Every new passenger car sold in the world will be electric by 2040, according to Exxon Mobil CEO Darren Woods in an interview aired this weekend by CNBC.
The interview also covered the company’s climate ambitions, putting a flashy coat of paint on an organization that is the world’s fifth-largest historical polluter and has pushed climate denial at a high level for half a century.
Exxon Mobil CEO Darren Woods sat down with CNBC’s David Faber for a long interview about climate change. The full interview is 35 minutes long (on top of a previous hour-long interview) and mostly discusses climate change and Exxon’s carbon capture and storage desires.
The interview sounds, at first glance, surprisingly reasonable and candid. Woods does not deny the scientific reality of climate change, calls for carbon reductions and a higher global carbon price, and recognizes that electric cars are coming.
But in view of Exxon’s history, Woods looks more like a wolf in sheep’s clothing.
No new gas cars by 2040
Of particular note is that he seems to think that sales of new gas-powered passenger vehicles will end in 2040 globally – before even many governments do. Some governments have set a target earlier than that – for example, 2035 in California and Europe (some European countries will go even earlier); 2030(-ish) in Washington; and the gold standard, 2025 in Norway. But there are others that have either set no target or that have set later targets, like China’s and Japan’s 2035 targets that still allow gas cars, and the US, which currently has no target but the earliest nationwide proposal is for 2045.
We’ve written before about how many of these targets will likely be exceeded (and also why post-2035 ambitions are pathetic), but the notion that Exxon also sees these targets being exceeded is quite interesting. Particularly given that not long ago Saudi Aramco, the world’s largest oil company, said that it expects 90% of vehicles to still be driven by internal combustion engines in “mid-century,” and industry analyst IHS Markit thinks only 30% of new cars in “key automotive markets” (i.e., not globally) will be electric in 2040.
So Exxon is a big outlier here and is predicting a much earlier end to gas vehicles than most other groups.
However, Woods still claimed this isn’t a threat to Exxon’s business. He said that even if all new cars were electric by 2040, that would only drop oil demand back down to 2013-2014 levels by Exxon’s calculations. Since the company was profitable then, he sees a future where it can remain profitable, even with that level of demand.
A much larger part of the interview is devoted to Exxon’s plans for carbon capture, which it is clear that Woods sees as a potential future revenue stream that Exxon can leverage.
Carbon Capture as another revenue stream
Woods paints a rosy picture of Exxon’s potential for contribution, but it’s easy to see the dollar signs in his eyes while he does so.
He claimed that Exxon is responsible for more carbon capture than any other company in the world (by capturing CO2 from its facilities, “some” of which it stores and the rest which it uses in operations…to help drill for more oil), and he thinks that Exxon can be a leader in “direct air capture” in the future.
Direct air capture is the idea that carbon can be taken directly out of the air and then sequestered in some way to make sure it stays out of the atmosphere. Environmentalists have questioned whether it is a valuable goal, or if it risks delaying climate action or simply works to serve oil industry profits.
Currently, it is very costly, as Woods pointed out in the interview, stating that it is “too expensive” to consider right now. (Would this excuse work if you threw your trash in the street and told your neighbors/city it’s “too expensive” to pay taxes for trash pickup? try it out and report back in the comments.) And the least expensive carbon storage would be to leave that carbon in the ground, where it currently is, in the first place.
On this tack, Exxon has recently asked for a higher carbon price because this would help incentivize companies to develop carbon capture technology, which is true – if Exxon, or some other company, could eventually capture carbon at a cost of $80 a ton and the carbon price is $100 a ton. Then it could profit by removing carbon from the air, and this will incentivize cleanup while disincentivizing pollution.
But we’ve heard this carbon pricing story before from Exxon. Last year, Exxon lobbyist Keith McCoy was caught on tape by Greenpeace, revealing the company’s reason for publicly supporting carbon pricing. The lobbyist said that Exxon felt it was politically safe to advocate for carbon pricing because it makes the company look good (known as “greenwashing“) but that “a carbon tax is not going to happen,” so Exxon benefits from goodwill but gets to continue benefiting from massive subsidies.
It is possible that Exxon has now earnestly changed its position only one year later, but even if it has, it certainly feels like Exxon may have only changed that position because it sees potential for profit. And given Exxon’s history on climate, the wolf-in-sheep’s-clothing theory is quite persuasive.
The mess is Exxon’s – why should it profit from cleanup?
In the interview, Woods completely failed to take responsibility for Exxon’s tremendous contributions to climate change. When Faber asked whether there is any question that climate change is human-made, Woods stated that there’s no question it is and that “it was always understood that CO2 in the atmosphere had potential for warming.”
