In this final episode, we consider recent proposals to take the fossil fuel industry into the public ownership: specifically, into the ownership of a national government. In Shell’s case, as a British and Dutch-owned company, we will explore where such a nationalization might take place, and a few of the mechanisms, as well as various implications of public ownership. Would a nationalization mitigate global warming to 1.5C, as outlined in the Paris Agreement? How can we ensure we actually wind Shell down once we take it into public ownership? How might nationalization support fossil fuel workers in a transition?
There are a number of pathways to nationalization. The most recent proposals argue that nationalization towards a managed phaseout of the industry allows countries to transition and democratize our energy systems in a just and effective manner, through central planning. This means we can support workers in the energy sector in training for new jobs as we transition, and ensure clean-up happens in marginalized, often racialized communities who have been on the frontlines of extraction. It would allow us to democratize control over our energy systems, allowing local communities to make decisions over their lives and neighborhoods. In short, advocates argue that it would allow us to finally put people before profit.
We also hope to explore the consequences of nationalization in terms of reproducing global colonial dynamics. For example, Nigeria is a former British colony, and its economy is heavily tied to oil production through Shell. This same industry has destroyed watersheds, ecologies and fisheries which local communities depend on. Would these communities and others worldwide be considered, in a nationalization process that might take place in the UK or the Netherlands?
In this final episode of the season, we are joined by two guests. We have Carla Santos Skandier, manager of the Climate and Energy Program at the Democracy Collaborative who has worked extensively on the case to nationalize the fossil fuel industry. We also welcome Dr. Olúfẹ́mi O. Táíwò, Assistant Professor of Philosophy at Georgetown University, who has written in both public and academic spaces on climate colonialism.
Reports and resources on nationalizing the fossil fuel industry:
Article on the nationalization of Shell:
Carla refers to the PPP program, this is the Payment Protection Program.
Olufemi Taiwo on climate colonialism: https://theconversation.com/how-a-green-new-deal-could-exploit-developing-countries-111726
MS: In this final episode, we consider recent proposals to take the fossil fuel industry into public ownership: specifically, into the ownership of a national government. These proposals argue that nationalization towards a managed phaseout of the industry allows countries to transition and democratize our energy systems in a just and effective manner. It would allow nations to stop production in a centrally planned way. This means we can support workers in the energy sector in training for new jobs as we transition, and ensure clean-up happens in marginalized, often racialized communities who have been on the frontlines of extraction. It would allow us to restructure control over our energy systems, allowing local communities to make decisions over their lives and neighborhoods. In short, advocates argue that it would allow us to finally put people before profit.
In Shell’s case, as a British and Dutch-owned company, we will consider what might happen if the Dutch or British government acquires a 51% share in the multinational. Which people would be put above profit? Shell’s oil production in Nigeria amounts to 514.000 barrels per day; Nigeria’s economy is heavily tied to oil production, and this same industry has destroyed watersheds, ecologies and fisheries which local communities depend on. Would these communities be considered, in a nationalization process in the UK or the Netherlands, or would a nationalization reproduce colonial dynamics? Are there ways to do it that center colonized and marginalized communities? Given that there are many nationalized oil companies, how can we ensure we actually wind Shell down once we take it into public ownership? Would a nationalization mitigate global warming to 1.5C (or less)? All this and more we will discuss in this episode!
A: Today we have two guests joining us. We have Carla Santos Skandier, who is currently the manager of the Climate and Energy Program at the Democracy Collaborative. Carla researches and writes on economic democracy and related policies, and she has been developing the case for public ownership of the fossil fuel industry for a number of years now. We also have with us Olufemi Taiwo, Assistant Professor of Philosophy at Georgetown University. Femi’s work draws from anticolonial scholarship and the Black Radical tradition among other schools of thought, and he has written much on climate disruption and colonialism. He also has a book coming out in December of this year, titled reconsidering reparations, which focuses on a constructive, future oriented view of reparations, and its links to climate justice. Thank you so much for being here, Carla and Femi.
C & F: Thank you.
MS: Yeah, also a warm welcome from my side, both Carla and Femi. It’s really great to have you on the show today. To start off the conversation, I think it would be great for our listeners to first learn a little bit about the basics of nationalization. So Carla, I would like to direct the first question to you. I know that you’ve written and researched the case for nationalization of the fossil fuel industry, largely in the US context. Can you explain what you mean by taking the fossil fuel industry or company like Shell into public ownership?
C: Yeah, sure. And I think that’s a great question to start off so we can get all the assumptions out of the way. I think when we talk about public ownership or at least in the context of my research, in a nutshell, it just means to detach fossil fuel reserves, which is a natural resource, so that it is owned and controlled by the public in the first place, and away from private and profit driven interest. I think what we’re having right now is that fossil fuel reserves are actually dictating our future as a livable society, the public has no say because they’re in the hands of private interests. And when I’m talking about ownership it is also important to mention that there is a lot of public ownership without control and decision making powers and this is not the type of public ownership we are talking about. We are talking about public ownership that’s very attached to control and decision making power so we can put the future back into the public hands and guide it in the public interest. On a more deeper level it also means regaining political will and power to the public. It also means decreasing economic inequality. It also means providing a pathway for front line people impacted by the transition, meaning the energy transition that we need to go through pretty fast in the next decade. So these are just some of the many layers when you talk about public ownership, but basically it is just putting our future back into the public hands.
