New mission for Jorma Ollila: fighting climate change
Chairman of the Boards of Nokia and Shell Oil wants to spread warning of global warming
By Anu Nousiainen
Jorma Ollila spreads his notes on the table of a conference room. He has written them with a black felt-tip pen in a notebook. On the upper left hand corner of each page is his name printed in small letters. His handwriting is low, and only the main points are written down in a very condensed manner. Those lines contain Ollila's message - what he now wants to say.
The topic of the discussion is to be climate change. Ollila has not spoken much of these matters in public before. In private discussions he has discussed it, and in recent times in an increasingly persuasive manner - at least that is what those who have met him have said.
Ollila has agreed to the interview because he feels that carbon dioxide emissions must be reduced much more quickly than is now happening. To achieve this, he says that governments need to impose restrictions on corporations and others.
"Otherwise the earth cannot take it."
Now sceptics will ask what the ulterior motive of the new chairman of the board of Shell might be. Finns were somewhat astounded when Ollila was named to the leadership of the British-Dutch oil company. Many recalled the Shell boycotts of recent years. A Finn at the helm of Shell seemed surprising, and even somewhat embarrassing.
There is black coffee in a thermos pitcher of the conference room at Nokia headquarters. Another one has hot water. Ollila takes some coffee.
He is in a wonderful mood - talkative and enthusiastic. He has clearly familiarised himself with climate change during the eight months that he has spent with Shell. During that time he has largely been outside the public eye, meeting prominent people, including several heads of state behind the scenes.
And for any doubters out there: he really does sound very sincere.
Ollila says that he first heard about climate change sometime in 1992 or 1993 when Nokia was establishing an environmental policy. At that time, the phenomenon was still known as the greenhouse effect.
Ollila seriously confronted climate change in June last year when he moved over to Shell. At that time he understood that climate change and carbon dioxide emissions were routine topics of discussion in companies in the energy field.
"Europe's big energy and oil companies have long had the view that climate change is caused by humans", Ollila says. "Carbon dioxide emissions are the key question."
"Awareness of this fact was significantly greater than what I had assumed. Attitudes have changed during the past five years or more, and one place where they have changed most rapidly are companies in the business.
Naturally, the exception is the American oil company Exxon-Mobil, which up to a few weeks ago was still denying the existence of climate change. But otherwise, Ollila feels that the world of international business is far ahead of the politicians in awareness of the matter.
In his view, large companies are ready to place limits on emissions, because they can see that sooner or later, the restrictions will come. It is best to be involved in drafting the agreements.
Ollila shows an article in the Financial Times. It says that ten large American companies are putting pressure on President George W. Bush to impose tight emissions limits on greenhouse gases. Included in the process are the industrial giant General Electric, and its CEO Jeffrey Immelt.
Ollila is therefore not alone in the circles in which he is operating. According to the World Economic Forum, one fifth of the top names of finance and politics feel that protecting the climate is their most important task. Last year the figure was less than one in ten.
And when the top managers of the world meet in Davos, Switzerland this weekend, climate is the main topic.
"Compared to that, Bush's proposal this week to reduce fuel consumption by Americans by one fifth was terribly meagre and disappointing. Emissions from transport are clearly less than half of overall emissions", Ollila says.
So what does Jorma Ollila think about climate change? These are the main points.
The world's GDP is expected to increase 3.5, or even fourfold by 2050.
"If energy production and carbon dioxide emissions increase even partially in the same direction, the earth cannot withstand it. We will crash into a wall in such a way that the changes will get to be uncontrollable", he says.
But is economic growth absolutely necessary?
It is, if we want to eliminate poverty, Ollila says. Therefore, it is necessary to think how to achieve growth while reducing carbon dioxide emissions.
According to Ollila, the first way to do this is energy efficiency. "It needs to double. The amount of energy that is needed to increase GDP needs to be reduced by half of what it is now by 2050."
This means saving energy. In 40 years we must get by with half the amount of energy that we consume now.
The ways to increase efficiency in the use of energy are unlimited, ranging from lamps that consume less energy to more energy-efficient engines and houses.
