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June 26, 2008
Shelley Alpern on How Tar Sands Perpetuate Petro-Addiction
    by Bill Baue

SocialFunds writer Bill Baue speaks with Shelley Alpern of Trillium Asset Management about its shareholder activism on oil company exploitation of tar sands.


In a 2006 Rolling Stone interview, Al Gore infamously likened the practice of extracting oil from tar sands to "junkies find[ing] veins in their toes" to inject heroin. Gore's image simply extends to its logical conclusion George Bush's 2006 State of the Union "addicted to oil" metaphor. Clean, renewable energy represents a healthy cure for petro-addiction. Tar sands, which increase the carbon intensity of petroleum extraction, represent an exacerbation of the climate-changing addiction -- kind of like trying to cure heroin addiction by injecting arsenic.

SocialFunds writer Bill Baue recently spoke with Shelley Alpern, director of social research and advocacy at Trillium Asset Management, about her shareholder activism asking oil companies such as ConocoPhillips and BP to assess and disclose the social, environmental, and financial risks of tar sands exploitation.

Bill Baue: First, what are tar sands? Explain the theory behind extracting oil from theese deposits and the reality of their social and environmental impacts.

Shelley Alpern: Tar Sands are what they sound like--sandy deposits drenched in a heavy condensed oil called bitumen. Extracting oil from tar sands is an extraordinarily water- and energy-intense process. You can think of it as scraping the bottom of the earth’s barrel for remaining oil.

Tar sands have been mined for about 40 years, but because the extraction is so water- and energy-intensive, it only became profitable once oil prices started to rise recently.

The cumulative environmental impact of mining tar sands is simply huge. It’s done through strip-mining as well as a process called steam-assisted gravity drainage. Both are enormously destructive in their own right and compared to conventional oil extraction. Vast expanses of wilderness are being completely deforested, wetlands are being drained; people who have viewed the open pits from above in the air have compared the areas in Alberta, Canada where this is taking place to the Land of Mordor from the Lord of the Rings.

They’re also a more carbon-heavy form of petroleum than conventional oil. So from a climate-change standpoint, they’re a disaster and are responsible for Canada not meeting its Kyoto Protocol goals in the last couple of years.

BB: And the social impacts on the people who have been living in and using these areas traditionally?

SA: Yes, it’s a strain on Albertans -- both the First Nations peoples who have been there forever because it’s been a major burden to the ecosystems on which they rely for fishing and hunting and to sustain their traditional way of life, and for newcomers to Alberta, it’s not a picnic either. You can get a fine salary because they want to attract people to Fort McMurray, but the infrastructure hasn’t been ready to handle it.

BB: Trillium Asset Management has filed a shareholder resolution with ConocoPhillips —- what does the resolution ask the company to do around their involvement with tar sands?

SA: Essentially, the resolution focuses on disclosure. It asks for a report on the potential environmental and social impacts if ConocoPhillips expands its tar sands operations. We’re realists: we recognize that ConocoPhillips and other companies have invested billions of dollars in tar sands, so they’re not about to pack up and go away. But we believe it’s in the best interests of everyone, including shareholders, to have a much better sense of how companies are anticipating and mitigating their environmental and social impacts.

BB: Green Century, a similar SRI asset manager, has filed a resolution with Chevron. How similar is it to yours at ConocoPhillips?

SA: Very similar -— just minor differences. Both did very well. The ConocoPhillips resolutions got 27.5 percent and the Chevron resolution got 25 percent support. And these are preliminary figures, so the final numbers may even be higher. This was the first year these resolutions were filed, so we’re considering them very successful in raising awareness and perhaps galvanizing other shareholders to start pushing the companies in private conversation to provide this kind of information.

BB: It’s almost unheard-of for a first-year resolution to get such a high vote. What do you attribute that high level of support to?

SA: I think there’s a lot at stake for the companies going into Canada to extract tar sands. We made a good case before their investors that there’s considerable financial risk, that there’s a growing backlash in Canada and even in the US against this kind of fossil fuel extraction and increasing dependency on oil when people recognize that, because of climate change, we have to be going in the other direction, shifting these massive financial resources to be invested in renewable forms of energy and other alternatives.

BB: Trillium is also a shareholder of BP, which used to be called British Petroleum and now goes by the tagline “Beyond Petroleum.” You sent BP a letter with a statement signed by a number of other US- and UK-based investors asking for the company’s stance on tar sands. This statement was read at their recent shareholder meeting, because they can’t have shareholder resolutions in the UK. What did the statement say and what was BP’s response?

