Exxon’s Fantastical Vision of the Future and Climate Change

Read time: 7 mins
ExxonMobil climate risks report cover

There really is little need to read past the cover of ExxonMobil’s 2018 Energy and Carbon Summary, a report purportedly meant to offer insights to shareholders on how the company manages climate-related risks. Apparently at Exxon, the plan is for humanity to frack its way out of the climate crisis by pouring more money into developing oil and gas.

The report you are reading looks into a lower-carbon future. It provides a perspective on what such a future might mean for our business,” Darren Woods, CEO of ExxonMobil, writes in the introduction.

But it doesn’t.

Yes, the opening of the report mentions climate change, and Woods cites addressing it as a “priority of mine,” but the bulk of the report indicates this is more lip service than anything else. It reveals that Exxon plans to produce as much oil and gas as possible for as long as it possibly can — while assuring its shareholders that this is perfectly in line with a scenario limiting global warming to below 2°C. 

The report opens with these two sentences from Woods:

“Providing affordable energy to support prosperity while reducing environmental impacts — including the risks of climate change — is our industry’s dual challenge.

Ensuring ExxonMobil does our part to address this challenge is a priority of mine. We are working hard across our businesses to find effective solutions that meet the needs of society.”

Those solutions appear to include ignoring the reality of climate change and claiming natural gas as a “cleaner” and more climate-friendly fuel. The report outlines Woods' vision of the future of Exxon. 

Even under a 2°C pathway, significant investment will be required in oil and natural gas capacity,” the report reads.

This statement directly contradicts the science on this issue and makes it seem like a 2°C pathway is achievable, right alongside a bright future for oil and gas growth. 

However, the International Energy Agency's annual energy outlook, Energy Technology Perspectives 2017, warned of the challenges involved in achieving a 1.75°C pathway:

“This would require unprecedented policy action as well as effort and engagement from all stakeholders.”

As analysis after analysis shows, the clock is ticking on cutting carbon emissions, and no unprecedented action has happened yet. In 2015, researchers at University College London calculated that most of the known proven oil, gas, and coal reserves can’t be developed if the goal is to achieve less than 2°C of warming.

This chart from Oil Change International shows how much carbon can be released into the atmosphere and still limit global warming to either 2°C or 1.5°C, even if no new fossil fuels were developed beyond the current known reserves.

The chart shows that between 68 and 85 percent of those reserves would have to be left in the ground.

However, Exxon doesn’t see things that way. Its 2018 report states that “we estimate that by 2040, over 90 percent of our year-end 2016 proved reserves will have been produced. Considering that the 2°C Scenarios Average implies significant use of oil and natural gas through the middle of the century, we believe these reserves face little risk.”

This chart below is Exxon’s vision for a “lower-carbon future.” 


Credit: ExxonMobil 2018 Energy and Carbon Summary

Meanwhile, in the same report, Exxon uses similar “unprecedented” language used by the International Energy Agency:

“Due to the unprecedented change that would be needed in the global energy system to achieve a 2°C outcome, we believe that only those scenarios that employ the full complement of technology options are likely to provide the most economically efficient paths.”

Such language would indicate that Exxon is well aware of what would be required to limit warming to below 2°C. But the company also likely knows cutting carbon emissions in a substantial way could involve cutting oil and gas production, which would also significantly cut into its future profits. 

Does Exxon's chart look like “unprecedented change” or 25 more years of the status quo?

Banking on Carbon Capture and Storage

How can Exxon present a view of the future to its investors that so directly contradicts the findings of energy experts? Magic.

Or at least the belief in magical thinking. Belief that, in the future, technologies that haven't been invented yet will emerge and that the world can burn plenty of fossil fuels and still keep warming below 2°C by simply removing carbon from the atmosphere after it is burned via carbon capture technologies.

Yet technologists and energy companies have promised before that carbon capture could deliver “clean coal” to the world.

That hasn't quite panned out.

But once again, this technology is offered as the solution to mitigating climate change. The only problem is that no one knows how to do that on a global scale. And it really isn’t clear when or if anyone will.

But the 2018 report assures investors that Exxon is on the job when it comes to carbon capture and storage technologies:

“We are conducting proprietary, fundamental research to develop breakthrough CCS [carbon capture and storage] technologies, with an aim to reduce the complexity and cost of this important technology, while increasing its efficiency.”

Once these “breakthrough CCS technologies” are developed, funded, and built to scale and once the existing fossil fuel infrastructure is shut down or retrofitted, the world could potentially see massive reductions in atmospheric carbon dioxide. At that point perhaps Exxon’s report will be worth the paper it is printed on. Until then, it’s a blueprint for climate disaster.

Stranded Assets 

In 2018 Exxon has painted a rosy picture for investors and the future of the planet in this new report. However, Exxon knew about carbon dioxide's role in dangerous climate change long before most people did and still funded climate science denial. What are the odds the company knows there is a real risk of its assets being stranded in the future due to climate change, and denying that risk?

In 2016 Exxon argued against proposed regulations on deepwater drilling safety equipment in the wake of BP's 2010 Deepwater Horizon oil spill, saying that the costs of the regulations might cause Exxon’s assets to be stranded.

Yet the company argues in its optimistic new report that a phenomenon as far-reaching and complex as climate change offers little risk of stranding oil and gas assets. 

What the report fails to mention is the future economics which could make that more likely to happen. Amazingly, the report does not mention the many lawsuits the company is facing over climate change. Kathy Mulvey of the Union of Concerned Scientists made this point in a recent statement:

ExxonMobil is dealing with risk squared. Already facing liability from a rising number of climate-related lawsuits, the company has chosen to add another layer of risk by failing to disclose the challenges to its business model posed by assets that may not be profitable to extract in a carbon-constrained world, costly litigation, and climate impacts to its operations. ExxonMobil is leaving its shareholders in the dark as climate change barrels down the tracks.”

Of course, Exxon is well aware of those lawsuits and is taking legal action to counter them. In addition, Exxon is funding think tanks, including the Independent Petroleum Association of America (and its front group, Energy In Depth) and the National Association of Manufacturers, which have attacked the cities suing Exxon over climate change. 

Santa Cruz County is one of the municipalities suing Exxon and is now facing a countersuit. Ryan Coonerty is the Santa Cruz County supervisor. He summed up the situation:

Any time you have adversaries that have unlimited resources and a determination to win, it is daunting.”

Indeed, Exxon insists in this report that its businesses are “well positioned” for the future.

Main image: Cover of Exxon's 2018 Energy & Carbon Summary

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