Another way to save the earth is to cut the amount of carbon dioxide emissions in energy production by half. Carbon dioxide is the worst of the gases that are warming the climate.
"Halving emissions means that we must shift increasingly to forms of energy that do not cause carbon dioxide emissions."
Researchers predict that temperatures will rise between 1.4 and 5.8 degrees from 1990 to 2100.
The European Union has set a goal of keeping the rise in the average temperature of the earth to just two degrees. Ollila warns that there is no time to waste. The warm autumn in Finland showed what Novembers and Decembers of the future can be like.
"There is technology available for both greater energy efficiency and reduced emissions. We must not incite pessimism, because these things are possible."
It is noteworthy that Ollila mentioned energy efficiency first.
This is what environmental organisations promote as an alternative to nuclear energy. They see the increased production of nuclear energy as "energy delirium tremens" which uses up the money that should be spent on developing renewable energy.
In spite of this, Finland is looking to nuclear energy as the One Big Solution to carbon dioxide emissions. Ollila feels that there is no such single solution.
So how are emissions to be reduced? Currently, 80 per cent of the world's energy needs are met by fossil fuels: coal, oil, natural gas. The new alternative energy sources - biological fuels, wind and solar energy, and hydrogen, only cover about two per cent of consumption.
How can the renewable resources be made competitive with fossil fuels?
Ollila says that at first it will be necessary to get the help of governments, the UN, and mechanisms such as the Kyoto protocols: public subsidies, taxes, and emission ceilings. States must punish those who cause carbon dioxide emissions. "This can be achieved through market mechanisms such as the EU's emissions trade, which guide consumption toward forms of energy that have low emissions."
Ollila repeatedly praises the EU's emission trade system. "It is the way that this will get on the move. First, setting goals for carbon dioxide emissions, and then, trade in emissions."
"But the system should be global. Otherwise everyone will be lurking at one another."
One of the lurkers would seem to be the Confederation of Finnish Industry (EK), which feels that the EU's emission trading system distorts competition. It says that Europeans should not set demands for themselves that go beyond what their competitors are doing.
Does this mean that Finland must not reduce emissions before the developing countries do so as well?
Ollila is cautious not to criticise the policy line taken by EK. However, he praises the fresh energy and climate strategy of the European Commission. In it, the Commission makes it clear that the days of cheap energy are over, and that it is time to adapt to a "low carbon dioxide" way of life.
According to the Commission, the EU needs to be the leader, even if the rest of the world does not immediately follow. "There is really much that is good in the report."
In Finland it is common to dismiss wind power as mere tinkering. Ollila used to feel the same way until recently. "Now I have come to a different way of thinking."
A few years ago it was thought that in 2050 no more than one fifth of energy needs would be met by renewable sources. "Now people are already talking about one third! The efficiency and competitiveness of wind and solar energy are constantly moving forward."
Ollila does not believe in biological fuels manufactured out of foodstuffs: it takes too much energy to produce them. However, cellulose-based fuels, such as wood chips, are promising in his view, as are different kinds of biological fuels manufactured from waste.
Finland produces just 0.2 per cent of its electricity from wind energy. In different parts of the world last year wind generators were manufactured with an output capacity totalling about 12,000 megawatts. Finland's entire wintertime electricity consumption is at about the same level.
Wind power is the most rapidly-growing form of energy production in the world, and Shell is one of its largest developers.
Shell also has a one-third stake in Britain's Array wind energy park, which is to be built at sea. It is expected to produce the equivalent of one quarter of the energy consumption of London.
Nevertheless, Shell is still primarily an oil company. Or more precisely, an oil company that would like to look like a versatile energy company, as its critics point out.
However, Shell has managed to significantly reduce its own carbon dioxide emissions: in 2005 they were 15 per cent lower than in 1990. Still, the company's "carbon footprint" is about 100 million tonnes a year - much grater than that of all of Finland.
In the 1980s, after the oil crisis, fossil fuels became so cheap that hardly anyone invested in energy efficiency or renewable sources of energy any more. This continued for about 20 years - all the way to the 21st century.
