Big Oil not only believes in global warming —
February 1, 2014 | 11:05am
An oil platform off Greenland shows how far north companies are pushing with the melting of polar ice Photo: AP
If this winter’s polar vortexes and accidental Atlanta ice-skating rinks have you doubting whether climate change is real, you’re not alone. In a recent Yale survey, a record 23% of Americans now deny the science.
But take it from giant oil companies like ExxonMobil and Royal Dutch Shell: You’re wrong.
Big Oil not only believes in global warming, it’s factoring it into the business plan. Consider Exxon’s enormous, already $3.2 billion partnership with Russia’s Rosneft in the warming Arctic, where up to a quarter of the planet’s undiscovered petroleum is thought to be hiding — and where melting sea ice means easier access for drill ships and oil tankers. In 2014, the partners plan to begin drilling in the Kara Sea, north of Siberia, where last summer Russian security forces boarded a Greenpeace icebreaker in a preamble to impounding it and arresting its activists.
One need only read Exxon’s website to know that the company that once funneled tens of millions of dollars to climate skeptics has had a change of heart: “ExxonMobil believes that it is prudent,” bold letters now declare, “to develop and implement strategies that address the risks to society associated with increasing [greenhouse gas] emissions.”
An internal, company-wide “shadow price” for carbon, $60 per metric ton, helps Exxon identify which of its divisions are the biggest polluters and most in need of improvement. Exxon has even quietly proposed that the United States levy a carbon tax — not necessarily out of love for the planet but because some form of greenhouse regulation seems inevitable, and Exxon would like to shield its shareholders from what it considers the worse fate of cap-and-trade.
Royal Dutch Shell’s CEO Ben Van Beurden said the company won’t drill in the Arctic circle in 2014.Photo: AP Photo/Alastair Grant
Shell made headlines this week when it announced it was abandoning the melting Alaskan Arctic after a series of accidents and legal setbacks. But the size of the prize, an estimated 27 billion barrels in the Alaskan continental shelf, may be too big for it to stay gone forever. Executives have said that the high north will someday be Shell’s No. 1 source of crude oil.
If the company has been a pioneer in the Arctic, it has also been a pioneer in recognizing climate reality. Along with BP, it was first among the oil majors to publicly accept the science, and already by the early 1980s it was incorporating warming and emissions into its internal planning. “It seemed inevitable that we would decarbonize,” says its head futurist at the time, Peter Schwartz, “for many reasons, climate among them.”
This is one reason Shell now produces more natural gas than oil. Gas still warms the planet, but less so than oil or coal.
In 1998, another Shell futurist, Jeroen van der Veer, who would soon become CEO, directed a formal, company-wide study of climate change’s impacts on the oil giant’s global business. The result was an in-house version of the Kyoto Protocol: a goal to reduce the company’s own greenhouse-gas emissions by 10% by 2002, an internal cap-and-trade scheme, a shadow carbon price, and a commitment to evaluate projects on the basis of not only the profit they would make but the carbon they would emit.
A decade later, Shell publicly released two scenarios describing the world up to 2050 — “Blueprints” and “Scramble” — that explicitly warned of the dangers of climate change while also foreseeing a massive boom in global energy demand.
For the first time, Shell declared that it had a preferred scenario: The greener, less emissions-intensive Blueprints offered the brighter future, for the company and the planet. Van der Veer gave interviews: It should be made expensive to emit carbon and other greenhouse gases, he declared. Global cap-and-trade agreements were urgently needed. Efficiency standards should be imposed. All this would require more government regulation. “People always think . . . the market will solve all of it,” he said. “That of course is nonsense.”
What went unsaid was that Shell would prepare for both scenarios. If the world looked more like Scramble — no substantial emissions cuts and a growing scramble for resources — Shell would be ready to scramble, too.
Ultimately, Shell’s embrace of climate science comes from the same place as Exxon’s: Realism is good for shareholders.
In public statements and private conversations, Shell officials continue to acknowledge the following truths: Climate change is real. Climate change is melting the Arctic. Ice-free seas are easier for shipping. Ice-free seas are easier for spill cleanup. Ice-free seas are easier for seismic survey, which, as the company website explains, “Enables explorers to see through solid matter in the same way an ultrasound can see a baby inside its mother.” And in places like Alaska, governments will allow oil drilling only during the ice-free summer, a season that is lengthening year after year.
As a Shell vice president once told a crowd of conference-goers, “I will be one of those persons most cheering for an endless summer in Alaska.”
McKenzie Funk is the author of “Windfall: The Booming Business of Global Warming” (Penguin), out now.
