William Colton, Vice President Corporate Strategic Planning at ExxonMobil, came to Brussels this week, to the Centre for European Policy Studies (CEPS), to present ExxonMobil’s view of our energy future to representatives from EU institutions. It was a clash of two worlds. Brussels failed to be impressed. Mike Parr of the independent consultancy PWR was there.
ExxonMobil’s annual publication The Outlook for Energy: A view to 2040, presents, in the company’s own words “ExxonMobil’s long-term global view of energy demand and supply. Its findings help guide ExxonMobil’s long-term investments, and we share the Outlook to help promote better understanding of the issues shaping the world’s energy future.”
It is, therefore, an internal guide – but also an external one, by which ExxonMobil hopes to convince the world that its own views of the future will become a self-fulfilling prophecy. William Colton was invited by the Centre for European Policy Studies (CEPS) to explain to “Brussels” how ExxonMobil views the world. It was a popular event: one woman who attended had flown from Seville to be present.
It is unlikely that this Outlook is really used internally by ExxonMobil, if only because it is mostly a work of fiction
Mr Colton’s key messages: gas would become the dominant fossil fuel for power generation in the period up to 2040, renewable energy sources (RES) would continue to be a minor player, full hybrid cars would provide a solution to emissions in the transport sector. There was also a tilt in the direction of TTIP with a plead for “robust free trade”.
In addition, Mr Colton emphasised how oil exploration technology was improving all the time. The threat of climate change was barely mentioned. The EU was portrayed by Colton as an exception (with its insistence on developing renewable energy and emission reductions), purely a result of policy.
Colton also put much emphasis on how much it would cost to change the current energy system. The most grotesque part of the presentation concerned levelised costs (LCOE) of a given energy system. Renewable energy was portrayed as far more expensive than any other source of energy:
The real facts with respect to renewable energy costs will have been known to much of the expert audience in the room. To give some real-life examples: Mediterranean basin solar PV costs around 5 eurocents/kWh (similar to the 5 UScents in Texas). On-shore wind in North Germany is around 7 eurocents/kWh and perhaps 5.5 eurocents/kWh in the UK. By contrast, onshore wind in the US is around 3 to 4 UScents/kWh.
It is unlikely that these facts would not have been known to Colton or any of the people to whom he was presenting. It is possible that the presentation was styled for a US audience of Republicans who believe what Exxon tells them is the gospel truth. Unfortunately for Colton, this was not the case in Bruxelles.
It was clear that the representative of the European Commission, Mr Stefaan Vergote, Head of the unit Economic Analysis and Financial Instruments at DG Energy, did not buy into the line that Colton was peddling. Vergote subtly rebutted some of Colton’s claims. For example he noted that the EU had decoupled economic growth from growth in energy use (implying that economic growth did not automatically lead to increased fossil fuel use, as ExxonMobil assumes). He also raised questions on scenarios of the International Energy Agency (IEA), partly used by Colton, with respect to renewable energy, noting that they projected level growth for the period 2015 to 2040 at 100GW/year, which Vergote implied was unlikely.
After these subtle rebuttals, Tom Brookes, Executive Director Strategic Communications and Member of the Executive Management Team of the European Climate Foundation (ECF), went into the attack and proceeded to dismantle many of Colton’s assertions. Colton claimed that all energy policies had costs, Brookes cited the example of improved fuel efficiency for motor vehicles that had direct and measurable benefits for motor vehicle owners. He was too polite to mention that the cost (less fuel purchased) would be a cost borne by fuel suppliers such as Exxon.
Brookes also raised the issue of subsidies and noted that the Australian government had given the coal sector $26 billion in direct and indirect subsidies over 10 years. He further noted that once many externalities were taken into account, most South East Asian coal stations could not compete with renewable energy.
Brookes also raised the pertinent question of “what would be a reasonable cost to address the existential threat posed by climate change”, thus echoing the words used by Lord Stern when addressing the European Parliament in 2011.
Questioning by the audience was uniform in its hostility. I personally asked where Colton got his LCOEs from. Colton claimed that these came from a wide variety of sources (without naming them). He also claimed that the data I cited included subsides (which I refuted) and then claimed that many/most/all RES projects (in the US?) would fade away without subsidies.
Another person asked if Exxon accepted global warming and was concerned about the moral duty with respect to reducing fossil emissions (and thus the impact of climate change). Colton said that Exxon did accept global warming but did not make it clear what kind of moral duty followed from that.
In summary, Colton put forward an “Outlook for Energy to 2040” that was wholly unbelievable. It is unlikely that this Outlook is really used internally by ExxonMobil, if only because it is mostly a work of fiction. This leads to the conclusion that the Outlook is a cynical attempt by Exxon to prolong as long as possible the status quo with fossil fuel use, regardless of the consequences.
Mike Parr is Director of energy consultancy PWR. He previously worked for one of the UK’s distribution network operators as a systems engineer running their network Merseyside. He then moved into industrial engineering running the services (and energy saving activities) at Sony’s Bridgend TV plant. In the late 1990s he founded PWR Consultants which undertakes research in the area of climate change and renewables for clients which include a G7 country and global corporations.
See also the article we published recently on Shell’s climate change approach by John Ashton: Less Worldy, More Wise, A Letter to Ben van Beurden, CEO of Shell.