At ExxonMobil’s AGM in Dallas, Texas on Wednesday, 62% of shareholders voted in favour of a climate change resolution, against the board’s advice, according to a preliminary count. While detailed data is not yet available, the convincing majority suggests some major funds joined sustainable investment activists after the same proposal won 38% of the vote last year.

Coming amid reports president Donald Trump plans to withdraw the US from the Paris climate deal, it signalled that concern about climate change is stronger than ever in financial circles.

“Investors voting against management at Exxon is a powerful rebuke to the climate denialist policies of this White House,” said Raj Thamotheram, head of thinktank Preventable Surprises. “Markets are moving and corporate America would be foolish to bet so much on the protection from this regime.”

The resolution requires Exxon to disclose how the international goal to hold global warming below 2C – as agreed in Paris – could dampen future demand for its oil and gas.

Thinktank Carbon Tracker estimated in 2015 that Exxon was planning to sink $72 billion over the next decade into developing fuel reserves that would be surplus to the requirements of a 2C world.

Despite Trump’s apparent refusal to honour the Paris Agreement, advances in clean technology and policy action elsewhere have convinced some other oil majors to start adjusting their expectations.

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During the AGM, Exxon chief executive Darren Woods reiterated his company’s support for the Paris Agreement and call for a revenue-neutral carbon tax to meet climate goals. But management opposed shareholder demands for more transparency, insisting none of Exxon’s reserves would be “stranded” in the global shift to clean energy.

Woods promised to “step back and reflect” after the result was announced.

The Church of England and New York State public pension fund, which led the shareholder rebellion, described Wednesday’s victory as “historic” and “unprecedented”.

Edward Mason, head of responsible investment for Church Commissioners, said in a statement: “Despite strong opposition from the Board, the majority of Exxon’s shareholders have sent an unequivocal signal to the company that it must do much more to disclose the impact on its business of measures to combat climate change.”

“Climate change is one of the greatest long-term risks we face in our portfolio and has direct impact on the core business of ExxonMobil,” added New York State comptroller Thomas DiNapoli. “The burden is now on Exxon Mobil to respond swiftly and demonstrate that it takes shareholder concerns about climate risk seriously.”

It piles the pressure on Exxon at the same time as it faces multiple lawsuits over allegations it deliberately cast doubt on the scientific consensus around climate change, even as its internal research confirmed it.

Grassroots campaign network 350.org has consistently argued that engaging with Exxon is futile and shareholders should take their money elsewhere.

“Exxon’s climate lies are finally catching up with them,” said Jamie Henn, strategic communications director at 350, ahead of the vote.

“Any real climate risk assessment will show that Exxon’s drill-baby-drill business plan is incompatible with a liveable planet. Despite shareholder protests, they’re still doubling down on fossil fuels when the world is moving in the opposite direction. Exxon’s refusal to adapt their business model to a carbon constrained world should send investors running for the exits.”

But institutional investors like pension funds and insurance companies typically spread their money across all economic sectors and are unlikely to flee oil and gas in bulk.

Instead, investors with an interest in sustainability see analysis of the 2C goal as a first step towards getting energy companies to diversify into clean technology or return money to shareholders.

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Shareholder activists are hopeful of securing a majority for a climate change resolution that would require the oil major to publish annual assessments of how international efforts to hold global warming below 2C – as agreed in Paris in 2015 – affect its business.

Last year, the resolution was supported by 38% of Exxon’s shareholders. A similar proposal to Occidental Petroleum passed with 67% support earlier this month, the first of its kind to succeed against board advice.

Two of the world’s largest asset managers, BlackRock and Vanguard, which between them own around 12% of Exxon, are considering voting in favour, sources told the Wall Street Journal. BlackRock was accused of hypocrisy last year for opposing the motion despite rhetorically championing stronger disclosure of climate risk. This AGM season, it sided with activists against Occidental’s management.

A coalition of investors responsible for $4 trillion in assets, led by New York State and the Church of England, declared their support from the outset. Proxy advisory firms ISS and Glass Lewis, which sway a large chunk of smaller investors, are also on board.

“All of these pieces together create tremendous momentum and really favourable circumstances for a successful vote on the 31st,” said Sue Reid, vice president of climate and energy at sustainable investor network Ceres, which is coordinating efforts.

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For investors, the concern is that if oil companies are not aligned with the Paris climate goal, they could waste capital developing resources that will be “stranded” in the shift to clean energy. The money at stake includes ordinary people’s pension pots and insurance policies.

“This is not necessarily about putting major energy companies out of business, it is about preserving value,” Reid told Climate Home. “If [investors] don’t see companies responding to these very real concerns, that will beg some very serious questions about the value of continuing to invest in those entities.”

Exxon is resistant, insisting it already analyses the 2C threshold internally and the world still needs all its oil reserves. It is among the most bullish in the industry about future demand, foreseeing continued growth through 2040.

European players, which have started publishing 2C scenarios, are more cautious.

Report: Coal and oil demand ‘could peak in 2020’

Shell predicts oil demand will peak between 2025 and 2030. At its AGM in the Hague last Tuesday, 40 minutes were devoted to a detailed presentation on climate change. There, debate has shifted to how fast electric vehicles could eat into petroleum’s market share – and whether the company should set sustainability targets (it is not there yet).

