Ministers' oil industry ties prop up high-carbon policy, report alleges

The World Development Movement's report Web of Power cites reluctance of City's vested interests to invest in low carbon fuels

The Guardian, Terry Macalister, Sunday 10 March 2013

Oil companies' political connections blocks flow of investment in low-carbon
forms of energy. Photograph David Mcnew/Getty Images

Close links between senior government ministers and the oil industry risk perpetuating dependence on a high carbon energy policy which is pushing the planet to the brink of climate catastrophe, a report has warned.

The World Development Movement (WDM) believes that up to a third of all coalition ministers may have past or present links with fossil fuel companies or with financial and services companies supporting oil or gas projects.

The WDM's report, Web of Power, also highlights the revolving door between oil companies and the big banks, with many executives sitting on the boards of both at the same time.

This, WDM said, perpetuates the City of London's vested interest in the status quo and breeds a reluctance to invest in low-carbon forms of energy such as wind power. Most of the links between ministers and carbon companies are revealed by the politicians themselves in their register of interests or elsewhere, but WDM said it was surprised and alarmed at the scale of the connections.

Among the top coalition names to have worked for Shell or other petroleum producers are the business secretary, Vince Cable, foreign secretary William Hague and international development minister Alan Duncan. The education secretary, Michael Gove, is among those who have received financial backing from people connected with hydrocarbons – in this case Aidan Heavey, the boss of Tullow Oil. Greg Barker, energy and climate change minister, was formerly employed at the Russian oil business Sibneft, while Maria Miller, secretary of state for culture, was on the staff at Texaco and Alan Robathan, a defence minister, was at BP.

On top of this, education minister Elizabeth Truss was a commercial manager at Shell while Robert Goodwill, who works in the government whips' office, holds shares in Russian oil and gas companies Lukoil and Gazprom.

"If we are to move away from a high carbon economy, the government must break this nexus and regulate the finance sector's investment in fossil fuel energy," said the campaigning group, which claims the top UK banks underwrote £170bn in bonds and share issues for fossil fuel companies between 2010 and 2012.

WDM shows a huge number of cross-connections between the energy companies and the banks that fund much of their operations. RBS, still 82% owned by the British taxpayer and a leading funder of fossil fuel projects, has Sir Philip Hampton as chairman. Hampton was formerly finance director at British Gas and at oil and gas explorer BG.

Another RBS non-executive director, Brendan Nelson, is chairman of the audit committee of BP and a former chairman for international services at accountant KPMG. Meanwhile, Sam Laidlaw, chief executive of Centrica, is a non-exec at HSBC bank while Standard Chartered bank has ex-Shell director Paul Skinner on the board along with Om Prakash Bhatt, who holds a similar position on the board of India's Oil and Natural Gas Corporation.

Alex Scrivener, a WDM campaigner, said he believes a third of government ministers have links to either the fossil fuel industry or the financial sector companies that bankroll it. "While the direct influence of fossil fuel companies is an obvious problem, the financial sector lobby also has a strong vested interest in ensuring the government allows unfettered investment in dirty energy to continue. Many of the City financiers donating to senior politicians depend on fossil fuel investments for their profitability," he said.

Scrivener highlighted donations to the shadow cabinet from accounting firms such as KPMG and Deloitte, both of which have dedicated oil and gas departments and get a lot of business from fossil fuel companies. "We desperately need regulation to stop banks and other investors ploughing billions into unsustainable fossil fuels – will this happen when government, big finance and big oil are so closely intertwined?"

The Guardian contacted Cable, Hague and others mentioned in the report for comment but had received no reply by the time of going to press.

Related Article:

Lung specialists launch 'name and shame' tobacco lobby website