MS: Yeah, great. And what I understood from the research that I’ve done, there are different routes or forms, how you can nationalize a corporation. So I will be curious to hear a little bit more… if you can take us a little bit through the steps of nationalizing or taking a corporation into public ownership. And maybe also, tell us a bit like what your preferred route would be?
C: Yeah, I don’t have a preferred route. I do have one that I researched the most. I didn’t mention, but I do deal with systemic solutions to the climate crisis and a lot of that is in intersection with politics and economics. A lot of my research has been focused on central banks, because they do have a mandate to financial stability and right now, climate change is a major threat to their mandate. So one of the routes that I’ve researched the most is basically through central banks. Especially in developed countries like the United States and the Netherlands, it is an option to first purchase equity stakes through the existing authority of the central banks. And before, I think last year, it was a pretty novel idea. In the United States we’re not doing such things with corporate bonds, and then that drastic shift happened when we had a pandemic and a financial crisis attached to it. So basically, the idea is that the Fed could go to the market, especially the United States since most of the fossil fuel companies are in the financial market, and pretty much buy stocks to receive control over the decision making power. That might mean for some companies 51%, for others close to 100%. But it’s basically just buying equity stakes of those companies. There are many other ways. Historically, in the United States, there’s the eminent domain. Basically, the government claims that a private company right now is due for the public good and they then pay a reasonable compensation, which is the standard and just acquire and nationalize the company. That has been done throughout the century. Especially in times of crisis, which is what we have right now. There’s basically also a regulatory route that is basically just to end private ownership of fossil fuel companies. I’m from Brazil, in case people didn’t notice my accent, but in Brazil, all fossil fuel reserves and natural resources are owned by the government, there’s no private ownership. You can have a lease to extract, but the main right remains with the federal government. And last year, we also added two other potential routes in our research and that was really attached to the COVID pandemic. One is basically claiming for us to condition the federal government to condition bailouts on equity. We were just sick of seeing the government giving money away to fossil fuel companies and it was time to ask something in return. That happened a lot in 2008. There were some companies that were de facto nationalized, like AIG, and they asked for equity in return. They didn’t use their controlling powers, but the government could if they wanted. And also, we did have a wave when the price dropped last year, actually going negative. And there were a lot of small companies that went bankrupt. So instead of going bankrupt and trying to maximize the profit for creditors, the government could receive stewardship over the future of the company. So those are two other routes that we have been proposing. And I think as we move forward, bankruptcy is going to be kind of a low hanging fruit of how we can actually promote nationalization of some of these companies and avoid further concentration from big oil and other companies. Or decentralization, as is happening in the UK North Sea.
MS: Yeah, I think that’s really interesting to hear and I’m curious if you could, maybe in a nutshell, share with us what for you the main reasoning behind the idea of nationalizing is like what are the core arguments you think that speak in favor of this pathway?
C: Well, one thing that we talk a lot about in the climate world is that we need a just transition, right? We need a just transition for workers, we need a just transition for dependent communities, we need to break through. And now with the Green New Deal, we also tap on something that has always been there, which is the social inequality that we have in this world. And that all circles back to extraction. When we talk about fossil fuels, it is very clear to see extraction. We are extracting natural resources, but the social inequality that we have across the world, and here in the US in particular, where I work and develop most of my research and policy, we are profiting from racial injustices, we are extracting labor, that’s all been connected to one industry for many years and it’s been replicated by other financial sectors, political sectors, and so forth. But when we talk about nationalization in itself it is just kind of starting to break through that chain of extraction and trying to see what is next for us as a democracy and as an economy. Trying to see what is next for us from a social justice perspective, to bring back power to the people and let the people decide what is next for us. I think nationalization has been very attached to models of high state and the socialism of the 70s. That is exactly why we talk about democratic public ownership bringing the power back to the people. And I think there’s no better sector to start off with than the sector that is pushing us to a climate crisis. It is going to be very hard if we don’t tackle inequality now while we have the opportunity to see an energy transition that is actually democratic. The energy transition is very reliant on renewables. There’s no central power. It needs to be in every single community. And if we don’t act now we are going to miss the greatest opportunity to bring us to a new economy and society, that I think most of us are going to benefit from. Not the 1% but the 99% are going to benefit from it.
MS: Yeah, I totally agree that really this democratization process should be a centerpiece or is really a core question in the process of transitioning away from fossil fuels and towards a new energy system. I’m curious to hear more from you Femi, you, of course, also recently have published an article in The Guardian, arguing for the nationalization of Shell. We just heard Carla speaking more about the importance of public ownership. So I’m also curious to hear from you a little bit what you think the core arguments for public ownership are and how you envision this? Or what do you think is central to keep in mind in this?