French company Total has explicitly ruled out drilling in the Arctic and cut back on tar sands extraction, on the basis such ventures are not compatible with a 2C warming limit.

None of the oil majors on either side of the Atlantic consider it likely that governments will do what is necessary to meet the 2C goal, seeing a carbon price as the clearest indicator of commitment.

Some analysts warn that clean technology could disrupt the oil sector faster than any regulation, however. The Carbon Tracker Initiative and Grantham Institute argue a 2020 oil demand peak is plausible, based on dramatic cost reductions in car battery and solar technology.

Swiss bank UBS expects the cost of owning an electric car to draw level with the traditional petrol-burning variety as soon as next year in the EU, 2023 in China and 2025 in the US. Maintenance and running costs are significantly lower, while the upfront price is declining rapidly due to advances in battery manufacturing.

US to UN: jobs come before carbon cuts

Not all signs are in the activists’ favour. The election of US president Donald Trump on a platform of maximising US fossil fuel production gave Exxon political cover. Trump even appointed former Exxon chief Rex Tillerson as his top diplomat, putting him in a position to facilitate overseas oil deals.

But that has not assuaged investor concerns, said Ceres’ Reid: “It was very difficult to predict in advance how companies across the board and investors would react to the ‘Trump effect’. What we have seen is almost increased resolve… Companies and investors for the most part have stepped up like never before.”

Indeed, Trump’s determination to open up more blocks for oil drilling could actually increase uncertainty in the sector. It was the US shale oil and gas boom that triggered a global oil price slump in 2014, rendering many higher cost ventures uneconomic. Earlier this year, Exxon wiped 3.5 billion barrels of tar sands from its books that were no longer considered viable to exploit.

It is not just a matter for individual companies. Analysts from the Carbon Tracker thinktank warn that if the industry is systemically underestimating climate risk, it could be creating a “carbon bubble” that will eventually burst, destabilising the whole financial system.

A task force for the G20 Financial Stability Board led by businessman and former New York mayor Michael Bloomberg has published guidelines for all companies to report on the financial risks associated with climate change and the solutions to it. These will be presented at the next G20 summit in July for leaders to endorse.

Report: G20 panel tells energy giants to come clean on climate risks

While the guidelines are voluntary, experts at a climate finance event run by the Financial Times in London last Tuesday expected them to be integrated into financial regulations.

“We are now in the voluntary phase,” said John Roome, climate change director at the World Bank. “In the future we may very well see standardised requirements coming from various regulatory authorities on the nature of reporting that needs to be done.”

Not if oil majors can help it. A report by analysis firm IHS Markit, supported by BP, Chevron, ConocoPhillips, and Total, criticised the proposal on the basis it would distort the market.

Antonia Bullard, IHS Markit vice president for energy-wide perspectives, said: “Singling out one type of risk for separate treatment would prevent financial markets from accurately assessing, comparing and pricing all risks and opportunities. That would undermine, not support, the goal of improving capital allocation decisions and market functioning.”

By publishing detailed assumptions about future scenarios, the report said oil companies could create “a false sense of certainty” and get sued if the world misses the 2C target and those risks do not materialise.

Report: Trump administration sued over climate change ‘censorship’

That is “completely bonkers,” according to Alice Garton, senior lawyer at Client Earth. There are multiple climate lawsuits arrayed against oil majors, not least from Client Earth, but following the industry best practice as set out by Bloomberg’s task force offers a legal defence, she said.

Companies are already obliged to disclose “material” risks to their business – that is, factors that could hit future returns. For oil majors, climate regulations and clean technology are material threats, said Garton: “The disclosure regimes that cover material risk apply equally to climate risk. The task force is a voluntary initiative but that can be used as a framework to comply with existing laws.”

Like Reid, Garton told Climate Home that if companies like Exxon do not engage with investor concerns, they could see shareholders flee to safer bets.

“The institutional investors, if they don’t start seeing real change at Exxon, there is increasing legal pressure on them to divest,” she said. “If they keep hitting their head against a brick wall, are they doing the best thing for their beneficiaries by holding the shares? Some questions need to be asked as to whether engagement is working at Exxon.”

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For two years now, China has been piloting a carbon market modelled on the EU’s emissions trading system (ETS), which tries to bridge free market economics with climate action.

But the project is behind schedule and speaking in Brussels last week, Yi Wang, a member of China’s national people’s congress and vice-president of the Chinese Academy of Sciences said Beijing would not “take the lead” in linking the two carbon markets.

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“I think we would like to employ a different and effective measurement to promote low carbon development and also reduce our greenhouse gas emissions,” he told Climate Home. “Maybe the market is one method but I would also have another choice: a carbon tax.”

Wang is considered an unofficial spokesman on China’s climate policy, offering an outlet for plausibly deniable government initiatives that are often quoted in media reports. He is also the chief scientist for China’s annual sustainable development report.

Emissions trading in China would be challenged by a cocktail of issues, including large regional differences, regulatory issues, data verification, market models, and management capacity, he argued.

“In China I think we would like to use a different kind of economic instrument,” Wang said. “The carbon market is more like a man-made market, so how to allocate the allowance of admissions equally, or efficiently? I think it is a big challenge for China.”

He added: “If China was to fail, it would be not only a crisis for China but also for the world’s carbon reduction cause.”

