Leasedrive Velo Blog

Roddy Graham, Commercial Director

Deepwater Horizon are two words BP, its employees, shareholders and more importantly still, the people living along the coastline of the Gulf of Mexico, wished they had never heard of. Deepwater is the polite term for what BP currently finds itself in. For the poor people, and the trouble is that most of them are poor, around the Gulf the deep oily mess they find themselves in is worse still. Fishermen find themselves fishing for oil, not fish. Tourism in the region has been devastated. The final environmental impact of the disaster has yet to be properly calculated. Now in its tenth week, the cost to BP so far amounts to $2bn and climbing. And on Barak Obama’s insistence, it has set aside $20bn to meet compensation claims.

Worst still is that ten weeks on oil is still spilling in the Gulf at a rate approaching 40,000 barrels worth a day. The company estimated it collected 23,900 barrels-worth last Sunday but the US administration estimates 60,000 is pumping into the waters each day. A relief well to finally stem the flow will not start operations until early August so the environmental disaster continues. The Exxon disaster pales into insignificance by comparison.

Even worse still for BP are other leaks. Those revolve around the company having allegedly bribed officials and cut safety corners. Like aircraft, oil rigs are designed with back-up systems. If one shear ram fails, as happened on Deepwater Horizon, another should kick in. However, in the BP case, the second one didn’t due to leaking hydraulic fluid, something that had been observed weeks before in one of the control pods and reported to the company. Normally, the rig would have been shut down to repair the fault but BP allegedly just shutdown the faulty unit and in so doing didn’t have a back-up system.

Nor should it be forgotten that 11 workers died on the Deepwater Horizon rig on April 20, when an explosion triggered the current environmental disaster. Something that beleaguered chief executive, Tony Hayward significantly failed to do, writing on Facebook that he wanted his life back! Ouch, PR disaster number one!

Then came his appearance at the US Congressional Committee last week where his performance was shambolic to say the least. Caught in the lion’s den, under the full glare of the media and facing naturally hostile questioning, Hayward was accused of stonewalling the Committee. In seven hours of questioning he admitted not knowing the answer over 60 times and showed little genuine remorse. PR disaster number two.

However, Hayward still had one more PR disaster trump card. The power of the social media came to the fore when somebody Twittered that Tony Hayward was enjoying life on the high seas in a corporate sailing event off the Isle of Wight. America was apoplectic with rage. PR disaster number three.

As a result of his performance, Hayward was relieved of his responsibilities as leader of the response team in the Gulf. The chairman of BP said that Hayward had damaged the reputation of the company. He declared that this has now turned into a reputation matter, financial and political.

So if any organisation has doubts about the importance of corporate social responsibility (CSR), or indeed the power of PR, they need look no further than the fine mess that BP is in. Five letters never to ignore – CSR and PR. Shy away from them at your peril.

Roddy Graham, Commercial Director

Eyjafjallajokull is a word that became quite familiar a few weeks back even though probably people got a little tongue-tied pronouncing it. However, with planes flying freely once again, Eyjafjallajokull has fallen off the radar! It doesn’t even figure at the top of the Met Office severe weather warnings any more.

So besides the obvious impact the erupting volcano had on fliers, shoppers and certain business sectors, as discussed in my blog of April 23, what other impact has it had or could have going forward?

I tripped across an article the other day that claimed that in just four days Eyjafjallajokull had negated all the carbon emission savings worldwide over the past five years! Apparently, when the Mount Pinatubo volcano in the Philippines erupted in 1991, it erupted more greenhouse gases than had been created in the previous 40 million years.

Indeed, out of control bush fires that happen annually in various parts of the world from California to Australia via Greece can negate carbon emission reductions by two to three years.

All that smoke and ash is bound to have its effect whether the above is entirely accurate or not. Eyjafjallajokull has not yet necessarily gone back to sleep and its sister volcano – Katla – is predicted to erupt in the coming months.

Every time Eyjafjallajokull has erupted, Katla has never remained dormant. It’s ten times bigger than Eyjafjallajokull and has always erupted within six months of its unpronounceable neighbour. It also has a much bigger ice cap, and the combination of melting cold water and lava results in ash shooting up to high altitude. Katla last erupted in 1918 so don’t bet on it not following its two-thousand-year track record. Unfortunately Katla is much easier to pronounce too. Let’s just hope it’s not on everyone’s lips!

Meanwhile, we cannot afford to relax our efforts to reduce carbon emissions, volcanoes or no volcanoes. Natural disasters and carbon emissions we can do nothing about but man-made disasters, such as the Gulf of Mexico oil spill, and man-made carbon emissions we can certainly limit. At a time when our oil reserves are diminishing at an unprecedented rate, it makes the BP fiasco a double-whammy. Short-cuts and bribery will end up by costing the oil giant dear and the loss of 30 million barrels of liquid gold per day are not a drop in the ocean. Quite literally! Just ask the poor folks of the four most affected states, and the majority of those are poor.

Protecting our environment and our natural resources must be a top priority. BP is easier to say than Katla and far easier to recall and utter than Eyjafjallajokull. In all cases however, they are having a dramatic effect on mankind.

Roddy Graham, Commercial Director

Electric vehicles are very much flavour of the month with Government. Chancellor Alistair Darling in this week’s Pre-Budget Report has announced that from April next year he is giving company car drivers who opt for the electric option a five-year break from benefit-in-kind.

Coming hot on the heels of the incentive in April of up to £5000 off a new electric car from 2011/12, this is good news for environmentally-minded company car drivers, who still currently have to pay 9% BIK on their electric cars.

Even van drivers are being given a five-year holiday for going electric plus a 100 per cent writing down allowance for the first year.

