Editorial

Playing With Dangerous Energies

The massive hidden cost of fossil fuels and other dangerous energies is demonstrated by a US$19 billion judgement against Chevron in Ecuador which has many of the corporation's shareholders in uproar.

In 2011 Chevron was found liable for the negligence of oil company Texaco, which it acquired in 2002. The Ecuadorian Court found that between 1972 and 1990 Texaco had polluted more than 1,500 square miles of the Ecuadorian Amazon jungle, dumped 16 billion gallons of highly toxic and carcinogenic water into the estuaries and rivers, had hundreds of crude oil spills, built around 900 waste pits without protective linings and destroyed the health and livelihood of the nearby communities.

The affected territory was dubbed by some "Amazon Chernobyl".

Yet it could get worse for the 30,000 affected Ecuadorians, as Chevron says the "judgment is illegitimate" and they fear Chevron will not pay. They have related litigation underway in Argentina, Brazil and Canada to ensure it does.

And things could get worse for Chevron. The website chevrontoxico.com notes that "Chevron also faces US$22 billion in possible civil and criminal penalties in Brazil over an offshore spill and related cover up last November in the Frade field", one of the company's biggest investments in the world.

Many Chevron shareholders want the US$250 billion corporation to settle with the Ecuadorians. At Chevron's annual general meeting last month, a third of shareholders supported a resolution to make it easier for shareholders to call their own meetings over "the need for better tools for shareholder scrutiny of management". The Chevron board opposed the resolution.

Also in late May, 14 of Chevron's institutional investors wrote to the US Securities and Exchange Commission asking it to "investigate evidence that Chevron Corporation is violating securities laws by repeatedly making misrepresentations and material omissions regarding the impact on the company of its adverse judgment in Ecuador of $19 billion for pollution of the land and water of rainforest communities."

Ecuador looks to be a shocking case of corporate irresponsibility. And it clearly shows how dangerous oil can be in the wrong hands, in this case those of an oil company. It is an extraordinarily cruel story for the Ecuadorians, and a sorry one for Chevron shareholders.

Yet all this trouble is even before we factor in the amount of carbon that Chevron's activities have released into the atmosphere and will release in the future. It shows that oil is a dangerous fuel even before its contribution to climate change, but with climate change it can damage not just the Amazon but the whole planet. Not only 30,000 Ecuadorians but 7 billion people and countless species.

But oil is not the only dangerous fuel that mankind plays with.

Last month, Doctors for the Environment Australia (DEA) issued a report saying Health Impact Assessments (HIA) of coal and gas projects are inadequate.

The rapid expansion of the coal and unconventional gas industries has exposed that HIA processes under the States "is confusing, inefficient, uneconomic and often rudimentary - and the health of communities has not been adequately protected.

"Current moves to cut 'green tape' at the instigation of developers will render present health assessments even more inadequate and must be resisted unless health assessments are protected and improved."

The DEA says there is "a well established body of knowledge about the health effects of coal, such as cardio respiratory illnesses and reduction in life expectancy". It says there is a "case for urgent reform".

Health is one of the hidden costs of coal that is not properly accounted for by industry and government. As Eco Investor asked in our editorial in December 2009 on The True Cost of Coal - has anyone added up these numbers and their costs to the Budget and family life?

Like oil, coal is a dangerous energy. And that is before its contribution to atmospheric carbon and climate change.

A third dangerous energy is the nuclear industry. I was touched by the story of the Aboriginal man Jeffrey Lee who in 2007 said no to a uranium mine on his ancestral land worth up to $5 billion and possibly up to $7.5 million for himself. Early this year the land was incorporated into the Kakadu World Heritage area.

Mr Lee was quoted as saying "Money come, money go. Once you take my land away, you can't put it back together again".

His wisdom was borne out when last week I saw a news item with hundreds of large orange plastic bags full of radioactive soil from the Japanese village of Fukushima. This is land the Japanese may take away and never put back together again.

The oil industry, the coal industry and the nuclear industry on one hand and Mr Lee on the other hand give share investors plenty to think about. My money is on Mr Lee.

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