LOBBYING IN THE EUROPEAN UNION GROUP 11 BEYOND PETROLEUM

Transcription

1 BEYOND PETROLEUM GROUP 11 Felix Federica Manuel Yogesh Amy This report contains a description of BP s lobbying activity in Europe including; the structure of the lobby, its missions, its methods, its sphere of involvement and is illustrated by two concrete examples.

2 Contents 1. Introduction Introduction to BP s Lobbying Activities... 3 Origin... 3 Structure... 3 Representativeness... 3 Mission... 4 Goals... 4 Issues... 5 Targeted Institutions... 5 Lobbying Method Concrete Examples Relevance to the European Process Conclusions Bibliography... 8 Appendices... 8 Appendix A1: Direct Influence... 8 Appendix A2: Use of Trade Associations... 9 Appendix A3: UK Lobbying... 9 Appendix B: Method of Lobbying... 9 Page 2

3 1. Introduction Lobbying is an attempt to influence policy makers to adopt a course of action advantageous, or not detrimental to a particular group or interest. 1 The European Commission defines lobbying as All entities engaged in activities carried out with the objective of influencing the policy formulation and decisionmaking processes of the European institutions. This can be done through a variety of activities. Lobbying is an important activity in the EU while there are 35,000 employees in the EU, there are approximately 15,000 lobbyists within the EU. 2 Beyond Petroleum (BP) is a private interest group as it is an individual company and a member of trade associations looking to influence activity at EU level. Is also one of the world's leading international oil and gas companies 3. BP is active in 29 countries, employing 79,700 people, owning 16 refineries and 22,100 retail sites. Its headquarters are in London, but it has sites worldwide. In 2010 it had sales revenue of $297,107 million. The EU is the second largest energy consumer in the world. Europe accounts for 43 per cent of BP s total marketing sales and 36 per cent of BP s refining capacity 4. The refining and sale of oil is increasingly regulated at an EU level. In addition one of the goals of the EU 2020 is sustainable growth and European environmental measures also increasingly affect the oil industry. As such it is in BP s best interests to try and exert influence in the European Decision Making Process. In this report we will look at how BP tries to exert influence in Europe, however it is important to note that BP as a global company lobbies also lobbies at national levels and International levels Introduction to BP s Lobbying Activities Origin Despite our best efforts it is impossible to find the exact origins of BP lobbying activities. This is due to the opaque nature of lobbying activities. In Europe, the Commission only launched its lobby register in 2008 which for the first time revealed which companies lobby at the European level. However, our research has shown us that BP was openly active from the 1990 s at European level. We would suggest that as long as BP has existed, BP has lobbied. As BP s operations increased and business globalised, we believe so did the scope of BP s lobbying. Structure Within BP lobbying and government interaction is the responsibility of the Communications and External Affairs Team. Within BP lobbying is also carried out by high level executives. BP s lobbying structure is both internal and external. Internally: Direct, high level executive influence on friends in high places, Individual lobbyists at the Brussels Office, EU Foreign and Trade Policies and EU legislative agenda. Externally: 3 rd Party Lobbyists and Political Affairs Consultants Representativeness BP is represented at each level of its structured lobbying organisation. We will briefly describe how it is represented here, before going into further details in the method section. 1 European Business Environment Slides, Olivier Delbard 2 European Business Environment Slides, Olivier Delbard 3 From BP Website 4 CEO: BP - Extracting influence at the heart of the EU 5 In the first quarter of 2011 BP spent over $2 million on federal lobbying in the USA on a wide range of issues. Page 3