It was only when oil became more expensive, and the price gap between fossil fuels and renewable energy became more narrow, that companies became interested in renewable sources.
Consequently, renewable energy is taken seriously at Shell. During Ollila's time, Shell is expected to increasingly invest in renewable sources. Ollila is expected to bring new thinking about research and product development to the rigid oil business.
Environmental experts point out that with its investments, Shell could influence what kinds of renewable energy sources are used in about 20 years.
Ollila artfully dodges the questions of Shell's investments. But he admits that he meets with environmental activists, and praises their dialogue as excellent, "even though we do not agree on everything".
"There is a slightly incorrect image of this in public. Environmental organisations have noticed that there is no point in wasting time and building barricades."
The Laajalahti bay spreads out outside the window of the conference room. It is the first real winter day of the season, after weeks of rain. The landscape is cold and frigid.
Ollila praises the so-called Stern Report that was published in Britain in October. "For the first time it raised the debate in language used by economists, and showed what kinds of financial losses climate change might cause."
Briefly: If we are to embark on a good fight against climate change, it will cost one per cent of the whole world's GDP every year until 2050. But if nothing is done, the annual costs will be between five and 20 per cent of world GDP.
"The report also raised the ethical question on what how much economic value we can place on weakening the possibilities of future generations to live on Planet Earth."
Ollila has one more matter that he wants to discuss: personal choices of individual people.
"It is possible to live a quality life even if one pays heed to energy consumption. In Finland we are still at a very early stage in this."
He takes Japan as an example. There, the government embarked on a massive campaign to save energy, following the oil crisis.
Now the Japanese use 2.8 tonnes of oil per capita each year. In the Untied States the figure is 5.4 tonnes.
"Although, when we look at global figures, it is startling how difficult whole thing is..."
What if people started to engage in emissions trading? In Britain, the government is looking into whether or not citizens could have some kind of a carbon credit card, with which they could buy electricity, fuel, and plane tickets. Those who consume less than their carbon quota could sell their share to those who use more electricity, or who fly frequently.
Ollila is thoroughly familiar with the British debate. In Britain, even Conservative politicians seem to promote ideas that are favoured only by the Greens and the Friends of the Earth here in Finland.
"Debate there is far ahead of that in Finland. Climate change is such a complicated problem that we need to experiment with different ways of affecting attitudes. I would like to encourage some quite radical means."
So what might the emissions of the Ollila family be like?
When repairs were made at the family's country home about five years ago, Ollila wanted to install a heat pump, even though the HEPAC engineer was opposed to it.
"Sweden already has 400,000 houses that use heat stored in the earth to warm them. In Finland there are only 50,000", Ollila observes.
The family has two cars, which use diesel fuel. But what about flying? After all, Ollila is a very frequent flyer. Does he offset the emissions by donating money to projects to reduce carbon dioxide?
This makes the Chairman of the Board of Shell squirm a little.
"Yes, I have looked into these possibilities. I am considering the possibility of taking such action."
"So I am painfully aware of this!"
He pauses and continues:
"Reducing emissions is really a difficult equation. It is made especially difficult by the fact that the most important hope of most of the population of the world is to reduce poverty. To attain this goal, energy is what is primarily needed. The complicated nature of the whole thing is a bit scary.
He recalls something unexpected: the classic book Silent Spring written by biologist Rachel Carson in 1962. The book describes how insecticides move up the food chain and kill birds.
Ollila read the book at the age of 16 when he was living in Vaasa. At that time he was the president of the nature club of his school.
Did Silent Spring leave an impression?
"Yes!"
This one book is seen to have launched of the whole modern environmental movement. The schoolboy who read it is now the most internationally influential economic figure in Finland.
Sceptics will naturally say that his comments on behalf of the climate will not spark as big a movement as Carson's book did, and they are certainly right in that. However, it might get Finnish corporate executives and politicians to think of something other than just a sixth nuclear reactor.
Helsingin Sanomat / First published in print 28.1.2007
ANU NOUSIAINEN / Helsingin Sanomat
anu.nousiainen@hs.fi
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| 30.1.2007 - THIS WEEK |
 New mission for Jorma Ollila: fighting climate change |
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