Despite climate warnings, Exxon plans to burn through oil and gas reserves
By Andrew Freedman From Mashable
On the same day that the U.N. Intergovernmental Panel on Climate Change (IPCC) released its new report warning that global warming will raise the risks of a host of potentially costly and deadly consequences, from sea level rise to food supply disruptions, Exxon Mobil Corp. released its own set of climate reports.
As one might expect from the world’s most profitable corporation and one of the largest oil companies, Exxon’s documents, published Monday, struck a different tone from the IPCC.
Exxon’s reports to its shareholders amount to an unprecedented disclosure of how the company views its risk exposure to climate change, specifically to potential greenhouse gas emissions reduction mandates that would curb oil and gas use between now and the year 2040. The company told its shareholders — some of whom spent years trying to get the company to disclose its climate-related risks — that it does not need to plan for aggressive carbon emissions cuts before 2040, because governments are unlikely to impose such expensive regulations.
Exxon cited a report by the International Energy Agency, which found that it would cost up to $45 trillion to cut global greenhouse gas emissions to 50% below 2005 levels by 2050.
This finding is striking because, as the IPCC said, just such aggressive emissions cuts are required in order for the world to limit manmade global warming below dangerous levels.
In fact, while it acknowledged that its operations face some risks related to climate change policies, and that the company favors governmental action to reduce the severity of climate change, Exxon said its plans call for all of its oil and gas reserves to be exploited for generating electricity and powering transportation, among other uses, through 2040. Therefore, the company said, none of its oil and gas reserves are at risk of becoming “stranded assets.”
Instead, these stores will be processed and ultimately burned, releasing more planet-warming gases such as carbon dioxide and methane.
“The risk of climate change is clear and the risk warrants action,” said William Colton, Exxon’s vice president of corporate strategic planning, in a press release.
However, Exxon said it is prioritizing the need to meet the world’s growing energy demands through its oil and gas products, rather than addressing climate change Exxon said it is prioritizing the need to meet the world’s growing energy demands through its oil and gas products, rather than addressing climate change, during the next several decades.
“All of ExxonMobil’s current hydrocarbon reserves will be needed, along with substantial future industry investments, to address global energy needs,” Colton said.
If all of Exxon’s oil and gas reserves were to be exploited, that would release at least 7.01 gigatons of carbon dioxide, the main long-lived greenhouse gas, based on 2013 data the group Fossil Free Indexes provided to Mashable.
By comparison, all the fossil fuels burned in the U.S. in 2013 released about 5.4 gigatons of carbon dioxide, according to the Energy Information Agency. And other estimates of the carbon dioxide emissions that would result from burning Exxon’s massive reserves are significantly higher, including a figure of 40 gigatons calculated by the environmental group 350.org.
“Exxon basically says, ‘we hear you about this climate change thing, we’re just not going to do anything about it,’” said Brett Fleishman, a 350.org senior analyst, in an email to Mashable. “Maybe that’s because, for the last decade, Exxon has remained at the top of the owners list of potential carbon dioxide held by fully public companies.”
In the reports and the press release, Exxon touted its investments in climate research, efficiency improvements within the company, and the company’s participation in “constructive dialogue on policy options.”
Until 2012, the company was one of the largest funders of organizations that deny the existence and severity of manmade global warming, such as the Chicago-based Heartland Institute, which is a free-market think tank.
No need to plan for a low carbon scenario
In its climate reports, Exxon ruled out the possibility that its leaders would seek to meet the IPCC’s low-carbon development scenario, which would limit global warming to 3.6 degrees Fahrenheit above preindustrial levels. The global community, including the United States, agreed to that temperature target at a 2009 climate summit in Copenhagen, but since then emissions have continued to track far above the path that would be needed to meet that target.
Exxon says trying to meet the 3.6 degrees Fahrenheit target would be too costly, and it does not foresee a government-mandated commitment to do so. Instead, it foresees emissions growing along a mid-range scenario, which would yield warming of between about 3.6 degrees Fahrenheit and 6.3 degrees Fahrenheit compared to preindustrial levels by 2100.
Furthermore, the company said its oil and gas reserves are too important for lifting millions of people worldwide out of poverty, particularly in the developing world.
“… We are confident that none of our hydrocarbon reserves are now or will become ‘stranded,’ the company’s report said. “We believe producing these assets is essential to meeting growing energy demand worldwide, and in preventing consumers — especially those in the least developed and most vulnerable economies — from themselves becoming stranded in the global pursuit of higher living standards and greater economic opportunity.”
According to Exxon’s scenario for global development through 2040, the world will require about 35% more energy in 2040 compared to 2010, the majority of which would still come from fossil fuels like oil and natural gas.
“Increasing energy costs leads to a scarcity of affordable, reliable and accessible energy and can additionally lead to social instability,” the report said.
In its new report, the IPCC warned that climate change itself will raise the risk of social instability and could help drive conflicts in already unstable parts of the world, such as the Middle East.
Andrew Logan, who directs the oil and gas program at Ceres, a group that advocates changing market practices to incorporate long-term risks like climate change, said the reports are a positive step for Exxon but discouraging at the same time. “Ultimately it’s not up to Exxon how the world deals with climate change,” he told Mashable. “We strongly disagree with some of the company’s sense of the likelihood of global action.” In other words, in Logan’s view, world leaders are likely to act more aggressively to curb climate change than Exxon anticipates.
Logan said it’s notable that the IPCC said on Monday that climate change jeopardizes economic growth, yet Exxon took the opposite view by saying that addressing climate change too aggressively would do the same thing.
“We share the perspective of the IPCC that the health of the global economy as well as the health of the globe depends on the world taking on climate change,” Logan says. “I just can’t imagine that given what we know about the consequences that we’re going to let ourselves go down that path.”
PHOTOS:
An Exxon Mobil refinery in Torrance, California.IMAGE: JAMIE RECTOR/BLOOMBERG/GETTY IMAGES
Figure that illustrates projected climate futures under a low emissions (RCP 2.6) and high emissions (RCP 8.5) scenario, along with observed changes in climate change risks.
IMAGE: U.N. IPCC WORKING GROUP II
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