4 Direct Influence, friends in high places: BP is a flagship European company and as such it has a sense of shared interest at the highest level within the EU. This enables BP to be represented by European Decision Makers, as well as having its key executives consulted on important issues. BP Europe operates from a Brussels office in the heart of the EU quarter. The 20 or so BP staff who work there are employed to maintain BP s relationship with the European Commission. BP Europe s office is on Rondpoint Schuman, described as the epicentre of the European institutions 6. The Commission s headquarters and the European Council are next door and all of the relevant Commission offices can be found within a few hundred metres. The European Parliament lies less than a kilometre away. BP s lobbyists Olivera Drazic, Emmanuel Haton and Gunnar Jungk work under Howard Chase, speaking on behalf of BP at conferences and events. Haton regularly addresses the Kangaroo Group, which brings together representatives from the European Commission, Council and MEPs. EU Foreign Trade Policies: The EU is a major trading partner with the USA, Russia and China, countries where BP has interests. BP is represented through EU Commissioners who meet with foreign diplomats from these countries to urge benign treatment of European corporations. BP is represented through direct participation in EU policy making through direct participation. For example, between2006 and Iain Conn, BP s chief executive of refining and marketing sat alongside Commissioners and members of the Council on the Commission s High Level Group (HLG) on Competitiveness, Energy and the Environment. BP is indirectly represented though participation of trade organisations such as the ERT. BP is also represented through the use of third party lobbyists and Public Affairs Consultants. Mission BP states in its code of conduct that Although BP will not directly participate in party politics, the company will continue to engage in policy debate on subjects of legitimate concern to the group, its staff and the communities in which it operates, by processes such as lobbying 7. BP s mission is therefore to engage in and influence policy debate on areas of concern to the group. BP s stated aim on the European Commission website is that it seeks to represent the positions, views and interests of BP Plc to the institutions of the European Union in areas including: 1. European policy and legislation impacting the business of our company including in the areas of energy, climate change, environmental protection, competition, financial markets and employment. 2. EU international relations with countries and regions of importance to our business operations. 8 Goals The goals behind the mission stated before are focused on defend the company interests: which is to be an influential contributor to the key policy and legislative issues at all stages of their development - To achieve favorable laws, policies and regulatory frameworks - To avoid any form of legislation which could impact on profits or developing strategy - To fights for soft regulation and maximum flexibility on those legislation that cannot be avoided - To identify, create strong associations and influence decision makers on the same industry and on the European parliament 6 CEO: BP - Extracting influence at the heart of the EU 7 BP Code of Conduct European Commission Website Page 4

5 Issues LOBBYING IN THE EUROPEAN UNION As a global company, BP is interested in lobbying on a wide variety of issues. On the European Commission website BP declares that its interests are in Competition, Employment and social affairs, Energy, Enterprise, Environment, External relations, External trade, Foreign and security policy, Internal market, Research and technology, Taxation, Trans-European networks and Transport. BP lobbies to avoid any form of legislation which could impact on its profits, preferring to advocate self regulation. Where regulation cannot be avoided, BP fights for softer regulation and more flexibility. Targeted Institutions BP targets different institutions using different lobbying tools. BP targets the Commission through its internal lobbyists who are located close to the commission and through trade associations through consultation. BP targets the Council through lobbying national governments because the Council is made up of heads of state. BP targets the Parliament through direct influence with MEPs through friends in high places executives on respected panels who are used to consult over matters. Lobbying Method BP lobbies using different methods at different times on different issues, or simultaneously to try and influence European Policy. The CEO states that these methods each carry a different degree of risk 9 and the method used depends on the risk level of the proposal for the company. Firstly, BP uses direct influence by placing its own staff in key positions within European Institutions. (See appendix A1 for examples) Secondly, BP lobbies through belonging to trade associations and think tanks. Friends of the Earth reports that BP uses these trade associations (including the platforms Europia, The Oil Companies European Association for Environment, Health and Safety in refining and distribution (CONCAWE), or the European Chemical Industry Council (CEFIC) to voice their opinions during events, presenting themselves as academics and scientists rather than corporate lobbyists. 10 (See appendix A2 for list of trade associations BP is a member of). BP tends to use this method of lobbying in response to specific legislative proposals from the Commission. This is because it can leverage its influence without using the name BP and so avoid damaging its brand through accusations of political interference. Thirdly BP uses clever media coverage in Brussels, especially through regular advertisements in newspapers such as Euractiv and The European Voice for instance to highlight its point of view. BP tends to use media coverage to influence a proposal when it feels that all other more private avenues of lobbying have been exhausted. Fourthly, BP has its own in-house lobbyists who maintain regular correspondence with the commission. These lobbyists meet with EU officials to discuss specific issues of concern the industry and the company. Finally, BP is very active in lobbying at a national level. In the UK, BP is represented on a number of government QUANGOs (see appendix A3). This national lobbying enables BP to have influence in the Council which is represented by Heads of State. 9 CEO: BP - Extracting influence at the heart of the EU 10 Friends of the Earth Europe, Report: Lobbying in Brussels; How much do the top 50 companies in the EU spend? Page 5