F: There are a couple of things that occur to me to say. The first is to talk about the importance of what we mean when we say public ownership or what the target of public ownership is. And I think what Carla just said on this topic is very important, right? We mean, democratic public ownership, not just the state, kind of assuming the role of shareholders in the quest for profit and control. But the primary contrast behind the call for nationalization is between two different ways that we could decide what to do with fossil fuel resources and the lands around them, right? So one way we could govern them by the needs and wants of investors, which is the method of controlling governance built into private ownership, or we could not do that there could be a broader, more publicly driven, more ecologically sustainable way of thinking about making decisions with respect to those kinds of resources and the politics around. And that second one is, of course, the goal of public ownership. Whether or not we actually get there, I think, is an important international question. So the phrase nationalization is important, but leaves a bit unsaid. One of the things that matters is not just whether or not resources in a country are nationalized but what that means from a governance perspective. And so in the case of countries like Nigeria, you might have nationalization of assets, followed by joint ventures with privately controlled multinational corporations based elsewhere in the world that largely dropped if how the politics and economics of oil works in the country. And so that’s not what the goal is and so we need to make sure that we’re appropriately international and global in our perspective of what it is that we would have to actually accomplish if we wanted democratic control over these resources.
A: Thanks Femi and Carla, I think, broadening what we understand about nationalization is really important to taking this project forward, and ensuring the sort of democratic and public parts of this are really central. And I’m wondering, Carla, whether you have any examples of industries that have been taken into public ownership in the past, where this has worked in favor of the public good?
C: Yes, I think, looking back the current rhetoric is that there’s no good example, there’s no public ownership, this is so novel. But public ownership, as my colleague Thomas Hannah has written in the past, is as common as traditional American Pie. It happens over and over again, every single decade we can point to examples. Of course I never like to point out to World Wars but that is a great example when a number of organizations were brought into public ownership with a single goal of producing goods, of rationing goods that were needed, and we couldn’t provide to the people at that time. But I was looking more into this broader question of what examples there are today for public entities for the public good. And it’s quite difficult not to find, and if we go to the lower standard of all, which is basically the revenue from public organizations go back to public accounts, so they are available to the people. So if we’re just using the financial standards, that is just by itself, a standard for using public enterprise for the public good. Of course, we have many more examples. I’ve been looking a lot into financial examples because I think the financial sector model has been very extractive and one the fossil fuel industry has a lot of hold on. So for example, there’s the Costa Rica National Development Bank, that basically has a mandate and I like that example, because it’s very democratic as well. They have, I think, a board that is composed of 290 members, and they’re all stakeholders of society. They do go through a public process of strategic planning and the bank has been very successful in promoting community development and supporting small and medium businesses. In the UK, for example, there was also a successful start to nationalize Britain’s health service that has since been nationalized, to provide public health and welfare to the British. We also have a lot of examples in the pharma industry. I do have a colleague whose research focuses on policy developments in the pharma industry. And with the COVID pandemic it has become very clear that the public pharmaceutical sector is actually promoting public good across the country. That also goes for Cuba. I know people don’t like to point to Cuba, but Cuba has a huge pharmaceutical sector success story. She also pointed to other stories. For instance basically insulin was developed by a public lab, something that I never knew off. It has since been privatized, which is why we see huge rise in prices of insulin medication nowadays. And I’m from Brazil, right? So in Brazil we do have public health. It is not as good as it used to be but they did nationalize some public labs and retail pharmacies, and now they provide genetics for a lower price for the most common diseases. And it’s been free to the people. If we’re looking at the US, I think, there was a lot of airport security that was nationalized after September 11 and that also provided employment for a lot of people. I think, I’ve been looking today and this sector in particular, and even though there is a lot of discrepancies between investor owned utilities and public utilities, when you really compare even though public utility seals are making millions of compensation, the highest compensation for a public utility CEO is still lower than the average compensation of the investor owned utility. So you can also look from an equality perspective. Of course it is not anywhere close to equality if you have CEOs that are being payed 20 times 25 times more than employees, but that is significantly less than making 40 times more, which is usually what happens in the private industry. So there are many ways to look into the public interest. And there’s a lot of potential as I mentioned before, there’s a lot of good examples there. But we need to look into the democratic governance and I think that is somewhat new to the world. But there’s plenty of examples right there on how to build from.
A: Thanks, Carla, I just want to offer the word to Femi as well, to add examples of public ownership.
F: It’s more a kind of analysis point than anything else. But one thing I want to just underscore about, actually, the first kind of example that Carla gave is that you know, it’s always about what the comparison is, right? So it’s not as though there’s any magic solution in public ownership, it’s just a kind of better model than the investor owned alternative. And one aspect of the Nigerian historical case that is really salient to me is that an author of finesse in Third World Quarterly estimated that .000007% of the oil revenues of Shell were invested in Ogoni land in the Delta region of Nigeria where a lot of their oil revenue was extracted from. And by comparison -that was in the 90s- and the present day, real revenues are still around the order of 50% of the Nigerian federal government budget. Right? So as many problems as there are from Nigeria’s kind of experiment with nationalization, it is better than we could expect from the companies left to their own devices with complete kind of political dominion over what to do with this.
