Engen on climate change
Thursday, March 02, 2006
Kudos to Travis Engen, outgoing chief executive officer at the ultra-energy hog Alcan Inc., for his advocacy for an intelligent corporate and governmental response to climate change. This kind of plainspoken support from a captain of an energy intensive industry can’t be ignored.
Engen recently gave an interview to the Financial Post – not exactly a climate change convert – that is excerpted below:
Q: What are your views on global warming?
A: I wouldn’t call it global warming. It’s really climate change. It’s clear that the potential effects are far beyond average temperature change. There’s increasing intensity of storms, greater gyration in weather patterns, all kinds of things. So climate change is probably the best label to use.
This is really important as a topic, politically if nothing else. There’s a huge debate around the science, without question. But I think it’s impossible to argue that Man has not had a profound impact on the planet.
Q: And what about Kyoto?
A: At some level, it comes down to a difference in perspective or philosophy: rules versus principles. Of course, we’re at a situation today where there are a variety of regimes that are addressing climate change, Kyoto in particular. But even implementation under that differs. There are cap and trade systems, there [are] all kinds of different mechanisms. It should be market-based, so there will be opportunities to have the most economic solution to improving things.
Q: And you advocate long-term guidance.
A: We’ve advocated going out to 2050, but with milestones along the way. Why do that? The answer, from our standpoint, and from the standpoint of any enterprise that has large capital investments, is that we have asset lives of 50 and 60 years. This year and last year, we were investing about US$5-million every day [in capital]. I want to make sure those investments made today are going to be right for 10 to 20 years from now.
Another way of thinking about this is that the industrial infrastructure of the world has been built, arguably, in the last 40 years, and much of it in the last 20 or 30 years. It will take at least that long to re-engineer it or replace it. To have a regime which goes out to 2012 from an effective date of 2005 is interesting, but it’s inadequate.
And also, the present regimes don’t encompass the globe. The U.S. is not in it, and more importantly, the developing nations are not in it.
Q: What about new technologies? Those take years to develop, so that would be a rationale for a longer time line, too.
A: Absolutely. But I can make fine-tuning adjustments today that will have a larger effect over a longer period. It’s a sailing metaphor. If you steer to something on the horizon, it’s easy. If it’s really close to you when it moves, it’s tougher to get to.