The week before last, the UK Economist published a piece on ExxonMobil and Guyana. Well ExxonMobil essentially, with Guyana as one illustration of its intention to re-establish its dominance in the oil industry. It was once the world’s most valuable company, said the weekly, but after a series of “missteps”, its position no longer looked “invincible,” and major Tech companies had overtaken it in terms of value. In addition, of course, the oil industry now had to confront the risks which came in the context of climate change, since the clamour for a reduction in carbon emissions to limit the increase in global temperatures, involved a decreased reliance on oil as a source of energy.
But if the world trend is to search for alternative sources of energy, according to the Economist, ExxonMobil was bucking the trend. It was aiming to expand its usual business, and was calculating that by 2025, oil and gas production would be higher than in 2017. Mr Darren Woods, the current head of the oil giant, was quoted as saying, “We take a long-term view of the industry. We are providing the energy needed by economies and by people’s standards of living.” While he supported the Paris Climate Change Agreement, in which governments committed to maintain the rise in temperatures “well below” 2o C relative to pre-industrial levels, the periodical reported him as saying that he was not anticipating that this would happen. The company’s prognostications, it would seem, are based on a growing world population and rising incomes.
In a leader, the Economist said that global investment in renewable energy was tiny in comparison to what was being invested in fossil fuels. It gave the example of electric cars, where despite the appearance of a range of new models, it was anticipated that 85 per cent of vehicles would still be powered by internal combustion engines in 2030. Despite the pressures being exerted on Big Oil from various green directions, the fact remained that in terms of financial returns, renewable energy sources simply could not compete with oil. As things stand, said the editorial, worldwide demand for oil was growing by 1-2 per cent a year.
Mr Woods did acknowledge the risk which the emissions of oil and gas represented to the climate, but unlike companies like Royal Dutch Shell and Total, ExxonMobil has not been investing money in alternatives like solar and wind power. He was quoted as saying that instead it looks “very closely at the renewables space and the opportunities to participate in that.” In other words, according to the Economist, it was employing its geological know-how to research into carbon capture and storage.
Barring some miraculous breakthrough, however, nobody imagines that this is going to prove a panacea for global warming, but that apart, the weekly went on to describe ExxonMobil’s climate change policies as “marred by inconsistencies.” The company was said to be in favour of a carbon tax, and had given $1 million over a period of two years to a group promoting this approach to achieve a reduction in emissions. However, remarked the Economist, that sum represented a tenth of what it spent on lobbying at the federal level in 2018. In addition, it went on to say that the kind of carbon tax ExxonMobil wanted would insulate oil companies from law suits.
A more glaring conflict, one might have thought, was the fact that the company had been making efforts to reduce methane gas leaks from its installations, but at the same time as a member of the American Petroleum Institute, had been trying to persuade President Trump to relax the regulations on methane emissions. In addition, the organisation had also been lobbying against incentives for electric cars.
As the Economist describes it, the Guyana project “is part of a bid to reassert its dominance,” referred to above. But if there are inconsistencies in the oil company’s positions vis-à-vis fossil fuels and climate change, what about this country? We cheer every time a new source of oil is found, a new well is dug or we are told that 5 billion barrels of oil lie off our shores, but weren’t we the ones not so long ago who were the cheerleaders for reducing carbon emissions and arguing for a greener approach? Do we not stand with our Caribbean colleagues on the matter of climate change and global warming?
It is true that recent governments have been committed to alternative energy sources within the country, but it must be the ultimate irony of ironies that the money which Guyana hopes will catapult it out of poverty will come from a source which the Economist said was expecting oil and gas production in 2025 to be 25 per cent higher than in 2017. Whatever else can be said, ExxonMobil’s perceptions of how to tackle climate change are hardly in sync with our own.
And we have a very vested interest in ensuring that all governments abide by the goals of the Paris Agreement. Most of our coast lies below high tide level, and maintaining our built sea defences – approximately 75 miles of them – is an extraordinarily expensive proposition, for which the EU, as we reported last week, has granted $20.1 billion in funding over four decades, including for Integrated Coastal Zone Management. So on the one hand, we are committed to curbing carbon emissions, and on the other, we are facilitating them in an admittedly very indirect way.
Of course, no one seriously would consider abandoning the oil project; the potential benefits are too great, always presuming, of course, that the well-known pitfalls are avoided – something which can hardly be guaranteed in our situation. It might be remarked in passing that as it is we have made a rather poor start on that front. In addition, we are hardly the only nation in this kind of incongruous position, and furthermore, we are not the primary or even secondary consumers of the fossil fuels which will be pumped from our seabed. The onus is on the big consumers, in particular, to ensure that the Paris Climate Change targets are met, and they are the ones in the best position to exert the necessary pressure. While for our part, we might be relieved that we can expect longevity for our oil, if the global industry grows as ExxonMobil is anticipating, then limiting the increase in global temperatures will be extraordinarily difficult to achieve.
As we all know, this will have direct consequences for us in terms of the rise in sea levels, among other things. Yet, for all kinds of reasons, we will not be moving to the interior. As we reported the EU Head of Co-operation Karel Lizerot saying last week, moving the capital was a bad idea, and the priority was to keep the ocean defences in shape and improve the drainage in Georgetown. He is surely right about this in principle. But one cannot help but feel that in the circumstances, the oil giant drilling off our coast should at some stage make a financial commitment to keeping our hydraulic society viable.
