Exxon Mobil Doubts New Policies will Disrupt Oil and Gas Market

Exxon Mobil Corp. believes climate policy is "highly unlikely" to keep its oil and gas reserves from selling in the next three decades.

In a report to investors yesterday, the firm said it can't rule out the chance that governments will aggressively combat climate change. But it's much more likely, Exxon Mobil said, that governments will expand the use of fossil fuels alongside renewable energy and efficiency.

It reaffirmed what Exxon Mobil, the world's largest public energy company, said in its last "Outlook for Energy," which extended to 2040.

"The Outlook demonstrates that the world will require all the carbon-based energy that ExxonMobil plans to produce during the Outlook period," the report said. "We do not anticipate society being able to supplant traditional carbon-based forms of energy with other energy forms, such as renewables, to the extent needed to meet this carbon budget during the Outlook period."

The paper is the first public effort by a fossil fuel company to tackle the "carbon bubble," the warning that most oil, gas and coal reserves have to stay underground in order to contain climate change. Exxon Mobil published the report after reaching an agreement with shareholder activists (EnergyWire, March 12).

The company said it plans exhaustively for different economic and price conditions, building in a safety margin to its investments. Even under this analysis, Exxon Mobil said, its oil and gas still make the grade.

"We do not believe a scenario consistent with reducing GHG emissions by 80 percent by 2050, as suggested by the 'low carbon scenario,' lies within the 'reasonably likely to occur' range of planning assumptions," the report said.

The company sketched out its most likely scenario: World population increases, economies grow and energy demand grows, mainly in developing countries. Governments will cut carbon emissions, but they will limit these cuts in view of economic growth and rising living standards.

"All economic energy sources" will be called on, Exxon Mobil said.

Renewable energy will grow the fastest at a clip of nearly 6 percent a year, but fossil fuels will remain the dominant sources of energy, it said. Coal remains flat.

Exxon Mobil said its variety of reserves -- conventional and unconventional, oil and gas, onshore and offshore, around the world -- prepare it for the most likely outcomes. It added that given rising demand for energy, expanding these reserves was not a risk.

Shareholder advocates Arjuna Capital and As You Sow, which pressed Exxon Mobil to write the report, said they were disappointed with it.

"Investors now know that Exxon Mobil is not considering a low-carbon scenario in its planning, which places shareowner capital at risk," Natasha Lamb, Arjuna's director of equity research and shareholder engagement, said in a release.

"While Exxon asserts that we will face social upheaval if carbon-based fuels are limited, we believe the greatest social disruption will come from climate change itself in the form of physical displacement and food scarcity -- as outlined in today's release of the IPCC report," she said.

The release pushed for more transparency by Exxon Mobil and asked the firm to cut back on risky fossil investments while investing in low-carbon alternatives.

The groups said they would continue to push Exxon Mobil to consider carbon risk in its planning.

Bill McKibben, co-founder of 350.org, said the report proved the case for his movement: stigmatizing the fossil-fuel industry so that investors bolt.

"Here's the shorter version of Exxon's announcement: We are happy to overheat the planet and we dare anyone to stop us," he said in a release. "Now you know why we need divestment now."

Saqib Rahim, E&E reporter

Republished from EnergyWire with permission. EnergyWire covers the politics and business of unconventional energy. Click here for a free trial

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