2018-05-09 17:30:03 UTC
2°C or not 2°C? Unanswered Questions in ExxonMobil's and Chevron's
Climate Risk Reports
09 May 2018 9:57 am EDT
Heading into their annual meetings at the end of this month, both
ExxonMobil and Chevron have published reports in response to investor
demands that they disclose their plans for a world in which global
temperature increase is kept well below 2 degrees Celsius (2°C)
above pre-industrial levels-the target set in the Paris Climate
Agreement. Mounting mainstream expectations for better corporate
climate risk disclosure have been reflected in shareholder resolutions
and the recommendations of the Task Force on Climate-Related Financial
Should ExxonMobil and Chevron shareholders be satisfied with these
reports? No -- and there are indications that some are not. I took a
look at these reports, consulted with other UCS experts, and
identified 4 big questions left unanswered.
1) When will they get serious about the Paris Climate Agreement
Both ExxonMobil and Chevron seem to bet against the world achieving
the Paris Climate Agreement goal of keeping global temperature
increase well below 2°C over pre-industrial times-and striving to
limit warming to 1.5°C.
A former ExxonMobil executive recently criticized the reports for
"assum[ing] that govts won't succeed in meeting their Paris
Agreement commitments, resulting in financial outlooks that leave them
free to sell all their fossil fuel assets."
ExxonMobil admits that the emissions trajectory of its Outlook for
Energy (which does not extend to 2100) "closely approximates in shape"
an emissions profile of the Intergovtal Panel on Climate Change
(IPCC) that "would result in an average global temperature increase of
approximately 2.4 °C by 2100 from the industrial age."
ExxonMobil's "2018 Energy and Carbon Summary: Positioning for a
Lower-Carbon Energy Future" presents a false choice between curbing
climate change and solving other pressing problems, warning that
"Inefficient approaches to address the risks of climate change can
divert resources and detract from society's ability to address other
important priorities" such as poverty, education, health, and security.
Like ExxonMobil, Chevron also emphasizes potential conflicts rather
than synergies between climate solutions and other societal goals: "As
we work to address climate change, we must create solutions that
balance environmental objectives with global economic growth and our
aspirations for a better quality of life for people across the world."
Under new CEO Michael Wirth, Chevron seems to be sticking with the
same old business plan. Its report, "Climate Change Resilience - A
Framework for Decision Making," states that "Chevron's views on the
future energy mix are generally aligned with prominent third-party
projections like the IEA's [International Energy Agency's] NPS [New
Policies Scenario]." The NPS takes into account Nationally Determined
Contributions (NDCs) under the Paris Agreement-with modifications such
as the announced US withdrawal-commitments that are acknowledged to
fall far short of what is needed to meet the agreement's global
Does Chevron urge greater ambition to keep global warming well below
2°C and transform our energy system? Um, no. Far from it. Instead, the
company dismisses the notion of a peak in oil demand as unlikely on
the basis that "a series of critical demand-reducing factors would
need to occur simultaneously, apply across the entire slate of oil
products and move at an unprecedented pace. Such a confluence of
events in the next 2 decades would represent a historic and
unprecedented revolution." Wasn't the Paris Agreement intended to
spark just such a revolution?
2) Why do they bank on burning like there's no tomorrow?
In UCS's 2016 Climate Accountability Scorecard, both ExxonMobil and
Chevron scored "poor" in the area of Planning for a World Free From
Carbon Pollution. Look for a Scorecard update later this year.
If fossil fuel companies support achieving net-zero carbon emissions
by shortly after mid-century, they should commit to reaching net-zero
with their own emissions, right?
Wrong. Neither ExxonMobil nor Chevron seems to envision much
disruption to the business of extracting, refining, and marketing
In response to a 2018 shareholder proposal, Chevron goes so far as to
"... disagree with the premise# that future diversification of energy
sources requires all energy producers to curtail production of fossil
fuel resources and/or to diversify their portfolios proportionately. A
decrease in overall fossil fuel emissions is not inconsistent with
continued or increased fossil fuel production by the most efficient
producers. We believe Chevron is a capable and efficient energy
producer, well positioned to participate in meeting future energy
demand regardless of other energy sources that may become
competitive." (Unfortunately for Chevron, its competitors seem to have
a similar "Survivor: Fossil Fuel Industry" mentality about 2°C
Meanwhile, ExxonMobil anticipates that over 90% of its year-end
2016 proved reserves will have been produced by 2040, and believes
"these reserves face little risk." The company expects to sink
substantial cash into developing the remaining 10% over the
next couple of decades, such that "the production of these reserves
will likely remain economic" even under a 2°C scenario.