A: Thanks Femi. I think the point about investment is really important. And also, just to return back to what Carla was saying, this pay inequality between CEOs and sort of line workers is also really important to consider in the context of public ownership. I think both of you have touched on this point already in a number of ways. One of the criticisms that is leveled at nationalization is that three quarters of oil production is already controlled by state owned oil companies, rather than private companies, and they’re not immune to corruption, they’re not exactly doing good things for local communities. And I think both of you have touched on this idea of it must be paired with democratization. So, how can nationalization offer solutions in this way? Are there specific things that need to be done to ensure that this transition actually occurs once reserves aren’t or once the industry is nationalized?
F: Maybe I’ll just say something quickly, because I’m sure Carla has something more in the direction of an actual answer to this question.
C: That was a tough question. I told them.
F: Yeah it is tough. One thing that I think is worth, at least adding to the context of the question, is the kind of geopolitics in which this system arose. It was around, I believe, 68, when OPEC started, requiring more than 51% state ownership of the oil and gas sectors from its members. This is the same time period in which much of Asia and Africa is completing national independence struggles. It is right before the oil shock of ’73. And it’s before the kind of structural adjustment programs and what I think would be fair to describe as a sort of debt crisis, structural debt crisis in much of the Global South. Now that’s not going to give you every country’s particular story but it is going to add a bit to what I think the rationale is for continuing to extract in ways that resemble the behavior of investor owned companies, if you are reliant for your revenue on this particular kind of extraction. And particularly if you have high levels of debt burdens, there’s a way that that can kind of crowd out political solutions. And the explanation for that has more to do with the overall global situation than any particular narrow thing we could say about the structure of firms or the nature of ownership in a particular country. So I’ll just say that for context, I know it doesn’t answer the question.
C: Yeah, and I’m not sure if I can fully answer the question. But one of the things that popped into my mind in the first place is that if we are nationalizing, if there’s enough will to do so, we are not going to continue extraction. So there needs to be safeguards and a clear mandate that we are doing this to wind down to provide the just transition. Because we’re going to use the resources we need to further a just transition and not just to perpetuate the fossil fuel dependent economy we have right now. So there’s a different mandate from the one that enables corruption on some level. In Brazil, for example, is just making sure that contracts are paying executives more than they’re doing to the family, and then kind of rip off the profits for themselves. So if you’re actually detaching prior financial interest out of fossil fuels, because you are winding down, you do have a plan, almost like a bankruptcy, how we are resolving these companies, if some of them can transform is a question but I know that those more in the field know that the transition of fossil fuel corporations is just turning like a cold store into ice cream shop. You need totally different skills, a totally different structure. So not saying that we need to transition them. But if we are going to resolve them, you kind of do a little, you’re less tempted to follow the corruption trap, hopefully. But as Femi was mentioning, I think corruption is perpetuated by the fossil fuel industry which is beyond what nationalizing one company or one sector is going to solve. Although it can be a strategic step if we go in the right direction. And I think it all goes back to extraction, right? Corruption is just one of the symptoms of this extractive mode that we use for natural resources, and labor, and people in benefit of the few. So if you start dismantling some of the sectors that are the core of extraction, our extractive economy, you can start seeing a pathway to deal with democracy, with equality, with social justice. But it’s a long way, it is not going to be solved by one sector or one nationalization. But the more we can at least envision how democratic governance for the public good can be, and people realize it’s just not just a daydream, that it is happening all across the world, we’re just not leveraging and reaching the full potential. I think people are gonna start to really question the whole system and how it has been corrupted.
A: Thanks for positioning nationalization not as a silver bullet. Both of you come back to this, but something to open space up to change these larger dynamics, or at least yet, go part way. I think that’s definitely an important aspect to keep in mind. I want to shift a little bit more towards the climate aspects of things and ask Carla do you think we can meet the Paris climate targets of 1,5C warming with a nationalization strategy taking into consideration of course, that 1,5C is still disastrous for a number of communities.
C: I think we’re running out of time and each year is getting even more challenging. But yes, the man reached the moon within 8 years or how long it took them to send a man to the moon. Looking at the history of World Wars, we also reached really high goals within a matter of a couple of years. So yes, it’s just a matter of taking that decision. And I think something that I forgot to mention but Femi mentioned a little bit in one of his answers, the question is planning. We need a plan. Right now we don’t have a plan. We have these scattered policies that if you put them together, they’re either pushing these companies into bankruptcy and letting them decide what gets traded for what, or they are just pushing back on any successful regulatory successes we have. So right now we just need the government to take the planning role that belongs to the government and that doesn’t belong to companies. Femi wrote in the Guardian that right now they’re trying to reach the position of ‘carbon management companies’. For profit companies, they don’t manage natural resources. I don’t know one example that they were able to successfully manage. And we are facing the greatest challenge in the environment that we have ever seen. So it’s time for the government to be hands-on and make a plan and democratize the plan. Meaning you have a plan, you have a goal that we want to reach, but what resources get extracted for what reasons is up to the communities and those most impact on the site. But yes, we can reach 1.5C but it is going to be challenging. But every progress is one less climate catastrophe that we’re gonna see right now and in the future. So even if we cannot reach 1.5, we need to reach 1.6 as fast as we can.
