speech

The Spirit of Environmental Enterprise

By Peter I. Bijur, Chairman and Chief Executive Officer
Texaco Inc.

Stavanger, Norway

Thank you for that kind introduction, and for providing me with the opportunity to speak on a subject that is so central to the future of our industry.

The extraordinary attendance at this conference and the quality and scope of the technical panels are compelling evidence of how critical the environment is in our line of work, and the great strides our industry has made in advancing environmental stewardship.

It is certainly no secret to any of you that our industry is in the midst of great change; change driven by a dizzying rate of technological innovation, by an increasingly interconnected globalized economy, and by new demands and expectations, environmental responsibility.

As an industry we are deservedly proud of the central role we have played in fueling human progress in the 20th century.

But we also know that we must reinvent ourselves for this new century, a century in which we will be measured not just by our ability to deliver the energy the world demands, but also by our ability to preserve the planet for future generations.

And this is what I am here to talk about today: how we can channel the forces of change to surmount environmental challenges and create value through environmental enterprise.

Before proceeding, I want to share with you an excerpt from an industry publication:

The greatest need in the handling of pollution problems is the development of technically sound, economically feasible, and socially effective solutions. Dedicated teams of capable people, representing industry, government and other organizations, are working diligently to build the framework of fact and analysis necessary for such realistic solutions. The results of their efforts should assure the world an improved environment in the years to come.

That is from Texaco's Annual Report in 1966, the year I joined the company.

The point, of course, is that environmental concern in our industry isn't a new phenomenon. It has been with us for generations.

It has, however, evolved, together with society's growing understanding of the interrelationship between the development of natural resources and its corresponding impact on our air, our water and our soil.

Back when I began working in this industry, we regarded the environment as a drain on profits. That is no longer the case.

Going forward, we know we will be judged as an environmental enterprise as much as an energy company, and we acknowledge this reality on parallel tracks:

First, we understand our responsibility as a caretaker, as a steward of the environment. Our absolute goal must be no harm – to the environment or to the people we come in contact with through our operations and our products. This is what our customers require and what our shareholders expect. This is the price of entry for our industry, and this environmental ethic will guide our operating principles forever.

Second, we must embrace the opportunities presented by ever-rising environmental expectations. We will do so by developing technologies and creating businesses that generate clean energy in a way that brings value to our shareholders.

At the outset, I want to make it clear that I see no conflict between the drive to create shareholder value and the requirement to effectively develop and market clean energy resources.

Any company that takes a pragmatic approach will understand that we can no longer afford to regard the environment as a drain on profits.

We must take the next step: to look for ways to transform our environmental concern into an emerging profit-center, to meet the needs of our customers and the expectations of our shareholders and in fact all constituents.

To look ahead with enthusiasm to environmental opportunities.

To replace the last remnants of skepticism and environmental resistance with one better suited for the demands of the 21st century: A New Spirit Of Environmental Enterprise.

Fortunately, because so many of the companies represented in this room share the same values: a healthy, exciting competition is underway among energy companies to be recognized as the best at driving environmental improvement.

Such a commitment demands of us more than well-designed programs and scripted responses. It requires a cultural shift. It requires making environmental commitment a company's way of life because it is the right thing to do.

I think Jacques Nasser, President and CEO of Ford, put it well when he said, "Once we have the technology and can take an action in volume to ensure a significant, positive environmental impact, we will not wait for regulatory timetables. We will act."

That single statement embodies the essence of the new environmental leadership sweeping industry.

As a CEO, I understand how vitally important it is not to send seemingly mixed messages to our employees. On the one hand, "protect the environment." On the other, "maximize profits."

We have no mixed message at Texaco – we simply will not sacrifice the environment in the name of earnings. More often than not, a creative solution can be found that enables us to achieve both objectives. And when no creative solution is forthcoming, we have to understand it is appropriate at times to forego that particular opportunity and seek others that are more compatible with our values.

As environment, health and safety professionals, you know this commitment means matching rhetoric with action and performance. Or, as we like to say in the United States, "walking the walk," not just "talking the talk".

This abiding concern for environmental performance must be integral to our whole approach to business – not merely an afterthought.

It is part of our bottom line, not a threat to it.

That is why an environmental assessment is part of the analysis we undertake for every investment opportunity.

And that is why managers of our operations have a vested interest in environmental excellence; not just because of our shared values, but because we translate those values into currency by linking compensation to their environmental, health and safety performance.

But I don't kid myself. Leadership no longer derives solely from the executive suite. Our job is to articulate vision and values, and to structure opportunities. For we know that when we do, our people will provide the leadership. We've all seen it.

Leadership that is spontaneous, that happens every day, in all corners of our company.

I am very proud of the spirit of Texaco's employees, who are forever pushing the bar higher when it comes to environmental performance. They are taking the initiative, and our company, our shareholders and the environment are the beneficiaries.

Through brainstorming at team meetings on ways to reduce emissions and waste, to leading volunteer campaigns, our employees are living these values "24 hours a day, seven days a week."

Likewise, I know the same grassroots leadership and spirit exists across our industry.

On the matter of leadership, I want to turn to a topic that is testing the leadership of our industry. I am speaking, of course, about climate change, which is, without question, the single greatest environmental challenge we face.

For our part, the time has come to move beyond the endless debates on science to the issue at hand: How can we reduce emissions of greenhouse gases in an era of increasing energy demand?

And this is an important nuance that cannot be dismissed. Energy demand will increase, regardless of any improvements in efficiency, because we will add nearly four billion people to the planet's population by the middle of this century.

This growing population will demand – and deserve – the fruits of economic development that we in the West now take for granted. And, as we know, economic development is literally fueled by access to energy.

