The Heat Is Online

Did ExxonMobil Blink?

Exxon softens climate-change stance

The Wall Street Journal, Jan. 11, 2007

 

In one of the strongest signs yet that U.S. industry anticipates  government curbs on global-warming emissions, Exxon Mobil Corp., long a leading opponent of such rules, is starting to talk about how it would like them to be structured.

 

Exxon, the world's largest publicly traded oil company by market value, long has been a lightning rod in the global-warming debate. Its top executives have openly questioned the scientific validity of claims that fossil-fuel emissions are warming the planet, and it has funded outside groups that have challenged such claims in language sometimes stronger than the company itself has used. Those actions have prompted criticism of the company by environmentalists and by Democrats in the U.S., who now control the Congress.

 

* The Situation: Exxon Mobil has stopped funding some groups that challenge global-warming fears and is discussing what a U.S. emissions policy might look like.

 

* The Background: The company has been a vocal challenger of global-warming science and a lightning rod for environmentalists.

 

* The Bottom Line: The shift shows U.S. industry is beginning to conclude that government emissions limits are coming.

 

Now, Exxon has cut off funding to a handful of those outside groups. It says climate-science models that link greenhouse-gas concentrations to global warming are getting more reliable. And it is meeting in Washington with officials of other large corporations to discuss what form the companies would prefer a possible U.S. carbon regulation to take.

 

Words Are Nuanced

 

The changes in Exxon's words and actions are nuanced. The oil giant continues to note uncertainties in climate science. It continues to oppose the Kyoto Protocol, the international global-warming treaty that limits emissions from industrialized countries that have ratified it. It also stresses that any future carbon policy should include developing countries, where emissions are rising fastest.

 

Still, the company's subtle softening is significant and reflects a gathering trend among much of U.S. industry, from utilities to auto makers. While many continue to oppose caps, these companies expect the country will impose mandatory global-warming-emission constraints at some point, so they are lining up to try to shape any mandate so they escape with minimum economic pain.

 

Exxon has stopped funding the Competitive Enterprise Institute, a Washington-based think tank that last year ran television ads saying that carbon dioxide, the main greenhouse gas, is helpful. After funding them previously, Exxon decided in late 2005 not to fund for 2006 CEI and "five or six" other groups active in the global-warming debate, Kenneth Cohen, Exxon's vice president for public affairs, confirmed this week in an interview at Exxon's headquarters in Irving, Texas. He declined to

identify the groups beyond CEI; their names are expected to become public in the spring, when Exxon releases its annual list of donations to nonprofit groups.

 

Myron Ebell, director of CEI's energy and global-warming program, declined to comment about why Exxon didn't fund CEI last year. But he added: "Like any company, they are concerned about both policies and image.

 

 "We're not at the mercy of our funders for what we believe. But we are dependent on them for funding to help promote our programs," he said. "Obviously, we would like to find a lot more funding on energy and global warming than we've had."

 

More significant are the meetings between executives from Exxon and other companies to discuss the potential structure of a U.S. carbon regulation. Several parallel tracks of discussions are under way, some sponsored by Washington think tanks, including the Brookings Institution and Resources for the Future.

 

The meetings underscore the view within much of U.S. industry that the science and the politics of global warming are changing. "The issue has evolved," Mr. Cohen said.

 

Exxon says important questions remain about the degree to which fossil-fuel emissions are contributing to global warming. But "the modeling has gotten better" analyzing the probabilities of how rising greenhouse-gas emissions will affect global temperatures, Mr. Cohen said. Exxon continues to stress the modeling is imperfect; it is "helpful to an analysis, but it's not a predictor," he said. But he added, "we know enough now -- or, society knows enough now -- that the risk is serious and action should be taken."

 

The question is what kind of action. The economic reality is that some companies will win from a carbon constraint and some companies will lose, depending on how the regulation is written.

 

Question of a Cap

 

One question is whether a carbon tax or cap should be imposed upstream -- on producers of fossil fuels -- or downstream, on the industries, and perhaps even the individual consumers, who use those fuels. Another question is whether such a constraint should target just a few industries or should be applied across the economy.

 

Such questions already are sparking fierce lobbying fights among industries in Europe. There, countries have slapped carbon caps on several heavily emitting industries. Now the countries are toughening those constraints.

 

A similar zero-sum fight appears increasingly likely in the U.S. California adopted a broad global-warming cap last year, and now it has to decide which companies, and perhaps which consumers, to stick with the responsibility for meeting the targets. Other states say they plan to follow California's lead.

 

In Washington, meanwhile, Democratic congressional leaders say they will

push for some sort of federal carbon constraint.

 

"By all indications, we'll certainly see much more legislative activity at the state and federal level going forward," Exxon's Mr. Cohen said. Among the broad options being debated, he said, "some look more favorable to us than others."

