Former insurance executive and climate change enthusiast Praveen Gupta has a message: people should know that Exxon’s plans for Asia are not in line with the Paris Agreement.
On the anniversary of the Exxon Valdez oil spill, I recommend reading ‘A look inside our energy future to 2040’ to understand Exxon Mobil’s ambitions in Asia Pacific. Our continent’s promises clearly makes Exxon salivate: ‘in Asia-Pacific, a combination of growing populations, a rising middle class, increased access to modern energy and improved living standards will likely result in greater energy use, helping drive up overall global demand by 20% by 2040. China and India, two of the world’s fastest-growing nations, are likely to contribute around half of that growth’.
What follows is seductive, suggesting a seamless way forward but also bearing the marks of a self-fulfilling prophecy: ‘The challenge is – and will be – satisfying this growing demand while reducing the risks of climate change’, is how close it gets to the biggest existential issue faced by the planet. How this outlook would treat the current pandemic and commodities price crash, which it predates, we won’t know just now, but some fundamentals remain. Indeed, behind the promises, this is what flies into your face:
- Today, more than half of the world’s energy comes from oil and natural gas, and it’s likely that these sources will continue to power the world well into the future, with existing gas resources capable of providing about 200 years of supply at current demand: Did someone move the climate timeline from 2050 to 2220?
- To continue to meet future demand, investment in oil and natural gas is required to replace the natural decline from existing production: So, oil and gas are here to stay?
- Natural gas, solar and wind will be the fastest-growing energy sources helping to meet future electricity needs, with gas balancing out more intermittent renewables. Gas is not only popular for its affordability and abundance, but when gas-fired electricity generation replaces coal plants, CO2emissions can be reduced by up to 60% while also producing fewer pollutants: Gas is only 40% as bad as coal?
- Increased energy efficiency and lower-carbon sources are expected to help curb CO2emissions, but not enough to reach a 2°C pathway: are they burying the Paris Agreement?
- The Asia-Pacific region will account for about 40% of all commercial transport energy demand by 2040. Affordable and widely available oil will remain the predominant transportation fuel: therefore, fossil fuel consumption is set to keep growing way beyond 2040?
Remembering the tragic impact of the Exxon Valdez incident calls for widening the exploration. So here is what I learned:
- Exxon has plans for $30-$35 billion in capital spending per year for the next five years. Most of its money will go to big oil and gas projects. Exxon seems to be singing off a different hymn sheet, not only from its competitors (except for Chevron), but also investors and, increasingly, banks.
- Let’s put it in Exxon’s context, which is money. It’s always about money. If they stay on their current path of justification, refusing to emulate their European counterparts by investing in green energy and steering away from fossil fuels, or by returning money to shareholders, it’s just financially not smart. Just ask Jim Cramer, who declared fossil fuels “done” on January 31.
- When leaders from Exxon Mobil and BP gathered last September with other fossil-fuel executives to declare they were serious about climate change, they cited progressin curbing an energy-wasting practice called flaring – the intentional burning of natural gas as companies drill faster than pipelines can move the energy away.
- But in recent years, some of these same companies have significantly increased their flaring, as well as the venting of natural gas and other potent greenhouse gases directly into the atmosphere, according to data from the three largest shale-oil fields in the United States.
- And we’ve learned since then that emissions from flaring may have been vastly underestimated.
- President’s George Bush’s decision not to sign the United States up to the Kyoto Protocol was partly a result of pressure from ExxonMobil, the world’s most powerful oil company, and other industries, according to US State Department papers seen by the Guardian.
- Until now Exxon has publicly maintained that it had no involvement in the US government’s rejection of Kyoto. But the documents, obtained by Greenpeace under US freedom of information legislation, suggest this is not the case.
- Shale oil has made the United States the world’s largest oil producer. But shale wells tend to dry up more quickly than conventional oil fields. That means producers must drill constantly to keep their oil production steady, while venting or flaring off the gas before pipelines can catch up.
- Flaring releases carbon dioxide, a major greenhouse gas, into the atmosphere, where it traps the sun’s heat, driving climate change. Venting directly emits methane, an even more potent greenhouse gas in the shorter term.