Yes, I recognize that we need to continue to develop the science of climate change, which at present is incomplete. However, there is broad consensus that by the end of this century atmospheric levels of carbon dioxide will likely be double that of the pre-industrial era.

It is folly to believe that this trend – if it continues – won't have consequences for the environment. We know enough to take precautionary action.

What solutions, then, can we bring to the matter of climate change?

Most important, perhaps, is in leading the global dialogue and action, rather than reacting to it. I am encouraged that the petroleum industry, at first slow to move, is now bringing the force of its resources, technology and wisdom to this challenge.

Late last year the American Petroleum Institute sponsored a workshop where companies, non-government organization's (NGOs) and representatives of government came together to share information, experiences and ideas on the technologies that can significantly reduce emissions. Clearly, many in our industry have been rethinking their approach.

And in many cases we have been doing so in partnership with governments and NGOs, including those represented on this panel. The World Bank and NGOs, like the World Wide Fund for Nature, have hammered out highly effective environmental solutions with industry through their "best practices working group." Together, we have created new approaches for standards in fuel specifications, lead removal and clean air initiatives in developing countries.

There is no reason to believe this kind of cooperation cannot work equally well in regard to climate change.

The environmental community is also being challenged to rethink its approach. The U.S. Environmental Protection Agency has found that when it shifts its approach from lawsuits and threats to "compliance assistance," the resulting cooperation yields big environmental results, and an eagerness by industry to race ahead of what is required.

Or consider the recent report from the World Resources Institute, which embraced the need to support economic growth to sustain the world's rapidly growing populations. Their study concluded:

Our traditional command-and-control regulatory system rarely encourages or rewards improvements in material efficiency. Generally, it simply sets limits for industrial pollution. Such a system is protective, yet it is not proactive.

The institute is right. No command scheme can match the power of the market in ferreting out cost-effective reductions. If emissions trading is allowed across national and industry lines, on a truly global scale, the resulting benefits promise to be massive.

Our industry has a key role to play in supporting market-based approaches to greenhouse gas reductions. Any successful approach to dealing with global climate change must embrace this spirit of environmental enterprise if it is to be effective and affordable.

We have seen that technological innovation and market forces in many countries are resulting in less carbon-intense energy use. In recent years, emissions of carbon dioxide in the United States have increased at only half the rate of growth in economic production. Journalists and academics write increasingly about a fundamental shift in the relationship between our economy and the energy sector; a shift that is commonly referred to as "decarbonization."

We cannot proceed under the false reasoning that oil and gas will forever be the central energy resource of our planet.

Yes, hydrocarbons will be the dominant energy resource for the foreseeable future. However, we are already seeing signals of a shift to cleaner, more efficient energy resources. And Texaco, for one, fully intends to capitalize on this opportunity, which is driven in equal parts by higher environmental standards and by the dramatic technology revolution underway in our industry.

There will, of course, be many unforeseen twists and turns on this journey to the next generation of energy technologies. However, from our vantage point I think we need to give careful consideration to the concept of the hydrogen economy.

We must do more than be carried along by the trend towards decarbonization. If our industry is to survive, we must become the drivers of change. This requires vision, a sense of where we're all heading. It will also require grounding our vision with pragmatism.

In the future, I see a myriad of energy solutions – a mosaic of sorts – defined in many ways by environmental performance.

  • Gasification, which converts dirty fuels such as coal, coke and wastes into clean gas to generate power and chemicals...
  • Cogeneration, which realizes substantial improvements in energy efficiency by using a single fuel to produce two energy streams...
  • New technologies that enable us to exploit coal bed methane for power generation, and to capture the full benefit of clean natural gas, while at the same time enabling us to end the wasteful flaring of associated gas...
  • Solar and geothermal energy...
  • And what I hold here in my hand – hydrogen.

This disc is part of the Ovonic Hydrogen Storage System, developed by a partner of ours, Energy Conversion Devices Inc.

This disc is the potential solution to one of the trickiest hurdles between us and a hydrogen economy – the ability to safely store and transport hydrogen for use in fuel cells and other energy technologies.

It is stable. It is cost-effective. It is rechargeable. It was unthinkable only a handful of years ago.

And it holds enormous commercial potential.

The interesting thing is that these initiatives I just described are not technologies we use to simply improve our own environmental performance.

Rather, these are businesses we intend to grow, with no less commitment of talent and resources than that which we invest in a promising exploration block, a pipeline or a new marketing strategy.

We see clearly that meeting the exploding demand of the developing world in this century will require energy solutions very different from those that we applied during our industrial revolution.

To some extent, we must look back and remember the drive, determination and innovation of our legacy – the wildcatters of the late 19th century. These people found no challenge insurmountable as they built this towering industry that we today represent.

Those qualities must be recaptured and refocused as we face our new challenges of the 21st century.

For a century, we in this industry narrowly defined ourselves as oil companies. This definition is changing as we strategically invest in partnerships and joint ventures whose sole objective is to commercialize technologies that just several decades ago we saw as weak threats to our industry.

In such ways we are evolving from being a traditional oil and gas company to a company that delivers energy in myriad forms. We are moving from being a commodities company to being a company that provides energy solutions.

This, then, is the emerging profile of our industry – one that will harness the profit motive in the service of the environment.

More than 30 years ago, the writer E.B. White surveyed the world of his times and said he was, "pessimistic about the human race because it is too ingenious for its own good."

Three decades later, we face a new century with greater optimism because we have inverted this equation. Our knowledge of the environmental challenges we face has grown dramatically over the last 30 years, as has the evolution in our thinking and ability to organize ourselves to meet these challenges.

Working together, we can channel human ingenuity to create a sustainable future, to meet our responsibilities in the spirit of environmental enterprise.

This is our continuing challenge in this new century.

Thank you.

Updated: June 2000