6 4. Concrete Examples We will outline the concrete example of the ETS to show BP s activities in Europe. This is summarised here and is described in more detail in Appendix B. EU ACTION BP LOBBYING ACTIVITY 1997: Kyoto Protocol states governments should limit greenhouse gas emissions Suggested EU Carbon Tax rejected BP lobbied against Carbon Tax BP set up own internal ETS UK government enacts Emissions Trading Scheme BP uses key employees (Mogford and Chase) to set up UK national ETS through working groups. UK government pressures Europe to implement an ETS scheme 2000 Commission presents a Green Paper on ETS to European Parliament BP and other trade associations consulted with Commission on proposal Different phases of ETS scheme discussed in Parliament and Commission BP and other trade associations lobby to exclude refineries from ETS auctions National Government allocation of Emissions permits BP lobbies to have higher allocation of permits As the above diagram summarises, BP was actively involved in lobbying for ETS throughout out the implementation of ETS. 5. Relevance to the European Process Lobbyists can be active at different stages along the European process. They can lobby pre-proposal to get a proposal to be made or to stop a proposal being made. Lobbyists can lobby during the consultation phase. Lobbyists can also speak with MEPs and Heads of State (more at a national level) to influence the wording of proposals. Page 6

7 The exact influence and relevance of lobbying on the European process is difficult to assess. A report by Friends of the Earth Europe states that the influence of Europe s largest companies on EU policy-making is still underestimated. 11 A lack of transparency about lobbying activities means that it is difficult to assess the relevance of lobbying to the European process. The Commission s register is criticised for being factually inaccurate: to restore the credibility of its transparency agenda, the European Commission must address the flaws in its lobby register. 12 Despite this opacity, it is clear that BP has a large sphere of influence in the European Process. BP has established an impressive Brussels power base, with key figures strategically placed inside EU institutions. The result seems to be that some within the EU think that what works for BP must be in the best interests of the EU s citizens, but it is far from clear that this is the case Conclusions BP has a high level of involvement in lobbying in the EU and it devotes considerable manpower and money to its lobbying activities. BP has a group of lobbyists who work daily to maintain BP s close relationship with the Commission and to develop dialogue with MEPs. This is reinforced by direct influences by senior members of BP who have close relationships both in the EU and at National levels. BP also lobby through industry associations which amplify the company s voice as well as insulating it from accusations of direct political interference. A lack of transparency means that it is hard to know just how much influence BP wields. The influence of personal contacts is difficult to evaluate and BP provides only limited information about its membership of trade associations. As Europe s second largest corporation, BP stands to benefit hugely form favourable EU policies, and through inputting to EU consultations. In addition, BP has penetrated EU institutions, giving it a direct voice in policy-making. The company has been able to have significant input to the design of the European regulatory mechanisms which affect its business, such as the Emissions Trading Scheme (ETS). Externally, BP benefits from EU foreign and trade policies, and the company is in regular correspondence with the commissioners and staff who shape those policies. As a flagship company which effectively represents Europe around the world, BP commands a sense of shared interest among Commissioners and MEPs, who are consequently enthusiastic advocates for BP s interests. 11 Friends of the Earth Europe, Report: Lobbying in Brussels; How much do the top 50 companies in the EU spend? 12 The Commission s Lobby Register One Year On: Success or Failure? written by the Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU 13 Corporate Europe Observatory PLATFORM, BP Extracting Influence at the heart of the EU Page 7

8 7. Bibliography 1. BP Website: 2. European Business Environment Notes 3. BP Code of Conduct 4. European Commission Website in Brussels 5. Lobbying in Brussels; How much do the top 50 companies in the EU spend? Report by Friends of the Earth Europe 6. Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU). The Commission s Lobby Register One Year On: Success or Failure? June CEO: BP - Extracting influence at the heart of the EU 8. Forty-sixth Report Session , House of Commons Committee of Public Accounts, Evidence Q26 9. and Q33, p Leigh, E. in (2004) The UK Emissions Trading Scheme - A New Way to Combat Climate Change, Forty sixth Report Session , House of Commons Committee of Public Accounts, Evidence Q2, p19 and Q12, p National Audit Office (2004) The UK Emissions Trading Scheme - A New Way to Combat Climate Change, UK Parliament House of Commons, Executive Summary Key Finding No. 2, p2 12. European Petroleum Industry Association (2008) Emissions Trading, Issues and policies Climate change, Appendices Appendix A1: Direct Influence For example, between 2006 and 2008 Iain Conn, BP s chief executive of refining and marketing sat alongside Commissioners and members of the Council on the Commission s High Level Group (HLG) on Competitiveness, Energy and the Environment. 14 BP Chairman Peter Sutherland served as Competition Commissioner under Jaques Delors and was appointed in 2007 as the President s adviser on energy and climate change, giving him unparalleled access to Commissioners and MEPs. Former BP Chief Executive 14 CEO: BP - Extracting influence at the heart of the EU Page 8