Still, both ExxonMobil and Chevron admit that some of their assets may
not be profitable to develop in a world where temperature increase is
kept well below 2°C:
ExxonMobil allows that "some higher-cost assets, which could be
impacted by many factors including future climate policy, may not be
developed," but estimates that these assets account for less than 5
percent of the company's total property value.
In a sidebar headlined "The `stranded assets' theory," Chevron
acknowledges the possibility that not all oil and gas assets will get
produced. In a discussion of stress-testing its portfolio against the
IEA's Sustainable Development Scenario, Chevron tacitly admits that
several of its projects may not be profitable in a low-price
environment, noting that they will generate cash but not necessarily earnings.
3) How about transparency we can use?
Both ExxonMobil and Chevron talk a good game about transparency in
these reports. ExxonMobil shares more information about its energy
forecasts; Chevron focuses more on strategy and includes some
However, it is difficult to extract and compare the assumptions
underlying both reports. For example, although ExxonMobil and Chevron
are both defendants in lawsuits by a dozen communities seeking to hold
them accountable for climate damages and adaptation, ExxonMobil's
report fails to acknowledge the rise of climate liability litigation
as a potential risk to its business. (Chevron acknowledges the
lawsuits but dismisses them as "factually and legally without merit").
Greater transparency on metrics such as emissions along the supply
chain, internal use of carbon prices, and investments in low-carbon
technology research and development is necessary in order to make
meaningful comparisons among different fossil fuel companies' 2°C
scenario plans, and to assess each company's progress toward its
stated commitments. (Read my colleague Jeremy Martin's blog about why
improved transparency along the oil and gas supply chain matters).
As issuing 2°C reports becomes the norm for companies across the oil
and gas sector, investors must demand comprehensive, consistent, and
comparable disclosures. Standard-setters like Task Force on
Climate-Related Financial Disclosures (TCFD), CDP (formerly Carbon
Disclosure Project), and the Sustainability Accounting Standards Board
(SASB) have a role to play-and so do regulators like the Securities
and Exchange Commission (SEC).
4) What's behind the PR Fanfare about Low-Carbon Investments?
Both ExxonMobil and Chevron fail to set targets for reducing
heat-trapping emissions-a glaring omission in any fossil fuel
company's consideration of its plans for a low-carbon world. They also
fail to identify opportunities to play a leading part in the clean
Chevron emphasizes "flexible investment strategies" and claims that
"setting targets, such as investing a predetermined percentage of
renewables within our asset base, could limit our ability to select
the most profitable energy development opportunities."
ExxonMobil is laughably lacking in ambition with regard to renewables,
highlighting its role as a supplier of lubricants for wind
turbines. As my colleague John Rogers (no stranger to wind turbines) observed,
While lubrication is important, in the context of ExxonMobil's
anti-climate activities, this seems akin to taking credit for a
skyscraper project because you supplied the signs for the restroom
doors... while simultaneously taking a jackhammer to the building's
foundations under cover of night.
Both companies tout their investments in low-carbon research and
development-sums that are a pittance in comparison with their spending
on oil and gas exploration and infrastructure. For example (thanks to
my colleague Nicole Pinko for number-crunching):
ExxonMobil reports spending more than $8 bn since 2000 to develop
and deploy higher-efficiency and lower-emission energy solutions
across its operations-less than 2% of its capital and
exploration expenditures during the same timeframe.
Chevron says it has invested more than $75 mn in carbon capture
and storage (CCS) research and development over the past decade-well
under 1% of its capital and exploration spending during that
time. The company also reports $1.1 bn of investment in two
projects-Quest in Canada and Gorgon in Australia-that include
CCS. Impressive? Not compared with Chevron's $20+ bn annually in
capital and exploration spending over the past couple of decades.
ExxonMobil's and Chevron's climate risk reports illuminate the
far-reaching risks of these companies' reliance on ever-increasing
sales of fossil fuel products. Now is the time for consumers,
investors, public prosecutors, policy makers, and others to demand
answers to the above questions, and insist that major fossil energy
producers use their enormous resources and technical capacity to make
real plans for a 2°C world.
UCS will be at the ExxonMobil and Chevron annual meetings at the end
of May, highlighting these gaps and following up on these outstanding
questions. Look for upcoming blogs delving further into major fossil
fuel companies' reporting and disclosures, incorporating insights from
several of my UCS colleagues.
Murray-Darling royal commission says it won't investigate water thefts
* 'Real risk' Murray-Darling Basin Plan is unlawful, commissioner warns
* What is the Murray-Darling Basin Plan again?
* SA launches royal commission into Murray-Darling Basin 'water theft'
ABC News, 9 May 2018 7:26am
South Australia's royal commission into the Murray-Darling river system has
confirmed it will not investigate water theft cases or New South Wales
bureaucrats already under investigation or prosecution by other bodies such
as the New South Wales ICAC.