Since 2009, Europe has cleaved to its ETS which sets a cap on emissions and then allocates or sells polluting allowances to around 10,000 companies, which can sell, bank, trade or offset their unused credits.

However, carbon prices have struggled to rise above €5 a tonne due to waves of free allocations to heavy industry, intended to forestall their relocation abroad. The result has been a carbon price too low to trigger meaningful change.

Isabel Hilton, the editor of the chinadialogue website told Climate Home: “It is plain to everyone at this point that a tax could be more effective than carbon trading. The ETS just doesn’t seem to save any carbon.”

“Wang’s remarks are interesting,” Hilton said. “It may be that after two years of experimentation, they just look at this dogs breakfast and say ‘Oh god, we’ll never make it work’. When you look at everything that made it not work in the EU, you’ve got it in spades in China.”

Trump’s ban: ‘I want to study in US to save my country from climate change’

Brussels has hung a lot of hopes on a hook up with China’s potentially enormous CO2 market, and a joint conference on the issue is planned for next year, even though significant ministerial players in China are upfront about keeping the carbon tax option open.

EU officials say that they would be “surprised” if China reversed course on its plans for a nationwide ETS.

One source said of Wang’s comments: “It is certainly not what the official government counterparts are saying. We have only been deepening our conversations about carbon market design with them in the past year, and even since [last November’s] Marrakech summit.”

“But I’m sure that there is a continuing line of policy debate, as there is within Europe, as to whether carbon markets are optimal compared to carbon taxes,” the source added. “It is happening in Canada as well.”

China to start work on national carbon market in 2015

The Canadian model currently allows provinces to reduce emissions by a carbon tax or market measures, with British Columbia and Alberta opting for taxes at $30 and $20 a tonne respectively.

Carbon taxes were traditionally seen by left-leaning environmentalists like James Hansen as a more effective, watertight, clear and potentially redistributive measure, being prevented by strong industry opposition.

Any split between the Chinese and Europeans would send tremors through climate negotiations that are reeling from the withdrawal of US leadership. It is hoped that a Sino-EU coalition could fill the void, but such a confederacy would be fragile and shot through with political divisions.

The Chinese démarche would align the country with some members of the Trump administration and prominent Republicans who support a carbon tax instrument.

A recently-launched initiative by three GOP ex-treasury secretaries – James Baker, Henry Poulson and George Schultz – called for a $40 a tonne tax on fossil fuels.

US secretary of state Rex Tillerson, is a long-standing advocate of a carbon tax, as well as being a former CEO of Exxon. His successor, Darren Woods, also came out in favour of a carbon tax two weeks ago.

Critics contend that Exxon’s first public carbon tax manoeuvre in 2009 was accompanied by funding for 30 of the 40 senators who voted to prohibit it in practice, and for 93% of the 156 co-sponsors of a congressional resolution to the same effect.

EU officials said they would “fall out of their chairs in shock” if the Trump administration proposed a carbon tax.

The post China floats split with EU over carbon trading appeared first on Climate Home News.

Fink praised shareholder activists, saying they often had better strategies for dealing with long-term risk than company boards.

Why then did the world’s biggest fund of its kind, with US$4.7 trillion of assets under management, side with ExxonMobil at its AGM against a proposal to do just that?

“It is real hypocrisy,” said Julian Poulter, CEO at non-profit the Asset Owners Disclosure Project. “There is no other word for it.”

AODP on Tuesday named and shamed the biggest Exxon investors blocking action to manage climate risk, including Vanguard, Bank of New York Mellon and JP Morgan.

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It focuses on item 12, which asked the US oil major to “stress test” its business model against the international goal of holding global warming below 2C.

BP and Shell embraced similar resolutions in 2015, implicitly accepting that carbon-cutting rules and clean technology could affect their future profitability – and investors had a right to know how.

The logic is that more than two thirds of known fossil fuel reserves are unburnable if the world is to avoid dangerous climate impacts.

Companies that overspend on exploration could struggle to sell their wares as emissions cuts bite. Their financial backers would lose out. In the worst case scenario, the “carbon bubble” bursts, triggering a financial crisis.

Report: Total rules out Arctic oil drilling, citing 2C goal

Exxon’s board rejected this analysis, adamant that only fossil fuels could realistically meet growing world energy demand. Activists drummed up 38% support for their proposal – a respectable result for a contested vote, but not enough to force change.

Of the funds that endorsed the status quo, 45% were signatories to the Principles of Responsible Investment and 25% to the Carbon Disclosure Project.

They were trying to show clients they were serious about sustainability, said Poulter, but undermining it with their voting behaviour. “You can’t have your cake and eat it.”

A spokesperson for Blackrock said: “We prefer to engage with companies directly on complex issues such as adaptation to a low carbon economy. We have engaged extensively on a range of issues related to the themes of these shareholder proposals. Where a company is unresponsive, we hold board members accountable.”

Analysis: Meet the investors pushing climate reality on carbon majors

Edward Mason, head of responsible investment at the Church Commissioners for England, which backed the climate resolution, noted that many of the institutions that voted against extra climate risk reporting at Exxon were in favour at BP and Shell.

“We hope that the size of this year’s vote will encourage these investors to adopt a consistent approach to voting on climate risk disclosure in the future. Their clients should demand nothing less,” he said.