9 David Simon stepped down from BP to take up a position as the UK s Minister for Trade and Competitiveness in Europe. Appendix A2: Use of Trade Associations BP revealed on the Commission register is a member of the following 10 trade associations which it uses to leverage its influence. However, this list is not exhaustive and BP may be a member of other associations or think tanks. 1. Europia, European Petroleum Industry Association. The Commission frequently consults with EUROPIA as well as with individual oil companies. 2. Concawe, Association for Environment, Health and Safety in Refining and Distribution 3. OCP, International Association for Oil and Gas Producers 4. ERT, European Round Table of Industrialists. The ERT brings together brings together senior board members from the largest European corporations. Roundtable members are in direct contact with European leaders and the European Commission and member state governments. Members are individuals and BP chairman have been members since Business Europe 6. CEPS, Centre for European Policy Studies 7. EPC, European Policy Centre 8. EEF, European Energy Forum 9. EABC, European American Business Council 10. EUGBC, EU Georgia Business Council Appendix A3: UK Lobbying The Learning & Skills Council, Competition Commission, DTI Advisory Panel on Photovoltaics, Council for Science & Technology, Commonwealth Development Corporation, Scottish Environment Protection Agency, Advice Committee on Business and Environment, Industrial Development Advice Board, Public Services Productivity Committee, Scottish National Heritage, UK Round Table on Sustainable Development, SW Essex Business & Education Partnership, and the Oil and Pipelines Agency Appendix B: Method of Lobbying BP lobbied heavily on the matter of the ETS (Emissions Trading Scheme). The ETS is a response to mounting pressure globally to reduce green house gas emissions from the Kyoto Protocol which stated that governments would set limits on greenhouse gas emissions. The EU decided to enact this protocol through an emissions trading scheme. We will describe how BP lobbied the EU to ensure that the Kyoto Protocol was enacted in a way which was beneficial to the company. BP s first action was to develop its own internal emission trading scheme. This was managed by John Mogford. BP s aim was to create a system which could be used across the UK and Europe. BP aimed to influence the policy direction of the UK with regards to its implementation of the Kyoto Protocol, Page 9

10 Chairman Peter Sutherland: We are hopeful that the experience which we gain within our own company will be of assistance to governments in framing their practical response to what was agreed at Kyoto 15. BP was further able to influence UK policy through placing people in key positions of power. Ms Mogford was seconded from her job (not at BP) to the UK Department for the Environment to become head of the Emissions Trading Group (ETG) secretariat, which was chaired by BP s deputy chief executive Rodney Chase. Mogford and Chase spent two years creating the national scheme based on BP s model. When the UK scheme was launched it had 34 voluntary participants, BP was the fourth largest participant in the scheme and received 18.9 million in incentive payments. Despite the scheme not being a success in the UK, where it was described as an outrageous waste of [public] money 16, BP continued to lobby for the scheme to be widened across Europe. Leigh (Conservative chair of the Public Accounts Committee) stated that half the point of this was to try and encourage Europe to do a similar scheme 17. A report by the UK s National Audit Office states that the UK Scheme has encouraged the development of the European scheme and influenced its design. 18 Having piloted the scheme in the UK BP had the support of the UK government in trying to lobby Europe to adopt the ETS. In 2000, the European Parliament adopted a Green Paper on emissions trading and the commission presented this proposal to Parliament in October BP with at least five other trade associations, as well as the UK Emissions Trading Group consulted with the Commission in drafting the proposal. One of the most vocal industry associations was UNICE, the Union of Industrial and Employers Confederations of Europe. Mike Wriglesworth, BP s Assistant Director European Government Affairs represented UNICE in the meetings with DG Environment. EUROPIA has admitted that the industry provided significant input into the debate on how to structure the [EU-ETS] system 19. The biggest problem with the UK scheme was the over allocation of credits. BP and other industries learnt from this experience and lobbied national governments for generous allocations under national allocation plans. There is evidence that BP lobbied hard for higher emissions allocations across Europe. In the UK BP lobbied so hard that the government submitted a revised plan for allocations which increased BP s allowance. In Germany, BP lodged a complaint which lead to the German government suggesting that companies such as BP should be compensated during the phase two allocation period. BP continued to lobby throughout the second phase of the ETS scheme. BP wanted refineries to retain free permits. In the draft proposal for phase three refineries were initially included as having to purchase permits, yet shortly before the commission adopted the proposal this was removed from the text. 15 CEO: BP- Extracting influence ETS 16 Steinberg, G. in (2004) The UK Emissions Trading Scheme - A New Way to Combat Climate Change, 17 Leigh, E. in (2004) The UK Emissions Trading Scheme - A New Way to Combat Climate Change, 18 National Audit Office (2004) The UK Emissions Trading Scheme - A New Way to Combat Climate 19 European Petroleum Industry Association (2008) Emissions Trading, Issues and policies - Climate change, Page 10