Chevron in Ecuador

The archive of the Clean Up Ecuador campaign website

How Green is Chevron?

By Jamie Court, San Francisco Chronicle
25 April 2007

Chevron shareholders meet today in San Ramon for the first time since the Democrats' takeover of Congress and the subsequent effort to recast the West's largest refiner as an environmentalist.

Chevron CEO David O'Reilly, along with other oil executives, has been touting the company's new green leaf in speeches across the country. Chevron's makeover includes the opening of a biodiesel plant next month in Texas, a purported $2.5 billion committed over three years to develop alternative fuels and more generous guidelines for the distribution of alternative fuels at its gas stations. Is Chevron really going green?

Shareholders, who partook in Chevron's record $17 billion petroleum profit last year, may only want their company to appease the new environmentally sensitive Congress with green puffery. If the company is going to talk the talk, though, it needs to walk the walk. Until Chevron tackles the following issues, the company will never be seen as making amends with the environment:

Settle up for destruction in the Amazon. The president of Ecuador recently joined with residents of the Amazon rain forest in seeking to hold Chevron accountable for dumping 18 billions gallons of oil-laden wastewater in the jungle over three decades via its Texaco subsidiary. A lawsuit on behalf of 30,000 Amazon residents seeks $6 billion in damages from what experts say is the worst oil-related environmental disaster in the world. Chevron recently said it would never ("at no point") settle the case, which is documented in a Vanity Fair cover story this month.

Shareholders beware: Plaintiffs argue Chevron has both violated its own internal code for corporate conduct and has not offered shareholders an accurate assessment of the company's liability. As Chevron tries to burnish its environmental credentials in the United States, it should take its responsibility to the Amazon more seriously.

Get serious about making and delivering non-petroleum fuel: "We're a big player in alternatives ... and we're doing a lot of work in the biofuels area," CEO O'Reilly said in Texas in February. "The dollars that are being invested in alternative energies today -- that's going to generate new products, new ideas and it's going to be the marketplace that dictates this, no matter where policy is." What Chevron's O'Reilly isn't saying is that a lot of the money the company spends on "alternative energy" isn't paying for research or development of new substitutes for petroleum.

For example, as the largest generator of geothermal power on the globe, Chevron counts those dollars as part of its alternative fuel development investment, when it isn't tapping or developing a new energy source. If you want to judge whether Chevron is truly interested in alternative fuel development, just look at the $40 million it spent to defeat Proposition 87, which would have funded state-based renewable fuel development. In March 2006, O'Reilly told a U.S. Senate hearing, "[O]f our 9,300 [gasoline] stations, 8,900 are independently operated and they are free to deploy E85 [high-ethanol fuel]."

In fact, Chevron's contracts with retailers make it impractical, and in most cases impossible, for them to sell alternative and renewable fuels. Among the contractual obstacles to distribution is Chevron's insistence that its dealers sell all three grades of fuel, rather than being allowed to replace mid-grade with E85. So dealers have big capital expenditures for new pumps and storage tanks if they want to sell alternative products. Chevron says dealers are not banging its doors down to amend their contracts to sell E85 and biodiesel, but if the company actively sought to produce and distribute such products perhaps there would not be 6 million flex-fuel vehicles on the road and only 2,000 gas stations (and only one in California) for them to fuel up at.

As for Chevron's touted investment in a biodiesel plant on Galveston Bay, Texas, the plant is not even intended to make automobile fuel, according to analysts. Chevron needs real plans for alternatives to petroleum and real disclosure about what it's truly spending on them. Pay California taxpayers what is owed over MTBE contamination: MTBE, produced and blended into gasoline by Chevron, leaked from gas station tanks and spread widely before it was banned in 2004. Taxpayers, represented by a few water districts, have sued Chevron and won. The company is still refusing to settle many cases and pay the billions it owes many water districts for cleanup.

It's time for Chevron to come clean and give some of its billion in profits back to the communities it contaminated. Cap greenhouse-gas emissions: Conoco Phillips recently took the plunge and called for regulation of greenhouse-gas emissions. Chevron's board, however, has urged rejection of shareholder resolutions being heard today that ask the company to comply with greenhouse-gas emission standards.

Shareholders should buck the board. Chevron shareholders have a chance to help make the company's reality meet its rhetoric. Whatever that costs now, it will save the company and the environment later.

Jamie Court is president of the Santa Monica-based Foundation for Taxpayer and Consumer Rights and a founder of Oilwatchdog.