SA: The statement was in response to BP’s announcement that it was entering into a joint project with a Canadian energy company, Husky, to develop tar sand operations. Our statement expressed our deep disappointment that BP was going in this direction. They’re open to having a meeting with us, so we’re in the process of arranging that.

BB: That’s fairly promising that they are willing to dialogue with you.

SA: I hope so. As I said earlier, once companies have announced a project, it’s unlikely that this company is going to withdraw from its commitments. But we hope to influence them to be absolutely as transparent and environmentally responsible as possible.

BB: Shell, another Europe-based company, said at a recent conference that they are questioning their involvement in tar sands in recognition of both the energy intensity of extracting oil from the tar sands and the environmental implications to climate change. What is your response to Shell’s initial questioning of the viability of tar sands?

SA: I hadn’t heard that, so perhaps there is hope for BP. I think this is a really great development.

BB: And perhaps would set precedent for other companies. Is the writing on the wall for this kind of last-ditch effort to be doomed whereas the money could be spent on renewables that have a much brighter future?

SA: I think it’s too early to say the writing is on the wall. Whenever you talk about any untapped oil reserve, especially underneath the soils of a friendly nation like Canada, it’s going to be a struggle and take a lot more dialogue and public pressure, if that. If the Albertan government is very excited about the tar sands as a huge economic opportunity, and the Canadian government has been supportive, there’s only so much that other sovereign nations can do to discourage this kind of activity. The US imports most of Canada’s oil, so a lot of the education and awareness has to take place right here at home.

BB: Do you see consumer education campaigns happening now, especially with the oil coming into the US for refining—for example at a BP plant in Michigan?

SA: Where there were protests over that. Yes, I think Americans are just starting to learn about this, and I think we’re going to see a lot more activism. Especially in the coming year, I’ve been hearing that a number of national environmental organizations are taking a great interest in this, including Rainforest Action Network, World Wildlife Fund, Earth Justice, Natural Resources Defense Council — we’re really just at the tip of this.

BB: You mentioned earlier that the Canadian government missed its Kyoto Protocol commitments for reducing carbon emissions in part because of its tar sands involvement. And now of course we’re looking at the US implementing a carbon cap. What are the implications of this price on carbon for the viability of tar sands?

SA: It means that the oil companies are potentially going to take a real hit to the extent that legislation starts “taxing” oil companies, in effect, through the cap-and-trade program, for the carbon intensity of their products. That’s something that should concern all shareholders, whether or not they believe that global warming is happening or care about the environmental consequences of oil sands. To the extent that cap-and-trade is going to pass on costs to consumers, everyone, regardless of whom they work for -- whether they work for an oil company and are sharing in the relative boom – needs to be concerned about the relative expense of paying for energy that comes from fossil fuels.

As one sign of the change in public opinion, you see people starting to speak out from unusual quarters. A vice president of GM, Larry Burns, who’s in charge of bringing the Chevy Volt online, the electric car, he commented that he thinks the oil sands are, and I quote, “a pretty bizarre way to get gasoline to a corner station — it’s an awful lot of capital and an awful lot of work to pull it off.”

BB: Taking a look into the near and mid-term future, what are the plans of Trillium and other aligned shareholder activists for continuing this campaign on tar sands and how does this fit into the bigger picture of oil company action and environmental activists addressing this tar sands issue?

SA: We’re going to be pushing in the near term for dialogue with companies. Deadlines for filing resolutions generally roll around in the fall, so we hope to have as much conversation with companies as possible before then, before we have to decide whether to re-file these particular resolutions or file resolutions at other oil companies. I think what this does in the context of all the climate change shareholder activism is, keep us grounded in the operations of what the companies are doing.

For a long time, the activism we’ve been doing on climate change has focused on broad targets, asking companies to reduce greenhouse gas emissions and set targets and explain to shareholders how they assess the risk that climate change poses to their business. This gets specific and shines a light on choices energy companies are making that we think are very short-sighted.


You can listen to the complete interview by Corporate Watchdog Radio host Bill Baue with Shelley Alpern at the CWR website. The show also features a commentary on tar sands by Susan Casey-Lefkowitz of the Natural Resources Defense Council, as well as analysis from the Environmental Integrity Project and Environmental Defence Canada about their new report, Tar Sands: Feeding U.S. Refinery Expansions With Dirty Fuel.

 

 
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