“In the wake of the Paris Agreement, proper climate related financial disclosure is a pre-requisite for successful investment management.”

Report: Pension holders petition funds on Exxon, Chevron climate resolutions

AODP also found a “crisis of accountability”. Pension holders petitioned more than 1,000 pension funds ahead of the Exxon AGM, urging them to align their retirement pots with climate goals. Only 35 responded, of which 23 declined to reveal their voting intentions.

It was partly a question of time: the campaign letters were sent three weeks ahead of the AGM. But AODP argued pension fund members were entitled to better information about where their money was going.

Colette St-Onge, digital campaigns officer at Share Action, which led the Vote Your Pension push, said: “Members engagement on issues like climate risk is an important tool to encourage responsible investing…

“These figures highlight how much work the industry as a whole needs to do to improve communications and accountability to members. Well-governed schemes are transparent about their voting and engagement activities; communicate their activities in a clear and accessible way; and actively solicit their members’ views.”

This article has been corrected. Blackrock has US$4.7 trillion of assets under management, not $4.7 billion as previously stated

The post Named and shamed: the top funds blocking climate action appeared first on Climate Home News.

In March Exxon attempted to block a climate resolution by appealing to the US Securities and Exchange Commission, only for the SEC to force Exxon to hold the vote.

The oil giant was warned about its conduct in no uncertain terms: ‘It does not appear that Exxon Mobil’s public disclosures compare favourably with the guidelines of the proposal’.

That’s one side of the coin. From a very different viewpoint some divestment campaigners, including 350 founder Bill McKibben, have criticised the slow pace of progress from engagement.

McKibben is urging investors to divest instead. It’s a valid argument that has gained traction in recent years, but one I think is flawed on a number of levels.

Less than 2 hours to the Exxon AGM. I shall be telling the board they are losing the confidence of their major investors on climate change.

— Edward Mason (@edwardcmason) May 25, 2016

First, we are seeing results. Progress is being made around company engagement, and divestment as a tool for managing climate risk has limits.

I would point to progress at Statoil, Total and Shell, where following years of engagement the argument that oil companies should re-direct capital to clean investment is being accepted.

Take for example Total’s solar expenditure and its newly released climate plan where it pledges to cease drilling for oil in the Arctic.

Will engagement make a difference at Exxon, a company with the ultimate bunker mentality?

The jury is out, but investors at today’s AGM in Dallas will let CEO Rex Tillerson know they are no longer satisfied with his stance on climate science and the company’s role in a sub 2C future.

It is certainly true that engagement can’t yet claim a track record that has materially switched the business plans of big oil.

Bluffer’s guide: The oil majors, climate change and investor pressure

But engagement is as much about big finance learning to take on a whole sector as it is about oil and gas itself.

Once investors learn new tricks, they don’t go backwards and with 136 resolutions raised against the oil and gas sector in the last two years against 64 in the previous 3 years there are signs they want to learn and act.

The pace may not suit Bill McKibben or any of us, but climate change is challenging investors in ways that not even the sub-prime crisis did.

This year’s Exxon and Chevron AGM’s will see a record 16 climate related shareholder resolutions covering climate change from a wide number of angles.

For the first time, one of these resolutions has been the subject of a unique alignment of interests. Exxon has been asked to prepare a 2C business scenario for its shareholders in a resolution co-filed by the European Aiming for A coalition and New York State Common Retirement fund.

This resolution (item 12 on the agenda) and its Chevron equivalent has been supported by a large coalition of NGO’s including civil society groups who have facilitated thousands of members in 50 countries to pressure their retirement fund to vote for the resolution through their VoteYourPension platform.

Briefing: Meet the investors pushing climate reality on carbon majors

Divestment has been rejected en masse by the retirement funds industry which hold the majority of shares in Exxon.

There are already signs that some oil assets are going off market into private equity and hedge funds where Bill McKibben et al will be unable to count them, let alone influence them.

Furthermore, Unions have expressed a strong desire to ensure that this industry does not collapse in a heap forcing millions out of work and whole communities to be stranded.

The advantages of the engage and diversify approach are copious.

Firstly, governments and regulators looking for a market solution would welcome a move to diversify these companies in a non-political way without regulation or carbon pricing.

Second, investors lower their portfolio risk over the long term from a more calamitous end for big oil at a time when regulators have no choice but to react to Mr McKibben’s rapidly worsening climate scenarios.

Thirdly, employees and suppliers would be allowed a smoother transition avoiding the kind of human contagion we saw in 2008.

Finally, and not without some irony, the companies themselves and their management will be rewarded for the transition, cementing their future and allowing them to grow further.

Having demonised oil and gas for some years, making big oil part of the solution is toxic to the environment movement but like the investors they too must learn on the job.

The blunt weapon of destructive capitalism is a grim alternative we experienced only recently after 2008 and it didn’t go very well.

Risky bet: Does divestment slow or speed green growth?

Nobody is suggesting that engagement is a panacea towards a low carbon economy but it is the only strategy where we can align interests of all stakeholders to drive change.

Engagement pressure is accelerating in ways that few could have envisaged in recent years.

Global collaboration between funds, associations and campaign groups can ensure that millions of retirement beneficiaries who ultimately own the majority of Exxon shares can have their long term interests aligned with the capital that Exxon and others have at their disposal.

