Exxon Issues Energy Reality Check as UN Debates EmissionsJoe Carroll
The world’s largest oil company sees emissions in the developing world surging 50 percent, a forecast that suggests the diplomatic push to draft an accord to curb global warming stands to fall short.
The assessment in a report yesterday from an Exxon Mobil Corp. team of economists, scientists and engineers shows how far the world is from cutting pollution blamed for climate disruption. It came on the same day that UN Secretary-General Ban Ki-Moon warned envoys at United Nations talks in Lima that the “window of opportunity” to slow climate change is closing.
Even as the most advanced economies cut energy use by almost one tenth through 2040 and add hundreds of millions of fuel-efficient vehicles, booming growth in places like India, South Africa and Thailand will boost demand for fuels 36 percent, the Irving, Texas-based company said in its annual outlook. Emissions will surge as an expanding middle class in poorer nations demands electricity, schools and hospitals.
“It is simply not possible to obtain significant reductions in greenhouse gases without engaging the developing world,” Bill Colton, Exxon’s vice president of corporate strategic planning, said during a webcast yesterday.
Envoys from 190 countries are meeting in Lima this week to discuss pollution limits starting in 2020. The talks aim to resolve a longstanding split between rich and poorer nations over who must shoulder the costs of greenhouse gas limits and how those caps will be structured.
2 Degrees Celsius
Exxon’s forecast assumes governments will enact policies to limit pollution and encourage energy efficiency. Emissions in India will rise the most among the major economies singled out in the report with a 140 percent increase over the next 26 years. Worldwide, the company expects carbon dioxide emissions to grow 20 percent by 2040, matching a forecast by the International Energy Agency.
“Greater access to energy is fundamental to reducing poverty and advancing standards of living for billions of people,” according to the report.
To limit the temperature increase to 2 degrees Celsius, a level seen as averting catastrophic climate disruptions, carbon emissions must fall about 39 percent from 2012 levels by 2040, the Paris-based IEA said in a report last month. If current policies remain in place, emissions will soar 58 percent.
“We expect that most every nation, regardless of circumstance, will seek solutions that help curb emissions without harming the prospects of greater prosperity for its own citizens,” Exxon said.
Adding urgency to the UN talks was a Dec. 1 report from the World Meteorological Organization that said 2014 was on pace to be the warmest year on record.
Environmental groups said Exxon was downplaying the impact of cleaner renewable fuels.
“Exxon Mobil’s outlook is a company wish list fashioned up as a serious energy forecast,” Darek Urbaniak, energy policy officer for the environment group WWF, said in an interview in Lima. “It tells us how the company wants to see the future, rather than a plausible projection of what might happen.”
The report serves as the blueprint to guide long-term investment decisions, Exxon said.
Exxon was ranked as the third-largest producer of greenhouse gases since the dawn of the industrial age, according to a study released on Dec. 8 by the Climate Accountability Institute, a Snowmass, Colorado-based research and advocacy group. Only Chevron Corp. and Saudi Arabian Oil Co. generated more, the study found.
Exxon Chairman and Chief Executive Officer Rex Tillerson has long championed fossil fuels as key to enabling billions of the world’s desperately poor to improve their quality of life and live longer. Rising incomes in poor nations will allow people to replace dirty fuels such as charcoal and dung with cleaner-burning propane, kerosene or natural gas, according to the report.
By 2040, reliance on dung, charcoal and wood to fire stoves and furnaces is expected to drop to 30 percent from 40 percent in 2010, the base year for today’s report. Fuel upgrading is expected to triple African demand for liquefied petroleum gases -- the class of fuels that includes propane -- during that period. Consumption in the Asia-Pacific region will rise 75 percent, the study found.
Cars powered by hybrid gasoline-electric engines will account for 50 percent of all automobile sales by 2040, up from 1 percent in 2010, Exxon said. As a result, hybrid cars will comprise one-third of the global automobile fleet by then.
Still, all-electric vehicles will struggle to expand market share and will only account for about 5 percent of all cars on the road by 2040, Exxon said.
“Plug-in hybrid and full electric cars will likely continue to make modest gains but penetration remains very low,” according to the report. “Even though battery costs are likely to fall in coming decades, electric vehicles will continue to face significant challenges.”
Elon Musk, chief executive officer of Tesla Motors Inc., has an opposing view. He is betting $5 billion on the future of electric cars with a battery factory in Nevada. Tesla has installed 135 fast-charging stations across North America where its Model S drivers can refuel for free.
Exxon, the world’s largest energy producer by market value, downplayed the prospect of countering climate change by carbon capture and storage, or CCS. The technique, it said, will remain too costly and technically difficult for widespread use by 2040.
CCS involves capturing carbon dioxide from coal-fired power plants and other industrial facilities and pumping it underground to prevent it from entering the atmosphere. In October, a Saskatchewan project opened that aims to strip 90 percent of CO2 from the Boundary Dam power station’s smokestacks and shuttle it to a Cenovus Energy Inc. oilfield 66 kilometers (41 miles) away. CO2 is a common solvent used to coax crude from oilfields after traditional extraction methods have been exhausted.
CCS “continues to face substantial economic and practical hurdles, which we expect will limit significant deployment over the outlook period,” Exxon said.