I posted my first blog here on Earth Day, April 22, 2012. I’m now approaching 500 (498) blog posts. Almost all of them, directly or indirectly, have focused on climate change and the energy transition that we are necessarily going through. Oil companies are key players in this transition. If you type “oil companies” into the search box of the blog, you will get 45 entries. From the beginning, oil companies have been leaders in denying both that climate change is an issue that society needs to solve and that such a solution might require an energy transition away from fossil fuels. In an early blog (July 17, 2013), I wrote the following:
The last series of blogs have focused, among other things, on the quote from ExxonMobil CEO, Rex Tillerson, who reputedly said, “What good is it to save the planet if humanity suffers?” – equating inherent “suffering” with a more limited use of fossil fuels. What he actually means by this is that setting a “cap” of usage at below the total quantity of “proven reserves” that still lay untapped would mean a major reduction in the capitalization rates of ExxonMobil and other oil companies (which would, in turn, require realignment of the stock prices). So, from this perspective, the introduction of a “cap” would mean major confiscation of capital from the stock holders – an action that is viewed by many as un-American.
Following such logic, Exxon, and most other oil companies, have fought tooth and nail—whether directly or through shady proxies such as the Heartland Institute—to retain societal and financial support for fossil fuels. I have covered this as well; a search for either “deniers” or “Heartland Institute” will yield 12 entries here. There are many great books that discuss the role that oil companies have played in mobilizing and funding public opinion against climate change mitigation (These include Merchants of Doubt by Naomi Oreskes and Eric M. Conway and The New Climate War by Michael E. Mann).
But attitudes are now starting to change. It’s becoming increasingly difficult to maintain the position that climate change is not a problem in the face of the highly visible, devastating impacts of climate change-driven extreme weather, including massive fires and droughts in the western US, intense, high-frequency hurricanes in the south, and similarly destructive events around the world. Oil companies want to capitalize on this shifting attitude by making the impression that they care about the environment. But fossil fuels are the lifeblood of these companies; almost per definition, they cannot exist if the planet turns toward green and sustainable energy sources.
These shifts are not taking place because the people who run the companies are finding the error of their ways. I am writing this blog a day after Yom Kippur— the “Day of Atonement”—in the Jewish religion. However, I would not imagine most of the managers and directors of the oil companies are motivated by remorse. Instead, their shifts come as a response to outside pressure. Below are a few recent examples of these external motivators:
May 26 (Reuters) – A Dutch court ordered Royal Dutch Shell to drastically deepen planned greenhouse gas emission cuts on Wednesday, in a landmark ruling that could trigger legal action against energy companies around the world.
Shell said it was “disappointed” and plans to appeal the ruling, which comes amid rising pressure on energy companies from investors, activists and governments to shift away from fossil fuels and rapidly ramp up investment in renewables.
Judge Larisa Alwin read out a ruling at a court room in The Hague, ordering Shell (RDSa.L) to reduce its planet warming carbon emissions by 45% by 2030 from 2019 levels.
Norway goes to the polls on Monday [September 13th] in parliamentary elections that are forcing western Europe’s largest oil and gas producer to confront its environmental contradictions.
Climate issues have dominated the campaigning since August, when the UN’s Intergovernmental Panel on Climate Change published its starkest warning yet that global heating is dangerously close to spiraling out of control.
The report gave an instant boost to parties calling for curbs on drilling: the country’s Green party – which wants an immediate halt to oil and gas exploration, and no further production at all after 2035 – saw membership surge by nearly a third.
Voters in Norway ousted their conservative prime minister on Monday, turning instead to a center-left leader following an election campaign dominated by climate change, and the growing contradictions between the country’s environmental aspirations and its dependence on its vast oil and gas reserves.
The vote came at the end of a tumultuous summer in Europe, marked by scorching temperatures and flooding in many countries. Once a distant prospect for many Norwegians, global warming became a more tangible reality that all political parties in the wealthy Nordic nation of 5.3 million could no longer ignore.
This could be a promising political shift for a country that has long led the world in oil and gas production. We’ll see if there is a corresponding change in policy.
On the day the little investment firm Engine No. 1 would learn the outcome of its proxy battle at Exxon Mobil, its office in San Francisco still didn’t have furniture. Almost everyone had been working at home since the firm was started in spring 2020, so when the founder, Chris James, went into the office for a rare visit on May 26 this year to watch the results during Exxon Mobil’s annual shareholder meeting, he propped his computer up on a rented desk. As an activist investor, he had bought millions of dollars’ worth of shares in Exxon Mobil to put forward four nominees to the board. His candidates needed to finish in the top 12 of the 16 up for election, and he was nervous. Since December, James and the firm’s head of active engagement, Charlie Penner, had been making their case that America’s most iconic oil company needed new directors to help it thrive in an era of mounting climate urgency. In response, Exxon Mobil expanded its board to 12 directors from 10 and announced a $3 billion investment in a new initiative it called Low Carbon Solutions. James paced around the empty office and texted Penner: “I was doing bed karate this morning thinking about how promises made at gunpoint are rarely kept. Exxon only makes promises at gunpoint.”
As I said, these are changes that are being made due to external motivations (e.g., financial or political). I’m not sure to what extent oil companies will follow through with their new commitments.
The House Oversight Committee has widened its inquiry into the oil and gas industry’s role in spreading disinformation about the role of fossil fuels in causing global warming, calling on top executives from Exxon Mobil, Chevron, BP and Royal Dutch Shell, as well as the lobby groups American Petroleum Institute and the United States Chamber of Commerce, to testify before Congress next month.
It’s great to see these changes happening around the world but energy is still at the bottom of the food chain, meaning that everything else depends on it. My next two blogs will try to explore how energy companies are actually implementing the green shift and/or if there is any backlash against the day-to-day consequences of the shift.