Exxon's Startling Outlook for Our Future
Posted March 21, 2013
There’s something startling about ExxonMobil’s 2013 Outlook for Energy: A View to 2040 report.
Could it be that the company that’s spent many millions of dollars and important years promoting denial of global warming now issues a report for investors and interested others that forecasts a 5 percent decline in U.S. energy consumption and a 25 percent decline in CO2 emissions even as GDP doubles?
Sure enough, it has. And given just how detrimental a force ExxonMobil has been in our nation’s climate debate, this is a pretty big deal.
Sort of. In fact, Exxon’s Outlook for Energy is both incoherent and self-serving.
Let’s start with its incoherency. That 25 percent projected drop in CO2 emissions that’s so intriguing given its source doesn’t occur until 2040—far too late if we are serious about preventing dangerous climate disruption. Yet it’s predicated on an $80 per ton CO2 price (which Exxon assumes without explanation), which could only happen in a world that is serious about solving climate change.
Still, coming from Exxon this forecast might be groundbreaking if it weren’t so self-serving. The decline in CO2 emissions in Exxon’s Outlook is driven primarily by a 70 percent reduction in coal usage—the one fossil fuel in which the company doesn’t have a financial stake—and a 30 percent increase in the use of natural gas, in which its interest is significant. Exxon’s assumptions turn out to be right in the sweet spot—not for our climate, but for the company’s business plan: The carbon price assumed in their Outlook is just high enough to drive coal out of the market, but not high enough to reduce demand for natural gas (at least given their unreasonable assumptions about how expensive renewables will be).
So ExxonMobil’s business plan is full steam ahead toward a ruined climate. The company, its Outlook says, is making what it calls “significant investments in oil sands, deepwater and Arctic production, and the oil and natural gas supplies found in shale and other rock formations.”
Are there other options? Most definitely. For one of them, check out this recently released plan by Stanford and Cornell University researchers showing how to wean New York State off fossil fuels and onto clean energy almost entirely over the same time frame that Exxon manages only a 25 percent reduction in CO2 emissions.
ExxonMobil is the world’s most financially valuable company, so it’s not too surprising that they expect a fossil-fueled future as far as their eye can see. But that future is just not compatible with a healthy planet for the rest of us. A fact Exxon is still not willing to acknowledge despite including CO2 emissions calculations in its Outlook.
Exxon has a lot of smart, successful engineers, and perhaps they will shift gears and decide to get in on the $2 trillion, near-term market opportunity that renewable energy represents. But I wouldn’t count on it.
The company is not, as its Outlook suggests, merely a passive participant in energy events and forecasts. (To get the full details on the company’s power brokering in Washington, check out this compelling New Yorker article by Steve Coll.) Exxon CEO Rex Tillerson has publically stated he supports a carbon tax, but one can’t help but wonder whether that’s because he knows it is currently dead in the water. And there is no evidence whatever that the company is using any of its considerable political influence to resurrect any legislation that puts a price on carbon—a price its Outlook assumes without explaining how it might come about.
So my bet is that Exxon will stick to its fossil fuel business plan, at which it is unsurpassed, and leave the $2 trillion clean energy market to other entrepreneurs, most of whom we haven’t heard of yet.
In the end, ExxonMobil’s current Outlook is startling—startlingly dangerous.