MS: Yeah, thank you, Carla. Another discussion point I often have with my friends, especially those who study economics, is the point when I talk about nationalization, they say it’s really costly. So I’m curious to hear a little bit from you about what you think about this, and maybe whether you have some numbers that your research has shown how much it might cost? And I’m also wondering whether you can situate these costs maybe in comparison to the subsidies the fossil fuel industry is already receiving at the moment.
C: Yeah, I don’t have the top comparison numbers in my head. But I also recently saw the headline in the Guardian that globally, the fossil fuel industry receives 11 million a minute in subsidies or something like that. In any way, there’s no number that you can put historically or every year that it will make sense to continue this path and then regulatory fighting to wind them or make them compliant to a climate plan in the first place and fight against lobbying. My research in particular, I mentioned I did a lot of research on the market on the financial market growth that would mean the Fed would basically be buying stocks. When we started the research, the top 25 oil and gas companies in the United States, if you go 100% of the market value will be like 1.15 trillion. Last year when the prices dropped, and that was a huge window of opportunity to actually move forward with public equity, the price of the whole fossil fuel industry sector was close to $700 billion dollars, which is a significant decline from when we started. And there we are talking about 100% of the market value. If we were to take 51% of the ownership just to get control over decision-making processes that would cut that price in half. So then we are close to $350 billion. I think that is a bargain for our future and considering that we are no close to close the loop holes, especially in the US regarding subsidies. It is not only subsidies, I have also been looking a lot into abandoned wells. And we don’t have a number of abandoned wells but this is basically all on taxpayers right now. So we need to kind of stop all of that together. And last year, there were bailouts, right? I don’t have the number on top of my head, but there’s Bailout Watch who have been tracking that number. And fossil fuel companies were able to get money on various plans for the COVID pandemic in three programs, not only the corporate, but they’re also some of them going into the PPP, which is basically mainstream money. And they, at the same time, also laid off employees, which was the whole purpose of the PPP money. So I will come back to the number hopefully, when you guys publish the podcast but I think in comparison, historically, and every year, billions of dollars in taxpayers’ money is not to compare. And we pumped over a trillion dollars out of nowhere in 2008, just to save the financial markets and I think we could do the same now. Especially in developed countries where there is monetary sovereignty from central banks. We could do the same and regain our power. And I must say, just to add one thing, when people ask me this question, there’s a huge question why we need to pay polluters, right. And I think there can be a strategic way of thinking that we are not paying polluters if you think about pension funds and retirement funds. What we are trying to do is also stabilize the financial system. And there’s a lot of workers, whose money is definitely attached to the fossil fuel industry. So if we go the financial market route, can we be creative? Can we adopt something like bankruptcy, that there’s first creditors who get the money. So if we go for 51% ownership, we go for mainstream investors, we go for our pension and retirement funds to stabilize those funds, don’t let those take the hit for the just transition. And speculative investors might never get the money. They are the 49% that are going to be kind of attached to us in our wind down plan, and if you take the hit then you take the hit. So I think there are creative ways to go through this route and actually address a lot of the polluter based questions around nationalization and compensation of fossil fuel investors. And we need to hold them accountable, and put them in jail, too. Nationalization is not protecting anyone that did harm and knew that it was doing harm for decades from going to jail. It’s actually, in my view, a complementary way. They go hand in hand.
MS: Yeah, maybe building on this response. I think that for many people, it’s a bit of a mystery where government money appears from, where it comes from and I know in your research you talk about the potential of quantitative easing and what impact it has for taxpayers. Could you maybe elaborate very briefly, what quantitive easing entails and what potential it has in nationalizing the fossil fuel industry?
C: Oh, that is a can of worms. But quantitative easing, basically is the idea that central banks, especially in developed countries do have this monetary power of creating money out of thin air. I know that we think about the creation of money as printing money or attaching it to gold. That hasn’t existed for many decades now. It is just a stroke on a computer, you create a debt. In the US it is on the Federal Reserve’s balance sheet, and you credit someone else with that money. It is never printed. And the Federal Reserve in the United States has the power to also delete that. Let it go away. It is not attached to taxpayer money. Most of the time, it doesn’t follow a balance sheet like congress and other legislators like to make sense. Of course, it might lead to issues of inflation, and it needs to be attached to resources, right, we need to have labor and resources able to back up that creation of money. But as we are seeing in the United States, now, employment is high, but inflation still not in any way close to what is considered high inflation. It is actually considered right now a health inflation. So basically we do have the money. Money is a fiction in case people haven’t figured it out, just as much as is politics. So if we need to create money to get out of the climate crisis, we do have the money. And just like the military, just like Trump’s proposal of a wall, the new presidential coin, those are all fiction, and they’ve just been used in the past to justify expenditures for the will of who is in power at a time. That is not to say that all countries could do that. I think developing countries, such as Brazil, do have more limits. So I don’t think that fully translates. But yes, Netherlands, the European Central Bank, the United States, Canada, they could all do so if they wanted.
