Terence Corcoran: Greens need to rethink Exxon theory
For years climate change warriors have alleged that ExxonMobil craftily concealed in-house corporate science that proved fossil fuels products were killing the planet. The conspiracy theory emerged again the other week in a Science journal article that claimed Exxon had loads of internal science research demonstrating that it knew a crisis was coming and had “predicted global warming correctly and skilfully.” The Science article, by a trio of academic climate activists, was instantly recycled at Davos last month by António Guterres, the UN Secretary-General, who claimed “Big Oil peddled the big lie” that climate change was a hoax.
Maybe not. Here’s an alternative theory. Could it be that Exxon’s corporate strategists looked at the science and concluded that, hey, climate change theory could provide a great money-making corporate opportunity? As one bit of evidence, almost 20 years ago Exxon’s 2005 Corporate Citizenship Report showed that Exxon, rather than fighting climate theory, had already embraced it as a planning strategy.
In that 2005 report, Exxon laid out a corporate policy that greenhouse gas emissions were an important concern for industry and governments. “We support the public reporting of GHG emissions on a consistent basis by all companies. We advocate for policy decisions that consider the consequences not only for environmental risks, but also for social and economic development, especially in developing countries.”
These are not the words of a corporation hiding the science. “We also work,” added Exxon, “with the scientific and business communities on leading research to identify economically viable technologies that can meet future energy demand while dramatically reducing global GHG emissions.” Exxon cited its work in “advanced fuels, lubricants, and combustion technologies, as well as our support of the Global Climate and Energy Project (GCEP) at Stanford University, which represents the largest-ever privately funded research effort in low-greenhouse-gas energy.”
Exxon did not bury the science. In an alternative conspiracy theory, these are the words of a corporation getting ready to capitalize on the carbon control regimes that activists and politicians were gearing up to impose on the world.
Now, fast forward to find out how Exxon is doing today. Stock price: At an all-time high US$115, up 225 per cent since 2020. Profits: US$55.7 billion, a record-breaking number for any Western oil company.
The reason for these results is a resurgence in oil prices in the face of supply constraints brought on by a range of political and economic developments, including the war in Ukraine, pandemic lockdown supply blockages, and Biden administration policies that have the effect of driving investment away from fossil fuel production. As the editorial board of The Wall Street Journal put it, the United States and European governments “have told companies that their products will soon become obsolete.”
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As a result, said ExxonMobil CEO Darren Woods, the fossil fuel industry is “underinvesting” in fossil fuels. “Some of our competitors have stepped back” from fossil-fuel investments, which tightens capacity and supply. But not Exxon. Woods went on to warn that until we have “competitive alternatives that address the full set of needs for society, there’s going to continue to be a demand for oil and gas and oil products.”
Sounds like Exxon saw it all coming and was armed and ready for the politics-driven transition to a lower carbon energy system. Could it be that Exxon’s extensive research into climate science gave it insights that has allowed it to seize emerging policy change as a business opportunity?
A good example of carbon policy foresight is this week’s announcement from Exxon’s Canadian subsidiary, Imperial Oil (stock price: $70, up 250 per cent since 2020). The company said it expects “big returns” from its $720-million investment in Canada’s largest renewable diesel manufacturing facility at its Strathcona facility in Alberta.
At first glance, the investment in renewable diesel seems to contradict the CEO of Exxon’s claim that there’s a lack of competitive alternatives to standard fossil fuel production. On closer examination, the big profits expected from the Alberta renewable diesel project are the product of major government subsidies through a complex supply chain of inputs and outputs.
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The renewable diesel project at Imperial will require a supply of “net-zero hydrogen” from another Alberta company, Air Products Canada, a subsidiary of Air Products and Chemicals Inc., based in Lehigh Valley, Penn. Last November, Air Products Canada received $475 million in project funding from Ottawa and Alberta for the net-zero hydrogen plant.
The new Imperial Oil diesel plant will also use biofeedstock — made from animal fats, food waste and plant oils. Imperial has yet to finalize the sources of biofeedstocks, but they are likely to also be subsidized. Also, the final biodiesel product will be shipped to British Columbia to meet low-carbon fuel regulations. And will Imperial get a carbon credit for such sales?
All of this suggests that ExxonMobil was no climate science-denier, as the leftist conspiracy claims. An alternative conspiracy theory would be that ExxonMobil has been quietly influencing the climate control movement. Exxon’s early corporate climate science gave the oil giant an edge — not on specifics of strategy or policy, but a superior foundation for making decisions.
Would you agree? Take your pick on which conspiracy theory is most credible, then send your Twitter vote to @terencecorcoran.