decade after the 2015 UN climate change conference in Paris, European governments briefly talked a good game about taking actions – even up to the stranding of hydrocarbon assets – that might actually make fossil-fuel production less profitable in the medium and long term. Hence why BP, Shell and others then started making plans to transition into cleaner energy. They wanted to be ahead of the curve, or at any rate, not too far behind it.
But since 2020, governments have shown that it was in fact just talk. Most notably, they have continued to issue licences for new oil and gas production at near-record rates, despite being told by experts that such licences are fundamentally incompatible with plans for net zero emissions; Norway alone has issued more than 100 new production licences since then. It is this miserable government appeasement that has emboldened BP and the rest to abandon their transition plans. Elliott, the activist shareholder in BP’s case, merely forced the issue; putting Marx’s “coercive law” into practice.
It is entirely within the power and purview of governments to change this situation for the better; either by making fossil fuels less profitable, or by making renewables more profitable, or both. For example, robust carbon taxes would hobble fossil fuels, or more generous electricity tariffs would inflate returns on renewables.
But what is economically straightforward on paper is politically fraught in practice: either of those courses of action would result in the one thing that sitting governments will never actively countenance, especially given the electoral experiences of recent years: namely, inflation.
And so, for now at least, we appear to be stuck. Because it is the crucible of fossil-fuel extraction and combustion, the energy system is at the heart of the climate problem. For as long as it remains beholden to the profit motive, it’s hard to see us resolving our predicament.
In the summer of 2007, Citigroup’s chief executive, Chuck Prince, explained why he was investing in sub-prime mortgages (just prior to them blowing up the global financial system): the sub-prime business was still profitable, and all his competitors were still in the game. “As long as the music is playing,” Prince said, “you’ve got to get up and dance. We’re still dancing.”
Two decades on, the music of the hydrocarbons is still playing, and BP is still dancing.
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Brett Christophers is a professor in the Institute for Housing and Urban Research at Sweden’s Uppsala University and author of The Price is Wrong: Why Capitalism Won’t Save the Planet
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