To drive this change, we must all stay in the game rather than exit and allow a far more dangerous off market game to ensue.

The Exxon AGM will almost certainly see a majority vote for board access by investors and a very strong vote (possibly over 30%) for a 2 degree business scenario.

When this occurs it is time for the divestment movement to realise that accountability in the investment and corporate chain is being rapidly improved.

The stationary energy industry already has many diversified companies who are transitioning and thus this is no longer a simple black and white issue as some of those companies have coal and renewable assets.

We need big oil to join those diversified companies and compete in the new transition and return each year to challenge the companies at every AGM where investors are driven by beneficiaries to vote for change.

You have to be in it to win it.

Julian Poulter is CEO of the Asset Owner’s Disclosure Project (AODP)

The post Exxon and climate change: Why it’s better to engage than divest appeared first on Climate Home News.

New York State Attorney General Eric T. Schneiderman addresses Tuesday’s press conference

By Ed King

US oil and gas majors face investigation from 17 attorney generals into claims they misled the public over the impacts of climate change.

In a Tuesday press conference New York State lead attorney Eric Schneiderman described the coalition as “unprecedented” and promised to pursue any company that had broken the law.

“This is a first of its time. We are exploring creative ways to enforce laws being flouted by fossil fuel institutions which are putting profits above people,” he said.

“We have heard the scientists. We know what’s happening. There is no dispute but there is confusion – sowed by those who are profiting by confusion.”

Terrifying math: How Carbon Tracker changed the climate debate

Top legal officers from Virginia, Massachusetts, California, Iowa, Maine, Minnesota, New Mexico, Oregon and Washington are among those to join the probe [full list].

Schneiderman described the scope and size of the enforcement project as “massive”, requiring a multi-state effort targeting what he referred to as “fraud”.

“We hope this will be the beginning of the end to our addiction to fossil fuel,” he said.

Four attorneys said they would direct their energies at Exxon-Mobil, which stands accused of deliberately hiding research from as far back as 1977 linking the burning of oil to global warming.

Inside Climate News: Exxon – The Road Not Taken

In the past four months Schneiderman and his Californian colleague Kamala Harris have subpoenaed Exxon demanding financial records, letters and emails linked to climate change.

Maryland attorney general Brian Frosh called on Exxon, coal giant Peabody Energy and top oil lobby group ALEC to “tell the truth so we can get down to the business of stopping climate change”.

“It appears many industries may not have told the whole story. Fossil fuel companies deceived investors. They should be, must be held accountable,” added Massachusetts’ Maura Healey.

Last week the Rockefeller Foundation announced it was withdrawing all funds from oil, gas and coal holdings, accusing Exxon of “morally reprehensible conduct”.

25 years later: When the world united against climate change

In a statement posted on its website, Suzanne McCarron, Exxon Mobil vice president of public and government affairs said the company was “actively assessing all legal options.”

“The allegations repeated today are an attempt to limit free speech and are the antithesis of scientific inquiry,” she said.

“Left unchallenged, they could stifle the search for solutions to the real risks from climate change.”

Exxon has long been accused of funding research institutions and think tanks to discredit climate science and block greenhouse gas cutting policies in the US.

In the early 1990s it helped found the Global Climate Coalition, which actively lobbied at UN climate talks to stymie efforts to develop an international treaty to curb emissions.

‘Book of revelation’

Former US vice president Al Gore, a veteran climate campaigner who was in New York to support to legal challenge, said it would be a “turning point” in moves to address global warming.

Fossil fuel groups had long tried to “jigger with the laws” through lobbying of Congress he said, part of a wider effort to block White House plans to deliver a domestic climate plan.

“Every night on news it’s like a nature hike through the book of revelation,” Gore added in reference to news 2016 would likely be the hottest year since records began.

The post Top US attorneys step up probe into oil major ‘fraud’ appeared first on Climate Home News.

350.org founder Bill McKibben hears the testimony of Scandinavian activist Jannie Staffansson in Montreuil, Paris (credit: Alex Pashley)

By Alex Pashley in Paris

A community centre in a working class Parisian town turned court room on Saturday as Exxon Mobil became the subject of a two-hour tribunal by activists.

The world’s largest private oil explorer is under investigation by New York’s top lawyer over allegations it has lied to the public about climate change since the 1970s.

Just a few miles from a major UN climate summit, the stunt lacked the trappings of classic legal cases.

The defendant was absent. A white banner bearing the words “Exxon versus the People” flapped above judges’ heads. And rockstar environmentalists Naomi Klein and Bill McKibben took testimony from a line of witnesses.

Report: Exxon Mobil faces legal inquiry on climate misinformation 
The Dirty Dozen: the fossil fuel polluter’s league table

A gallery of 250 people sympathetic to the environmental movement heard a damning rap sheet of the US energy giant’s alleged crimes against the planet.

Exxon’s “state of the art” research team recognised burning fossil fuels’ driving of global warming as early as the 1970s, said climatologist Jason Box. The revelations came out of an expose by Inside Climate News and the LA Times earlier this year.

The Texas-based company chose to cover it up, then actively discredit the scientific consensus, he charged. Think tanks were set up as vehicles to spread denial, and lawmakers funded to resist regulation.