 

Exxon wants any regulation to be applied across "the broadest possible base" of the economy, said Jaime Spellings, Exxon's general manager for corporate planning. Exxon says avoiding a ton of carbon-dioxide emissions is, with certain exceptions, less expensive in the power industry than in the transportation sector. Though solar energy remains expensive, reducing a ton of emissions by generating electricity from essentially carbon-free sources such as nuclear or wind energy is cheaper than reducing a ton of emissions through low-carbon transportation fuels such as ethanol.

 

Exxon, like the U.S. government, also argues that any regulation should take into account rising emissions from developing countries, too. Both Exxon and the federal government oppose the Kyoto Protocol.

 

The fact that Exxon officials are beginning to lay out even these generalities is significant, said Philip Sharp, president of Resources for the Future. "They are taking this debate very seriously," said Mr. Sharp, a former Democratic congressman long active in energy-policy debates. "My personal opinion of them has changed by watching them operate."

 

Exxon cuts ties to warming skeptics

Oil giant also in talks to look at curbing greenhouse gases

MSNBC staff and news service reports, Jan 12, 2007

 

NEW YORK - Oil major Exxon Mobil Corp. is engaging in industry talks on possible U.S. greenhouse gas emissions regulations and has stopped funding groups skeptical of global warming claims   moves that some say could indicate a change in stance from the long-time foe of limits on heat-trapping gases.

 

Exxon, along with representatives from about 20 other companies, is participating in talks sponsored by Resources for the Future, a Washington, D.C., nonprofit. The think tank said it expected the talks would generate a report in the fall with recommendations to legislators on how to regulate greenhouse emissions.

 

Mark Boudreaux, a spokesman for Exxon, the worlds biggest publicly traded company, said its position on climate change has been widely misunderstood and as a result of that, we have been clarifying and talking more about what our position is.

 

Boudreux said Exxon in 2006 stopped funding the Competitive Enterprise Institute, a nonprofit advocating limited government regulation, and other groups that have downplayed the risks of greenhouse emissions.

 

CEI acknowledged the change. I would make an argument that were a useful ally, but its up to them whether thats in the priority system that they have, right or wrong, director Fred Smith said on CNBCs On the Money.

 

Last year, CEI ran advertisements, featuring a little girl playing with a dandelion, that downplayed the risks of carbon dioxide emissions.

Since Democrats won control of Congress in November, heavy industries have been nervously watching which route the United States may take on future regulations of carbon dioxide and other heat-trapping gases scientists link to global warming. Several lawmakers on Friday were introducing a bill to curb emissions.

 

President Bush has opposed mandatory emissions cuts such as those required by the international Kyoto Protocol. He withdrew the United States, the worlds top carbon emitter, from the Kyoto pact early in his first term.

 

Sen. Harry Reid of Nevada, the new Senate majority leader, has said he wants new legislation this spring to regulate heat-trapping emissions. Other legislators also are planning hearings on emissions.

 

Scenarios studied


The industry talks center on the range of greenhouse gas policy options such as cap-and-trade systems and carbon taxes, said Roy Kopp, head of the climate program at RFF. There also will be debates on whether rules should focus on companies producing oil, gas and coal, which release CO2 when burned, or consumers who use the fuels.

 

To spur open industry discussion, RFF said the talks, which began in December, exclude nongovernmental organizations.

 

Some see Exxons participation in the talks, coupled with its pledge to stop funding CEI, as early signs of a possible policy change.

The fact that Exxon is trying to debate solutions, instead of whether climate change even exists, represents an important shift, said Andrew Logan, a climate expert at Ceres, a coalition of investors and environmentalists that works with companies to cut climate change risks.

 

Exxons funding action was confirmed this week by its vice president for public affairs. Kenneth Cohen told the Wall Street Journal that Exxon decided in late 2005 that its 2006 nonprofit funding would not include CEI and "five or six" similar groups.

 

Cohen declined to identify the other groups, but their names could become public this spring when Exxon releases its annual list of donations to nonprofit groups.

 

Scoring oil

In a report last year on how oil majors are addressing global warming emissions, Ceres gave Exxon a 35  the worst of any company. Oil majors BP and Royal Dutch Shell got 90 and 79, respectively.

 

Given how large and influential Exxon is and that they are basically the last big industry climate skeptic standing, even small moves can have a very big impact, said Logan.

 

But he said it was too early to tell the substance of the change. The devil is in the details, he said.

 

Cohen told the Wall Street Journal that while questions remain about the degree to which fossil fuels are contributing to warming, the computer modelling on what the future may hold has gotten better.

 

And, he said, we know enough now  or, society knows enough now  that the risk is serious and action should be taken.

 

Peter Fusaro, a carbon markets expert, noted that Exxon already must comply with Kyoto regulations in other countries, and said the company may want to simplify compliance standards throughout its international operations.

 

Multinational companies are under the gun to comply with Kyoto, he said. Its starting to crystallize that companies cant have dual environmental standards.

 

Philip Sharp, president of Resources for the Future, told the Wall Street Journal that he was impressed by Exxon. They are taking this debate very seriously, said Sharp, a former Democratic congressman. My personal opinion of them has changed by watching them operate."