Hill Heat

From the Wonk Room.

From 1998 to 2005, ExxonMobil directed almost $16 million to a group of 43 lobby groups in an effort to confuse Americans about global warming. After being criticized by the Royal Society in 2006, Exxon promised to end funding to groups questioning climate change. In May 2008, Exxon again issued a public mea culpa and pledged to cut funding to groups that “divert attention” from the need to develop and invest in clean energy. Yet, in 2008, while cutting contributions to the most extreme groups, Exxon still funded the National Center for Policy Analysis, the Heritage Foundation, and the American Enterprise Institute for Public Policy Research, all groups which publicly question or deny global warming:

Company records for 2008 show that ExxonMobil gave $75,000 (£45,500) to the National Center for Policy Analysis (NCPA) in Dallas, Texas and $50,000 (£30,551) to the Heritage Foundation in Washington. It also gave $245,000 (£149,702) to the American Enterprise Institute for Public Policy Research in Washington. The list of donations in the company’s 2008 Worldwide Contributions and Community investments is likely to trigger further anger from environmental activists, who have accused ExxonMobil of giving tens of millions to climate change sceptics in the past decade.

Exxon’s continued duplicity should come as no surprise. Just as ExxonMobil makes public promises to end funding to groups that work to deny climate change, it also has devoted millions to ad campaigns touting clean energy without actually investing significantly in renewable energy. In 2007, Exxon-Mobil spent $100 million on advertising and “green-washing” campaigns in an attempt to exaggerate their commitment to renewable energy, producing ads that focused on global warming, efficiency, and alternative energy. That’s despite the fact that ExxonMobil spent more on CEO Rex Tillerson’s salary than on renewable energy in 2007. While Tillerson took in $21.7 million, Exxon invested only $10 million or so in renewable energy – just a tenth of the amount they spent talking about investing in clean energy.

Exxon is staffed by and supports those who deny the most basic facts of climate change and global warming. In June 2005, White House official Philip Cooney had to resign from Bush’s Council on Environmental Quality after being caught altering documents to hide links between fossil fuels and global warming. ExxonMobil waited only three days to hire him. In fact, ExxonMobil didn’t admit that global warming is occurring until 2007.

This latest evidence of Exxon’s continued opposition to clean energy comes less than a month after the American Petroleum Institute released a report revealing just how little the top Big Oil companies invest in renewable energy.

ExxonMobil, the world’s largest company by both revenue and market capitalization, has a place on the world stage comparable to a major nation-state (only 23 nations in 2006 had a GDP greater than Exxon’s revenues of $347 billion, which rose 7% in 2007). Only 31 nations exceeded its annual greenhouse gas emissions in 2004 [UN MDG indicators, ExxonMobil CDP response]. If end-use emissions of ExxonMobil’s products are included, its carbon footprint of 1 billion metric tons of CO2 equivalent is exceeded only by five nations.

David Sassoon at Solve Climate asked Mario Lopez-Alcala, a senior analyst with Innovest Strategic Value Advisors, to estimate how the Kyoto Protocol impacts the company. Lopez-Alcala made some counter-intuitive discoveries.

Turns out that under Kyoto, Exxon is responsible for abating only 9 million out of the 138 million tons of its carbon footprint—about 6.9% of its absolute exposure. Mario arrived at this figure by compiling a weighted average of the emissions targets affecting all Exxon operations around the world. His estimate for what it costs Exxon to abate those emissions, assuming it had to purchase carbon credits? About $1 billion a year. (He calculated net present value for the 2008-2012 Kyoto compliance period and applied a standard oil industry discount rate to arrive at the figure, based on an expected price of $28 per ton of carbon. He also had to add in to the calculation, abatement costs for reducing emissions to a baseline year.)

$1 billion annually is not a terribly large liability for a $400 billion company.

Furthermore:

There’s also another aspect to Exxon’s carbon footprint: the 129 million tons of emissions that it is not required to reduce. It is an enormous carbon asset in a world in which carbon has a price, and it presents a tangible opportunity for enhancing profitability – even beyond $40.6 billion. By reducing those emissions – most simply through reduced flaring, co-generation, heat recuperation, and carbon capture and sequestration – Exxon could reap profits from selling carbon credits it generates. Mario reports that BP is the leader in the sector in taking advantage of these opportunities, which are tangible and positive already.

Sassoon concludes that from an investor (as well as moral) standpoint, ExxonMobil’s storied resistance to the science of climate change is a poor corporate position.

In Resolved: Public Corporations Shall Take Us Seriously, the New York Times Magazine describes the rising tide of shareholder resolutions on climate change against ExxonMobil:

The ring tone on Sister Patricia Daly’s cellphone is the “Hallelujah” chorus from Handel’s “Messiah,” which makes every call sound as if it’s coming from God. On the particular May afternoon, however, David Henry, who handles investor relations for the ExxonMobil Corporation, was on the line. Henry wanted to know if Daly planned to attend the annual shareholder meeting later that month — a rhetorical question, really, since Daly had been at every one of them for the past 10 years. At each she posed roughly the same question: What is ExxonMobil, the world’s largest publicly traded oil company, planning to do about global warming?

The article makes reference to Citigroup’s influential climate change investment report from the beginning of the year, Climatic Consequences: Investment Implications of a Changing Climate, and the May 2007 Greenpeace report ExxonMobil’s Continued Funding of Global Warming Denial Industry.