Scott Silvestri, an Exxon spokesman, told Bloomberg last month: “We unequivocally reject allegations that Exxon Mobil suppressed climate change research contained in media reports that are inaccurate distortions of Exxon Mobil’s nearly 40-year history of climate research.”

Campaigners weren’t buying it. They moved on to set out the damaging legacy of Exxon’s alleged lies.

Climate change is a highly polarised topic in the US, for one thing. The country’s refusal to back legally binding targets in order to bypass a Republican-controlled (climate-denying) Senate is because of Exxon’s “campaign of misinformation,” author Klein told Climate Home after the event.

One by one, witnesses were summoned. Some were citizens of countries in line for devastating impacts like thinning ice sheets and rising sea levels. Others were climate scientists and energy analysts.

Naomi Klein speaks with a witness on Exxon Mobil’s environmental record in Texas, with judges to right (credit: Alex Pashley)

A reindeer herder from the Arctic told veteran campaigner and 350.org founder, Bill McKibben, of the perils of a warming Arctic. A Nigerian activist spoke of Exxon’s record of polluting base metals in the Niger Delta with impunity. And the founder of a investigate website to track the company took the court through its packaging of “doubt as a product”, much had tobacco firms had done.

“They are corporate serial killers,” said one witness from Louisiana, who said she was braced for storm damage after oil drilling had infringed on the state’s natural wetland buffer. The charges mounted.

Some testimonies read too fluidly to not be scripted. It was surreal, but it didn’t lapse into farce. Statements were broad and even-handed. A prominent biologist Sandra Steingraber submitted a report on the dangers of fracking for evidence.

Bill McKibben: Exxon’s power is ‘weakening daily’ 

In a closing statement. Keystone antagonist McKibben said Exxon’s complicity in holding back climate action was unforgivable.

“[E]xxon knew, as we know, early on precisely what the problem that we face was. That crisis has grown over those 25 years, but over those 25 years Exxon continued to maintain that architecture and ecosystem of denial and deception and disinformation.”

Klein said: “It is Exxon’s crime that it believes money trumps life… there is no price that can be placed on the Marshall Islands, on Arctic cultures, and lives of our loved ones and what we are able to pass onto our children.”

After two hours, judges including Hollywood actor Peter Sarsgaard gave their verdict.

A straight-up ‘guilty’ ruling would have been too easy. Inconclusive was the fairest, given its empty chair, they ruled.

“The burden of proof now rests squarely on this corporation to somehow prove that the documents and memos don’t show what prima facie, they seemed to demonstrate, namely a profound disregard for the safety of the planet and its people,” said Sarsgaard.

“We render this verdict unanimously on 5^th December of 2015, the hottest year yet measured on our Earth.”

The post Exxon put on mock trial in Paris for ‘climate crimes’ appeared first on Climate Home News.

(Pic: Ed King/Climate Home)

By Ed King

The free market’s ability to spur innovation holds the key to tackling climate change, not tougher government policies, ExxonMobil CEO Rex Tillerson told fellow executives in London on Wednesday.

The threat of global warming could be addressed, said Tillerson, by using more natural gas, employing carbon capture (CCS) technologies and investing in energy efficiency measures.

“Government works best when it maintains a level playing field, opens the door to competition and refrains from picking winners and losers,” he said.

The Texan, who runs a company with a market value of US$357 billion, said Exxon was already a “global leader” in CCS, a technology deemed essential by many climate experts but which operates to scale at a mere 14 sites globally.

The head of the largest US oil major made a point of mentioning this year’s Paris climate summit in his address to the Oil and Money summit, an annual gathering of hydrocarbon leaders.

“We believe the risks [from climate change] are serious, but we also believe that by sound and wise actions we can mitigate those risks,” he said.

And he urged policymakers away from adopting tougher greenhouse gas cutting measures, suggesting the best policy was a global “revenue neutral” carbon tax.

“It’s up to the people in this room to communicate the foundations of these policies,” he added.

Report: Oil majors to release climate plan on 16 October says Total CEO

Earlier this year the Guardian revealed Exxon was still channelling millions to climate sceptic lawmakers in Congress, despite a 2008 pledge to quit lobbying on this issue.

The newly crowned Petroleum Executive of the Year swerved this issue, instead stressing the company’s focus on environmental standards and efficiency investments.

Exxon scientists had mapped internal climate scenarios since the 1970s he said, stressing the company had also cooperated with the UN’s Intergovernmental Panel on Climate Change.

The UN climate science panel’s latest report suggests the world has less than 30 years on current emission levels to avoid warming above and beyond the 2C danger zone.

But Tillerson dismissed calls for an end to oil and gas use, a potential outcome at this year’s Paris climate summit, calling fossil fuels a “moral and humanitarian imperative”.

Oil exploration companies had a better perspective of how energy poverty was affecting the world’s poorest than many campaigners, he said, given the geographic breadth of their operations.

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Source: Flickr/Elvert Barnes

By Sophie Yeo

Government efforts to stop climate change are “highly unlikely” to reduce the amount of oil and gas that ExxonMobil intends to burn over the coming 25 years.

This is the outcome of two reports published today by Exxon, assessing whether the company might have to leave a significant proportion of their reserves in the ground, due to government restrictions on greenhouse gas emissions.

