Exxon: Highly unlikely world limits fossil fuels

0

NEW YORK (AP) — On the same day the world’s scientists
issued their latest report on climate change and the risks it poses to
society, the nation’s biggest oil and gas company said the world’s
climate policies are "highly unlikely" to stop it from selling fossil
fuels far into the future.
Exxon Mobil issued a report Monday on
the risks that climate change policies could pose to the value of its
assets and future profitability, by coincidence on the same day as the
latest paper by the Intergovernmental Panel on Climate Change, a Nobel
Prize-winning United Nations group assembled to assess the science and
risks of climate change.
Both Exxon and its critics used IPCC research to bolster their cases.
Exxon’s
report was in response to the contentions of some shareholders and
environmental activists that the assets underpinning the value of Exxon
and other fossil fuel companies will be worth less as society restricts
consumption of fossil fuels to fight climate change.
The report,
the first detailed response to these concerns by a major oil company,
acknowledges the need to adopt policies to address climate change. But
it concludes that because oil and gas are so critical to global
development and economic growth, governments are "highly unlikely" to
adopt policies that cut emissions so sharply that fossil fuel
consumption would be severely restricted.
"We know enough based on
the research and science that the risk (of climate change) is real and
appropriate steps should be taken to address that risk," Ken Cohen,
Exxon’s government affairs chief, said in an interview Monday. "But
given the essential role that energy plays in everyone’s lives, those
steps need to be taken in context with other realities we face,
including lifting much of the world’s population out of poverty."
Natasha
Lamb, director of equity research at Arjuna Capital, a sustainable
wealth management group that filed the shareholder resolution with
Exxon, called Exxon’s report a "milestone."
"It’s a huge first
step in the right direction and it shows a lot of leadership," she said.
Arjuna and As You Sow, a nonprofit that promotes environmental
corporate responsibility, agreed to withdraw their resolution after
Exxon agreed to issue a report on climate risks.
But Lamb said she
was disappointed that Exxon declined to explain what would happen if
society did in fact adopt policies that would lead to sharply lower
emissions, something known broadly as a low-carbon standard.
"The
question is not whether or not we’ll face the low carbon standard, but
whether they are prepared to address it. We need to know what’s at
stake," she said. "But at least now investors know that Exxon is not
addressing the low carbon scenario and (is) placing investor capital at
risk."
Exxon and the environmental groups agree that climate
change is a risk and that society will take steps to reduce emissions
from fossil fuels to slow the buildup of greenhouse gases in the
atmosphere. They differ, however, on how drastic society’s response
could be, and what would cost more — severely restricting fossil fuel
consumption or not doing so and allowing more carbon dioxide to build in
the atmosphere.
Exxon, along with other private and government
energy researchers, believes that demand for fossil fuels will continue
to grow around the world as more people demand access to electricity,
heat, and transportation. Exxon predicts that carbon dioxide emissions
from energy sources will peak by about 2030 and then begin to decline as
society becomes more efficient and switches to lower-carbon fuels.
The
Irving, Texas-based company’s report notes that its emissions
predictions track closely with the IPCC’s "intermediate" scenario
considered in its last report.
Exxon says that renewable energy
sources are not now cheap enough nor technologically advanced enough to
meet growing demand for energy, let alone also replace oil and gas.
Governments therefore face a choice between restricting access to energy
or raising the cost of energy significantly. In Exxon’s view,
governments will chose to raise the cost of fossil fuels to encourage
alternatives somewhat, but stop well short of enacting policies that
will sharply curtail consumption, especially in developing countries,
because populations would resist and social upheaval would result.
Arjuna
Capital’s Lamb disagrees. "There’s greater risk of social upheaval from
climate change itself," Arjuna Capital’s Lamb says. "(Exxon’s report)
ignores the cost of inaction."
Lamb points to some of the
conclusions in the latest IPCC report, which says climate change will
worsen problems that society already has, such as poverty, sickness,
violence and displacement.
The report also says climate change
will slow down the benefits of a modernizing society, such as regular
economic growth and more efficient crop production — exactly the types
of things that Exxon argues are delivered now only by relatively cheap
and available fossil fuels.
___
Jonathan Fahey can be reached at http://twitter.com/JonathanFahey.
Copyright 2014 The Associated Press. All rights
reserved. This material may not be published, broadcast, rewritten or
redistributed.

No posts to display