MS: Yeah, thank you for this. I think it’s really important when we open up these discussions about what potential pathways are to a future beyond Shell is also to really debunk some of the myths and shed some light on these economic mysteries. Or that are mysteries for many of us that don’t necessarily study economics. I would like to shift gears a little bit and talk a bit more about Shell specifically. Since our podcast is really based on this premise, that we need to dismantle Shell, we cannot build a just future with Royal Dutch Shell in it, so I’m curious to hear from either one of you, do you think we can end Shell by nationalizing it?
F: I think we probably can’t end Shell without nationalizing. I’m not sure if we would be successful in all the things that we would need to be successful in to write a company that large, out of existence. But that’s how I feel about most aspects of the climate crisis.You know, there’s a perspective that you take when you’re just trying to predict the future when you’re betting maybe. But then there’s a perspective you take when you’re trying to do things. So I think it’s the right kind of goal. I think nationalization would help that goal along. But beyond that, it’s hard to say.
MS: Yeah, I’m curious, I know Carla, your research focused more on the US context. But I’m wondering whether either one of you feels comfortable to do a little thought experiment and say out loud how you think a nationalization process of Shell could look like or would look like? Who would facilitate it? And what are important institutions that would play a role in it?
C: I think it all depends what route we are taking. If I was just to translate the financial market route, it would probably be the Netherlands, maybe the UK as I understand that there is a huge Shell subsidy headquartered there. Basically, you are trying to look at the country where the high decision making is happening, where the planning for the future of the organization is happening, and that country should be in charge of winding down the corporation. I know that would have implications beyond the country, and workers beyond the countries. As Femi mentioned, Nigeria is a huge place. Oddly enough Shell, I know there are a lot of people that think Shell is part of the transition, but Shell was the only one to be in an auction that happened last week in Brazil for offshore drilling. So now they have four more leases in Brazil. So there will be huge implications in Brazil as well. But it needs to be a planning decision, at the higher level. So if you take the market route… so there it is where it gets tricky. I don’t know if it is the European Central Bank, but I believe the Netherlands Central Bank will be the one in charge of printing money for that. And it all depends also legally, what is the translation of the eminent domain to the Netherlands. But I think it will have to be the government where the organization is headquartered and where the decisions are being made.
A: Thanks Carla. I want to move towards the more justice related questions that nationalization brings up, both I think, locally, but also globally, given that Shell and most fossil fuel companies are large ones, in any case, are multinationals, right. So both of you have mentioned sort of a just transition in passing. And I’m curious, perhaps we can start with you Femi, do you see nationalizing Shell or other fossil fuel companies towards a managed wind down as a path to supporting a just recovery? What are the ways that it can support such a transition, particularly with a justice lense on?
F: So what a private corporation is, is a way of organizing an entire sphere of economic life in which most people who are affected by the operations are outside of power. So that’s going to include the workers who are below the management class. Maybe after the shareholder resolution it even includes the managers, but we can leave that aside for a second. It certainly includes the workers, it includes people in communities that are nearby whatever the operations of the company are, and it takes all that aspect of social life and says, the governing principle for this part of social life is going to be shareholder value, and or profit. So benefits for a small group of people based on interactions of a much larger group of people. From that perspective, nationalizing these sectors of the economy is a pretty central role, I think, in a just transition. It’s not about just the decision making power, though, that in and of itself is important. But it’s actually about socializing the benefits and burdens of the kind of activity that we’re doing in a given day sector, right? What a corporation is, is the privatization of those benefits and the socialization of the burdens. So, oil is dumped or spilled in the Niger Delta, so that portfolios in the Netherlands can show a healthy rate of return. There’s no just transition in my mind where that is still an organizing feature of major aspects of economic life, certainly not the aspects of economic life that are responsible for the climate crisis.
A: Thanks, Femi. Carla, do you have anything to add to that? No, I think that goes to the heart. And I think it shows that if you look, even those that are green washing and that are saying that they have an energy transition plan, you don’t see the word workers or communities anywhere. So if you really go just to the surface level of this question, where do they take into consideration those that have put their lives into these companies? And there’s no answer. Like in the United States that ruled for just transitions, bankruptcy, where they manage judges to just ditch their environmental and labor responsibilities there in the legislation. So that’s exactly in the opposite direction of a just transition. But I think Femi’s answer actually goes to the root of this question. More than just a superficial level.
A: Yeah, I want to build on that. Because Femi, you have written and spoken about what you term climate colonialism. So could you tell us a little bit more about this idea and what the role of corporations like Shell is in climate colonialism.