- Both practices are “a tremendous waste of a natural resource,” said Riccardo Puliti, global director for energy at the World Bank, which leads a global public-private partnership that aims to reduce the practice. The World Bank estimates that flaring last year emitted more than 350 million tons of carbon dioxide globally, equivalent to the greenhouse gas emissions of almost 75 million cars.
- “They’re saying, ‘Here’s our number. Trust us,’” said Ben N. Ratner, a senior director with the Environmental Defense Fund, a group that works with oil companies to track and reduce methane. “There’s been no breakdown of how they arrived at that number. And we don’t have all the facts, the transparency, to assess whether that’s accurate or not.”
- In 2019, 350.org co-founder Bill McKibben wrotein the pages of the New Yorker: “I suspect that the key to disrupting the flow of carbon into the atmosphere may lie in disrupting the flow of money to coal and oil and gas.”
- Now, a new campaign called Stop the Money Pipelineis bringing a greater focus to this connection between Big Oil and finance. “Banks, insurance companies, and asset managers are funding, insuring and investing in the climate crisis,” says the campaign website. “Stopping this money pipeline is one of the most important ways we can address the climate emergency.”
- Stop the Money Pipeline has a common set of targets: JPMorgan Chase, the world’s top banker of fossil fuels; BlackRock, the world’s top investor in fossil fuels; and Liberty Mutual, a major insurer of the fossil fuel industry.
- On November 29, 2019, ExxonMobil announcedthat Joseph “Jay” Hooley was joining its board of directors, effective January 1, 2020. Hooley is the former CEO and chairman of State Street Corporation. He sits on the board of directors of Liberty Mutual, which, in the face of activist pressure, has started to make gestures about climate concerns. But they are not meaningful yet.
- Moreover, are Liberty Mutual’s gestures toward climate action compromised by retaining a director who is also directing a company whose core business is centered on producing and burning fossil fuels?
- Hooley’s joining both ExxonMobil’s and Liberty Mutual’s boards also raises concerns over conflicts of interests. Is Liberty Mutual insuring fossil fuel projects that ExxonMobil profits from, now or in the future?
- Liberty Mutual insures fossil fuel infrastructure projects that, without this insurance, would otherwise be halted. While many fossil fuel clients of Liberty Mutual are unknown, we do know that it insures the controversial Trans Mountain pipelineand Mariner East pipeline.
- Liberty Mutual is also an investorin fossil fuel companies, including in TC Energy, which is building the Keystone XL pipeline, which will transport some of the dirtiest oil in the world from Canada to the U.S. TC Energy is also building the Coastal GasLink pipeline, which has sparked a wave of indigenous resistance that ground Canada’s rail system to a halt over the plan to ship gas through unceded Wet’suwet’en territory.
- The interlocks between finance and the fossil fuel industry have another leading figure: Lee Raymond, the former chairman and CEO of ExxonMobil, who is a 33-year board member of JPMorgan Chase.
- Raymond is a powerful figure at JPMorgan Chase. He is Lead Independent Director and close to Chairman and CEO Jamie Dimon. According to the LA Times, “Raymond is described in public filings as the chief executive’s sounding board, advisor on long-term strategy and guide for annual performance reviews, as well as a key voice in who will one day succeed him. He oversees the board’s agenda, has the discretion to call members together whenever he wants, and runs meetings in Dimon’s absence.”
- Raymondwas Chairman and CEO of ExxonMobil from 1999 to 2005, and, prior to that, Chairman and CEO of Exxon Corporation from 1993, until its 1999 merger with Mobil Oil Corporation. While leading Exxon, he disputed global warming even as Exxon knew internally that fossil fuel emissions were warming the planet. “During his time at the helm he cut investment in renewable fuels, pushed countries to unite against emission limitations, and in 1997 said the planet was cooling,” wrote the LA Times.
Given all these assorted ‘tales’ from its home country, should one still expect Exxon Mobil to be benign towards Asia Pacific? The East India Company’s plunder in India and China and the Opium Wars may be confined to the history books for most, but many have vivid memories from the Exxon Valdez accident exactly 31 years ago. The truth, in Asia as elsewhere, is that only renewables will keep us from sinking. As humanity navigates its current turmoil, we must not forget it.