But the company has found that ‘stranded assets’ pose essentially no risk to their future operations. “The world will require all the carbon-based energy that ExxonMobil plans to produce during the Outlook period (up to 2040),” they say.

“The scenario where governments restrict hydrocarbon production in a way to reduce GHG emissions 80 percent during the Outlook period is highly unlikely.”

An 80% reduction in greenhouse gases by 2050 is the target that many – including the UK and the European Union – are advocating in order to keep the world below 2C of warming, beyond which governments have agreed the risks of climate change become unmanageable.

Unbearable costs

The reports were produced in response to pressure from stakeholders, who were concerned about the risk that strengthening climate legislation could pose to the value of the business.

New restrictions could slash the value of Exxon, which has the second-largest stockpile of carbon contained in its hydrocarbon reserves after Russia’s Gazprom. Bloomberg’s Carbon Risk Valuation Tool shows that the company’s share price could decline by 45% in a stranded assets scenario.

But Exxon said it they were not considering the possibility of such a ‘low carbon scenario’ emerging in the future, as the impacts of such an overhaul of the world’s energy systems would be more than society “would be willing to bear”.

For instance, they calculate that putting a price on carbon that would provide the market incentive keep carbon dioxide stable at a safe level would cost the average American household an extra $2,350 per year in energy by 2030.

They added that it was also incompatible with development agendas in poorer countries, where 1.3 billion people still lack electricity, with half of these in Africa.

They said that while it was always possible that the world could choose the low carbon pathway, “it is difficult to envision governments choosing this path in light of the negative implications for economic growth and prosperity that such a course poses.”

Under the banner of the UN, all countries are working on a deal to keep climate change from exceeding dangerous levels, which is due to be signed off in Paris in 2015.

Exxon said it would continue to focus on energy efficiency as a less damaging means of driving down greenhouse gas emissions, while continuing to provide from a growing demand in energy up till 2040 as populations and wealth expands globally.

Disappointment

While acknowledging that Exxon’s decision to publish information on its risk of stranded assets puts it a step ahead of other energy companies, including Chevron, who have refused to disclose this information, many have expressed disappointment at the outcome.

Natasha Lamb of Arjuna Capital, one of the companies who asked for the repost, said: “Investors now know that ExxonMobil is not considering a low-carbon scenario in its planning, which places shareowner capital at risk.

“We believe the company should protect shareholder value by divesting assets at greatest risk of stranding, diversifying investments into low-carbon alternatives, and returning money to shareholders that might otherwise fund future ‘at risk’ assets.”

Andrew Logan of Ceres, a sustainable investment group, said that “investors disagree” with Exxon’s verdict that a low carbon scenario was unlikely, and said they would continue to push Exxon to “align their planning with this reality”.

Anthony Hobley, CEO of Carbon Tracker, said: “Exxon saying there is no risk does not constitute prudent management of shareholder funds. It’s like King Canute assuming he can hold back the tide, but investors can see that a shift in energy is already coming in.”

The findings released on the same day that the Intergovernmental Panel on Climate Change released its latest report on the impacts of climate change. This confirmed that catastrophic effect that continued warming would have on food systems, infrastructure and human security.

Tim Ratcliffe, European Divestment Coordinator at 350, said: “It’s incredibly cynical of Exxon to announce that it intends to exploit its reserves until the last drop, the same day scientists highlight the sweeping impacts of climate change on humans on every continent.”

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(Pic: Shell)

By Ed King

Oil and gas giant Exxon has agreed to reveal how the risks linked to climate change will affect its future business plans.

In response to a shareholder resolution the company says it will produce a Carbon Asset Risk report, examining if new climate regulations could force it to leave its reserves in the ground.

“We’re gratified that ExxonMobil has agreed to drop their opposition to our proposal and address this very real risk,” said Natasha Lamb from Arjuna Capital, one of the groups that had submitted the resolution.

“As investors, we want to ensure our Companies’ capital will yield strong returns, and we are not throwing good money after bad.”

A report by the UK-based Carbon Tracker Institute last year highlighted that $674bn of annual investments in fossil fuel reserves could be at risk if governments adopt tougher climate laws.

Next year countries are scheduled to agree a global emissions reduction package at UN aimed at ensuring the planet avoids warming beyond 2C, a level deemed dangerous.

Scientists say most fossil fuels will have to stay in the ground to avoid further warming. Currently, the balance sheets of the 200 largest coal, oil, and gas companies are valued at $20 trillion.

ExxonMobil is rated as the world’s fourth largest fossil fuel company. At the end of 2013 its reserves equalled 25.2 billion oil-equivalent barrels, roughly split between oil and gas.

“A careful and detailed assessment of the potential for stranded assets is an important first step for all fossil fuel companies, and we’re encouraged by Exxon Mobil’s commitment to publish this report,” said Andrew Logan, Director of Ceres’ Oil and Gas Program.

“Moving forward, Ceres and its Investor Network on Climate Risk will be looking for concrete commitments by companies to avoid making riskier investments in the most carbon-intensive assets, which would demonstrate the companies’ ability to adapt as the world transitions to a low-carbon economy.”

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(Pic: BP)

Leading oil and gas companies are integrating internal carbon prices into their business strategies, disclosures to the CDP organisation indicate.