F: So by climate colonialism, I really just mean a new kind of political division and social organization based on climate politics. So the ability to govern how the risks and impacts of climate crisis get distributed, are based on these ordinary, old definitions of power, it’s just a new significance they take on as the climate crisis accelerates. So it’s more or less the same idea that people have been talking about under the term climate apartheid, right? Maybe you could apply the term climate apartheid when we’re thinking about which individuals bear the most burdens based on climate crisis, or maybe which families or communities within a country. But once we look across the world, once we start looking at a higher level of scale, where we might be comparing nation states to each other, or we might be comparing indigenous nations to the settler communities around them, then the term climate colonialism seems to fit a little more in my head. But the basic idea is that these kinds of relationships between stronger and weaker countries, richer and poor countries are increasingly going to take on qualitative dimensions of the climate crisis. So which countries will be securing their food security, and energy security, and water security at the expense of which other countries will start to take on these, will start to respond to these older hierarchies of power.
A: Yeah, I think it’s important to keep in mind this idea that these colonial legacies have not gone away, right. They continue to exist in the context of our current political economy. So given this one of the arguments for public ownership is that it provides more democratic governance as both of you have talked about a lot and it is driven by the public will, as opposed to for private profit. And I’m wondering, Femi, how do we reckon with these relationships between nation states in Europe that have these colonial histories of extracting from countries like Nigeria, which is a British colony, like many other countries, in the Global South. How does nationalization fit into this if the Netherlands or another European country nationalizes, Shell, or another fossil fuel company, is it just reproducing these power dynamics in terms of empire?
F: It depends on what gets done with the nationalization. This goes back to Carla’s, early point, right. If it’s not made clear from the outset, and followed through upon that the point of nationalization is drawdown, the point of nationalization is to eventually end the fossil fuel industry and if that isn’t how people act, then nationalization could well fit into climate colonialism rather than serve as a bulwark against it. I think that’s why there needs to be a certain kind of holism, a holistic appraisal of how all these function in the context of a larger politics, right. All these are pieces of a larger puzzle, and are good or bad based on how they fit into the whole context. So the just transition aspect of nationalization, as the point of nationalization, as a kind of governing principle of nationalization is not a detachable part. These are things that we have to win in tandem. But I don’t think this is a special risk of nationalization as a policy, this is a risk of democracy, right? The point of democracy, in my view, is something like the political ideal of self-determination. What that means is that you’re in charge, what that means is that you the people are responsible. And as soon as we give up a kind of idealized or romantic notion of what the people are, any group of people, whether they’re in the Netherlands, or Nigeria, or the United States, then I think we give up a romantic notion of what democracy would mean. It’s not the end of politics, it’s not the end of conflict. It’s not the guarantee of good outcomes. It just moves us from a political system in which we have guaranteed bad outcomes, right, we have guaranteed outcomes in the service of a very small, well positioned global elite, to a situation where more people’s views become heard, right, more people’s potential successes and failures, politically, morally, ethically become relevant. It’s a different and better point of struggle, but it is a point of struggle, and that will never cease to be a feature of democratic politics and genuinely democratic politics.
A: Yeah, and I’m wondering, whether through nationalization, or another vehicle, what you think ways or ideas are to put the voice of people in Ogoniland in the Niger Delta region that their voices are on an equal playing field with people in the Netherlands or in Groningen, which is a place where there’s a gas field and Shell is extracting gas there as well. So it’s not that people in the Netherlands are also not totally immune to the consequences of Shell’s extraction, it’s just a totally different level of extraction and violence that’s going on in places like the Niger Delta region. I’m just wondering, is there scope for global democracy to really be able to push this through where everybody’s voices get heard?
F: I think there has to be. And I think one of the things we should be thinking about or maybe the way we should be thinking about it is a kind of political ecology or political field of power rather than any particular institution as a kind of guarantor of that sort of voice. So it seems to me that there’s an important national level question, an important state level question about the level of democracy in state control of resources, but there’s an important local level question about the level of power in particular communities, particularly those who are located near sites of extraction. And the approach to supply chain justice, if we want to describe it in that way, even though eventually we want these supply chains to dry up and weather, right, at least some of them. But you know, that approach looks more like the kind of approach where the focal variables are things like union density and local level community control, rather than national level political decision making bodies.
MS: Yeah, thank you Femi. We already mentioned that also, soon, you’re going to release a book called Reconsidering Reparations, where you talk about a politics of reparation that is rooted more in the future rather than in the present and the past, given the challenges we face with a climate disruption. So I’m wondering, do you see scope for reparations and distributive justice in nationalizing and phase out? And what would this look like to you?
F: I definitely see scope for reparations in these discussions. I think these discussions are the stuff of climate reparations. My view of reparations, which is not a novel view, but I’ve just started calling it the constructive view, is that we should be building a world order that would include things like a new international economic order, which is a very old idea, decades old idea. But the players and allocations of power and distributions of power internationally should be fundamentally reconfigured. So that approach to what reparations is, especially in the era of climate crisis, would put nationalization as part of a just transition. high up on the list of goals and targets. But I think the questions from there are maybe more straightforwardly redistributive. If the Netherlands inherits the assets of Royal Dutch Shell, do all those go to solving social problems in the Netherlands? Or does a substantial portion of them go to solving social problems in Ogoniland, which are part and parcel of the explanation of why the nation would inherit these assets in the first place. Those are the points of operation, of policy, of action where things are more straightforwardly in the orbit of reparations. What do we do with these resources that we’ve nationalized? Where do they go? If they all stay in the country that now has taken them from the corporation then that seems like a failure from a reparations perspective.