The former Weatherill govt launched the royal commission last year, in
the wake of allegations of upstream water theft first aired on Four Corners.
Stormy Daniels' lawyer alleges Russian oligarch made payments to
ABC News, 09 May 2018 00:06Z
CBA and ASIC agree $25m settlement in rate-rigging case
ABC News, 09 May 2018 00:17Z
Commonwealth Bank agrees to pay $25 mn to settle an interest rate
rigging case brought by ASIC.
Russia Tried to Undermine Confidence in Voting Systems, Senators Say
New York Times, 09 May 2018 00:23Z
The UK, Germany, and France will continue to uphold the Iran deal even
though the US is pulling out
Business Insider, 09 May 2018 00:26Z
NSW drivers to be fined $300 for getting too close to cyclists
ABC News, 09 May 2018 00:30Z
Drivers in New South Wales who travel too close to cyclists will be fined
$300 and lose 2 demerit points under new laws being introduced by the
Unique Subtropical Cyclone Forms of [sic] the Chilean Coast
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EPA Emails Shed Light on Pruitt's Plan to Debate Climate Change
New York Times, 09 May 2018 01:13Z
China's move on the Arctic is a threat to the West
Climate change is shifting politics in the Arctic "as surely as it is
shifting ice", writes Roger Boyes, diplomatic editor for the
Times. "The meltdown will make the extraction of rare earth metals
that much easier", he explains, "moreover, as the Arctic warms up so
does the racing certainty that China will want to exploit the northern
sea route to ship goods quickly from Asia into Europe." China views
Greenland "as an opportunity", he says. Greenlanders could decide to
"exchange the Danish yoke for a no-political-strings-attached
commercial relationship with Beijing". Boyes concludes that it's time
for the West "to pay attention..new partnerships are being formed and
their aim ultimately will be to weaken the clout and coherence of the
Atlantic alliance, to splinter and confound.". -- Roger Boyes, The Times
US talks to oil producers about increasing output
Sam Fleming and Ed Crooks, Financial Times
Investors Want Green Solutions Even if Trump Doesn't
Mathew Carr, Bloomberg
What the massive trove of new documents reveals about Scott Pruitt
Rebecca Leber, Grist
Hitachi's UK nuclear project to get guarantees from govt
Despite Trump, more Republicans grasp that climate change is our fault
Kate Yoder, Grist
Trump officials seek ideas on coal 'power plants of the future'
Miranda Green, The Hill
Towing icebergs to Cape Town is a poor way to halt water crisis
Olive Heffernan, New Scientist
Renewable Energy Now Employs 10.3 Million People Globally
Yale Environment 360
Russian Leverage Over Trump Isn't a Theory. It's Now a Fact.
New York Magazine, 09 May 2018 03:37Z
Impact of a Warming Climate on the Sierra Nevada and California's Water
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New ultra-capacitor tech could drastically boost battery EV range
Autocar, 09 May 2018 07:54Z
Listen to Google's freaky new AI pass as a human who just wants a table
ABC News, 09 May 2018
Google's new Duplex artificial intelligence is able to book a table over the
phone and pass for a human - within specific "closed domains".
BBC Weather forecast: UK set to be hit by ANOTHER sweltering heatwave NEXT WEEK
Express.co.uk, 09 May 2018 10:48Z
Snowball Earth due to plate tectonics?
EarthSky, 09 May 2018 11:52Z
Trump again threatens govt action against reporters
Los Angeles Times, 09 May 2018 14:46Z
Montana Floods Force Mandatory Evacuations of 60 Missoula Homes
The Weather Channel, 09 May 2018 14:47Z
China's ZTE stops major operations following US export ban
ABC News, 09 May 2018 15:53Z
NYSE: CVX - 9 May 1:07 pm GMT-4
129.28 USD +2.71 (2.15%) *** up 2.2% ***
12m high: 133.60 on 12 Jan 2018
12m low: 103.19 on 05 Jun 2017
Exxon Mobil Corporation
NYSE: XOM - 9 May 12:07 pm GMT-4
79.62 USD +1.53 (1.95%) *** up 2% ***
5y low: 72.83 on 28 Mar 2018
Cabot Oil & Gas Corporation
NYSE: COG - 9 May 12:08 pm GMT-4
23.29 USD -0.060 (0.26%) down
American Outdoor Brands Corp
NASDAQ: AOBC - 9 May 12:08 pm GMT-4
10.69 USD -0.10 (0.93%) down
Ford Motor Company
NYSE: F - 9 May 12:07 pm GMT-4
11.06 USD -0.21 (1.86%) *** down 1.9% ***
5y low: 10.29 on 01 Mar 2018