A study published this week reveals Exxon, Shell, BP and Total are all internally pricing a tonne of carbon between US$ 8-60, referring to this as a carbon cost, fee or price.

Delta Airlines, Google, Walt Disney and leading US utilities also have pricing strategies, which CDP says is now a “core element” of most large corporations’ long term planning.

An increasing number of companies believe carbon pricing will form a part of future regulations to address climate change, say CDP, a non-profit aimed at encouraging companies to report their environmental and social impacts.

“Therefore, companies cite use of a carbon price as a planning tool to help identify revenue opportunities, risks, and as an incentive to drive maximum energy efficiencies to reduce costs and guide capital investment decisions,” the report says.

BP says its price of US$40 per tonne of CO2 is based on estimates of what “might realistically be expected in particular parts of the world.”

Chevron, whose CEO John Watson dismissed climate concerns earlier this year, says that all capital projects of more than $5 million must estimate emissions and the range of carbon costs and benefits.

ConocoPhillips, which works off a price range of US$6-46 per tonne of CO2e, recommends all projects costing more than US$ 75m or with potential emissions of more than 25,000 T/CO2e must evaluate how they would work with a carbon price.

Also of note is Delta Airlines’ decision to incorporate the potential costs of the aviation emissions trading scheme the EU is trying to enforce for all flights in and out of the region.

It says this is “in anticipation of compliance with EU ETS and regarding future expectations of CO2 emissions costs into decisions for future aircraft purchases.”

While the study illustrates how major fossil fuel companies are concerned about the impact climate policies could have on their operational costs, analysts say they do not take into account the impact of the use of fuels they extract.

“For the companies this reflects the likely costs to them but means only around one eighth of the emissions are covered, and the impact on the demand end for consumers is not incorporated,” said James Leaton, Research Director at the Carbon Tracker Initiative.

“The current limited application does not change investment decisions in the same way it might for a utility, which is why oil companies are still considering oil sands projects for example.”

A carbon price set at US$150 is frequently mentioned as a level required to incentivise investments in low carbon technologies, and is significantly higher than the US$7 carbon currently sells at in the EU’s emissions trading scheme.

A discussion paper written by climate economist Chris Hope in 2011 suggests a price of US$100 per tonne could raise around £32 billion in the first year.

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Oil and gas multinationals could lose up to 60% of their market value if the world cuts its carbon emissions to limit climate change, according to the world’s second-largest bank.

This is the first time the financial sector has been warned by one of its own that shares could plummet if the necessary action is taken to prevent disaster.

The study, Oil and Carbon revisited: Value at risk from ‘unburnable’ reserves, is published by HSBC Global Research.

The International Energy Agency (IEA) said in its 2012  World Energy Outlook that in order to have a 50% chance of limiting the rise in global temperatures to 2°C, only a third of current fossil fuel reserves can be burned before 2050.

Staying within the 2°C limit would mean keeping carbon dioxide concentrations in the atmosphere to 450 parts per million (ppm). They are already at 390 ppm, and are increasing by about 2 ppm a year.

2% of Shell’s reserves are at risk – but Norwegian company Statoil would be hardest hit, with 17% of its reserves unburnable

To stop them crossing the 450 ppm boundary, scientists say the world can emit only around 1,440 gigatonnes (Gt) of carbon between now and mid-century. It has already emitted 400 Gt, leaving only around 1,000 Gt in the budget – one-third of current proven oil and gas  reserves.

The 2°C target has been the goal of many policymakers for years, although there is a growing scientific consensus that it is already out of reach.

The World Bank has said that the Earth may warm by as much as 4°C, and some predictions suggest that even a 6°C rise is possible – a prospect whose impacts would be devastating.

“We haven’t forgotten climate change, but we have forgotten that we have to do something about it”

The HSBC study says the economic impact on parts of the hydrocarbon industry of exploiting only a third of fossil fuel reserves would also be devastating.

The Norwegian company Statoil would be hardest hit, with 17% of its reserves unburnable.  The study says about 6% of BP’s reserves are at risk, 5% of Total’s and 2% of Shell’s.

But it says a bigger risk is that reduced demand for fossil fuels could force down oil and gas prices, meaning that between 40 and 60% of leading fossil fuel firms’ current market capitalisation – essentially their net worth – could be at risk.

The study’s authors say: “We believe that investors have yet to price in such a risk, perhaps because it seems so long-term.

“And we accept that our scenario probably exaggerates the risk as we assume a low-carbon world today rather than beyond 2020.”

They advise investors to focus on companies with low-cost projects, and say they think capital intensive, high-cost projects like heavy oil and oil sands will be the riskiest.

The HSBC authors’ argument that much of the world’s fossil fuel reserves cannot be used if climate change is to be tackled seriously is not new: it has been advanced  by scientists and conservationists for years.

What is striking is that this appears to be the first time the argument has been made by the financial sector itself. James Leaton of  the NGO Carbon Tracker told the Climate News Network: “The question this raises for investors is this: is this investment compatible with a 2°C world?”

Andrew Simms, a fellow of the new economics foundation, said: “I wonder whether this will wake us up from the strange spellbound state that has persisted since the Copenhagen climate summit in 2009?

“We haven’t forgotten climate change, but we have forgotten that we have to do something about it.”

This article was produced by the Climate News Network

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