MS: Yeah, I totally agree that reparations in future should play a really central role considering what front line communities have endured over the past decades or centuries even. I think another important core group that you’ve already spoken about are the workers in the just transition. I know Carla, you have written in your work more about how nationalization could support workers in the transition to a democratic regenerative economy. And I was wondering if he could expand more on this thought?
C: Yeah, sure. I think when we talk about winding down corporations, one of the ways that we could support this transition is by really clearing the political pathway for us to have a meaningful conversation about what a transition means. If we look at the company level this would concern creating a plan, not only for winding down natural resources, but a plan for what’s next for workers. And that includes, are we training them to be in a new sector? Are we giving them five years of training so they can transition away from the industry? We are giving a timeline, like, you’re not getting fired tomorrow, as it has been happening recently where one is laid off last minute. We are giving a plan on when they’re going to be transitioning out, with training, and also a social security net. What does that mean? Do we need to continue paying them for a couple years, three years, five years until they are able to be placed in a new market? And are we securing their retirement funds? Right now what has been happening when some of these companies go bankrupt, basically, the funds of those workers are diminished, because they become lower in the creditors teers of a bankruptcy procedure. So are we just securing the funds, in the first place, so they can have a retirement. A lot of those workers, within five to 10 years, are going to be retiring in first place. So there’s different types of workers, the one there’s gonna need to go into a new field, they’re going to be ones that are going to be retiring. Anyway, we’re just securing the retirement or giving them a clear path. And I think that is part of the wind down in first place. So I think just bringing them back to the planning process, and not having them in the consequences of an unplanned transition that is happening one way or another very disorganized. And why now not securing any climate safety. But yeah, it’s just putting them into consideration first and foremost along impacted communities and other front line communities as Femi mentioned.
A: Thanks, Carla. I want to take us in the direction of a wrap up. So we asked all of our guests at the end what do you think is necessary to get to a future beyond Shell? And is nationalization, this strategy that we’re talking about today, the main tool? What are other or another tool that you think is important in this fight? And this is for both of you.
C: I can jump off a little bit while Femi is thinking about it. Well nationalization is definitely not the only tool. In my view it is a main tool just to break through. We’re in a very vicious cycle, we cannot figure out why we cannot pass anything that moves us beyond Shell, regulatory wise. So it is a political breakthrough. It’s also a way to stabilize and gain time. So for me it is the main tool, but mainly in the sense that it needs to go right away. So we can actually start planning the transition, but not in the sense that it’s even the most important. I support all the efforts from supply side folks here. Banning licenses is totally a strategy, and is a way for nationalization. If we continue allowing them to grow, we’re just moving further and further away from any political will to nationalize. So there’s a lot of other tools that play a crucial strategic role. But also how to secure the transition government is not going to just water down a nationalization plan that is being implemented. So it is a platform really, like we need a climate policy platform. And I focus my research on nationalization because I am wondering why is public ownership not being debated as one of the crucial ways for us to get there? So this is the work I’ve been doing. This is a tool that needs to be part of the platform. It is not the only tool by any means, it is not a panacea. As we’ve been discussing it, it is difficult. We are talking about democratic public ownership, not only public ownership, so it’s another level of challenge in itself. But why is it not part of the conversation? And I truly can not understand why because Femi mentioned it and I’m stealing it. I just don’t see how we’re gonna deal with a climate crisis without public ownership of these companies in the first place.
F: It is not my property, you’re not stealing it. It’s under democratic ownership. Um, so I think I totally agree with Carla. I think it’s a necessary tool. I think that’s what I’m inclined to say, which is just to say that if investors are in control of what happens with these resources, if investment logic is in control of what happens with these resources, even if it’s not necessarily private investors, we can just calculate mathematically what they’re going to do, right? If the basis is to maximize profits or return to shareholders, we just know which strategies will do that. That is for them to delay the energy transition. And if not, entirely, prevent the energy transition. And even if the energy transition is presumed to happen, to accelerate production before the energy transition, in order to minimize stranded assets and maximize profits, right. When we are describing what it is for an industry to be run for profit, we are describing the conditions on which those calculations decide what happens in those sectors. So unless and until we challenge that I don’t see any way of meeting even the least conservative temperature targets. And like Carla, I’m extremely confused as to why this isn’t the mainstream part of conversation. We should be debating how to do this, not the weather.
A: Thank you both so much, Femi and Carla, I think we’ve learned a lot about nationalization of the fossil fuel industry, its implications in terms of climate crisis, but also in terms of democratizing and fighting some of these colonial and other power dynamics to achieve a more just future in any case. Thank you so much.