In some ways, I see electric van sales possibly becoming more popular initially pro-rata than electric car sales as local delivery drivers opt for the cheaper, greener electric van route.

Earlier in the year, RAC Foundation research indicated a fifth of the UK’s 34 million drivers would consider or were planning to buy an electric car within the next five years.

However, lacking a proper re-charging network infrastructure, the Government acknowledged that electric vehicles would not be available as mass-market alternatives until 2017 at the earliest.

The PBR announcements would indicate Government wants to jump-start the switchover.

Widespread adoption of electric vehicles will definitely depend on a viable public re-charging point infrastructure but Government may be hoping the incentives to individuals and companies will hasten its creation at a practical level.

We’ve had the Energy Technologies Institute announce a number of UK major cities are to gain charging points for electric and hybrid fuelled vehicles under an £11m development plan, which will see a Joined-Cities Plan initially set up charging points in nine UK cities including 25,000 in London by 2015. And then, this November, we heard about the Plugged-In Places initiative which will fund charging points in streets, car parks, commercial, retail and leisure facilities to the tune of £30m in three to six UK regions as a precursor to a nationwide roll-out.

Whether joined up, plugged in or plain fully-charged, the switch to electric transportation is slowly gaining momentum, a bit like when you depress the accelerator on an electric vehicle.
        

Roddy Graham, Commercial Director

Money can often be a deal breaker and the Copenhagen climate change summit may be no different.

Currently, there is a deep abyss between what the developed countries are prepared to pay to secure climate change and what the developing countries are demanding by way of support to toe the line.

Will a compromise be reached or will Copenhagen be yet another nail in the coffin, as we march inexorably towards the destruction of our planet?

At the core of the deal is the amount the developed countries will pay the developing countries, led by China and India, to reduce their carbon dioxide emissions while at the same time expanding their burgeoning economies.

For 200 years, the western economies have been chucking CO2 into the atmosphere like there was no tomorrow. Now, while accepting responsibility for their past misdemeanours, they expect the developing countries not to follow suit, a position clearly they will have to pay for.

If you were China, you wouldn’t want to hold back economic development purely to appease the West’s concerns on climate change. Naturally, you would seek compensation to put the brakes on economic growth!

So what are the developing countries looking for? A cool £245bn! The EU is the first not to blink and has countered with its own proposal – £20 to £50bn per annum depending on what actions the developing world takes, more specifically the poorer countries. The UK’s contribution could be around £1bn.

The rich western economies have accepted that, since they have caused the problem, they must provide the solution and will have to assist the G77 developing countries to grow economically in a low-carbon way. This will cost money, huge sums of money. Many of the G77 developing countries are very poor and the only way to get their people out of poverty is to grow rapidly economically. It’s almost a Catch 22 for the climate.

The monies to be paid by the developed world has to go towards two main objectives – reducing carbon emissions and preparing for climate change, such as building flood defences. The first is called mitigation, the second adaptation.

China and the G77 calculated in August that the developed countries should pay between 0.5% and 1% of their gross national product each year, equating to nearly double to four times the current amount of overseas development aid.

Now here comes another crunch. China and the G77 insist this money must be in addition to that development aid, not a substitute for it.

Hence, the significance of the EU response.

This week we have the Copenhagen pre-negotiations when the 192 countries involved in the treaty try to thrash out some kind of compromise. And a big compromise it’s going to have to be given the chasm between the two figures currently on the table – £20bn versus £245bn!

In addition, the EU has insisted that while China and India will be beneficiaries, they should also contribute too, as they are rich developing countries.

The developing countries it is estimated will eventually account for 90% of all future emissions growth, which is why securing a deal is so important. It also kind of puts the contribution of the automotive industry into perspective. In the UK, road transport accounts for around 20% of CO2 emissions with cars responsible for 11.5% of this.

We must continue doing our bit but we must all hope and pray the policy makers do theirs as well and thrash out a workable deal come December. After all, the future of our planet is at stake.

It’s all well and good us in the West getting all hot under the collar about climate change and the need to dramatically reduce carbon emissions but if the rest of the world doesn’t follow suit, it’s check-mate and game over.

That’s ignoring the fact we had to contend with the direct opposition of ex-president Bush, who should have been leading the way, not holding us up.

With president Obama fully committed to a pro-active approach, the next dark mutterings were directed at the rising economic superpowers, namely China and India. Now unexpectedly, we’ve had a giant U-turn from China, the world’s biggest polluter.

On Tuesday, the Chinese President, Hu Jintao promised a ‘notable’ decrease in the amount of carbon emissions per unit of economic output from his country by 2020. Disappointingly, no figures were disclosed but the adjective ‘notable’ used. The only specific example of action was the commitment to plant forests covering an area equivalent to the size of Norway and generating 15% of China’s energy needs from renewable sources within 10 years.

According to the Chinese President: “At stake in the fight against climate change are the common interests of the entire world. Out of a sense of responsibility to its own people and people across the world, China fully appreciates the importance and urgency of addressing climate change.”

Warm words on the previously chilly approach to the climate change summit in Copenhagen in December.

The latter looked as if it was heading for a disastrous start but, after India changed its tone and now the Chinese, there is renewed optimism that progress will be made in the Danish capital. It seems heads of state are at last waking up to the impact of climate change and the need for action now after a decade of delay and prevarication.

Vehicle manufacturers have been investing huge sums of money in research and development into alternative fuel vehicles and making massive strides in cleaning up the good old reliable internal combustion engine but it would be for nothing if the industrialised countries did not get their act together.

After the electric and hybrid unveilings at IAA Frankfurt Motor Show, we have the fresh impetus of the UN general assembly meeting.

Let us hope that the climate change summit in Copenhagen proves the real deal and we can start making real progress to stemming the tide of climate change.

Roddy Graham, Commercial Director