This statement is true; scientists have known for a long time that CO2 increases warming and that humans are causing this. But Woods blatantly ignored a half-century of Exxon’s efforts to cast doubt on climate science, which it is currently being tried in court over and which McCoy admitted to in Greenpeace’s investigation. Exxon knew climate change was happening and lied about it, and Woods not only doesn’t acknowledge those lies but claims Exxon never told those lies – which is, itself, another lie.
And while Exxon plans to lower its carbon emissions and become carbon neutral by 2050, that only accounts for its “scope 1 and 2” carbon emissions. This only counts company-owned facilities and vehicles and the energy they use, but it does not account for the impact of various impacts like distribution, leased assets, employee travel, and most importantly, Exxon’s products, which account for the vast majority of any fossil fuel company’s “scope 3” emissions (for Exxon, about 85% of its emissions are scope 3).
Exxon has not committed to carbon neutrality for scope 3 emissions, so its “carbon neutral” commitment means it will offset 100%… of 15% of its emissions.
Part of Woods’ plan includes other ways to leverage Exxon’s vast store of hydrocarbons and its existing infrastructure into cleaner-burning fuels. Rather than eliminating petrochemicals from our energy supply, which is necessary for the climate, Woods wants blue hydrogen (cracked from methane, rather than green hydrogen, which is generated through electrolysis of water), biofuels, and ammonia to play a part in the conversation. He is sure to point out the “challenges” of solar, wind, and battery storage – three products his company isn’t involved in. And he explained how LNG could fix Europe’s heating issues, rather than geothermal, heat pumps, electric heating, or other less-polluting or more efficient solutions. Weird – almost like he’s selling us something.
Despite that, Exxon, a single company, has sold products responsible for almost 3% of all of humanity’s historical carbon emissions, Woods claims that Exxon can be a large part of the cleanup, which seems appropriate since Exxon made the mess in the first place.
And at the $100/ton price that Exxon seems to favor, it would cost several trillion dollars to make up for its historical contribution to carbon emissions and at least $65 billion for its scope 3 emissions for the year 2020. Exxon made $181 billion in revenue and $30 billion in profit in 2020.
But rather than spending the $65 billion a year it needs to clean up its scope 3 CO2 at the price it favors, Exxon has announced a plan to spend just $15 billion over 6 years ($2.5 billion per year) on its scope 1 and 2 emissions reduction plan.
The emissions blame game
Woods plays the blame game, which is so common, with every entity these days with respect to climate change. In this game, everyone stands around pointing fingers, blaming some other entity for climate change, absolving themselves as only responding to market forces, and claiming that action can only happen once some other entity takes action first.
Exxon, in this case, was only responding to “consumer demand” and still responds to consumer demand, selling oil because there are buyers for it. Woods foresees continuing to meet that demand and considers Exxon the savior for people around the world who are “living in energy poverty.” But a large majority of currently proven oil reserves must stay in the ground if we want to avoid catastrophe, and that catastrophe will disproportionately affect those people living in poverty. He also blames government for not crafting consistent and efficient regulation, after Exxon has lobbied against action for decades.
Meanwhile, consumers point out Exxon’s contribution to climate change – the 2.6% of scope 3 carbon emissions the company’s products are responsible for – and claim there is a lack of nonpolluting options. Then blame government for not acting to pass climate legislation while also complaining about high prices for a fuel that needs to stay in the ground anyway and basing their votes on whichever candidate “seems more fun to have a beer with” rather than which one will keep our only home from burning.
And governments stand by in a cowardly manner because of fear that voters will blame them for any disruption of the energy industry and that companies will leverage their power toward unseating any representative who affects the profits of established, polluting firms (rather than funding them, as those firms currently do).
This behavior is echoed on a worldwide level as governments and citizens wonder why they should act when that other country over there “isn’t doing enough” – a common excuse used by the world’s climate criminals.
So everybody points the finger at everybody else and uses this to absolve themselves of blame and to justify inaction.
And the worst part is that everyone is partially right. Nobody is doing enough. Everyone can do more.
But the “wait and see” approach (or worse, Exxon’s “propose solutions you know are unpopular or not technologically or politically viable” approach) doesn’t solve any problems. We can’t all stand around, pointing fingers and loudly proclaiming our innocence, while the boat sinks. We have to grab a pail and start bailing, and the more powerful entities, like perhaps the 16th largest company by market cap in the world, have to leverage that power to bail harder.
Exxon mustn’t wait for the carbon prices to incentivize cleanup – it needs to clean up its mess now and make up for the century of messes it has caused and the lies it continues to tell. Consumers have to stop making excuses for sticking to the status quo and need to demand more action from governments and from themselves because everyone’s life is going to have to change somehow or another to fix the biggest problem humanity has ever faced (and caused). And governments need to take courageous and bold action and call Exxon’s bluff on carbon pricing – which a majority of Americans in every congressional district support.
And if we do all that, maybe we’ll even beat Exxon Mobil’s 2040 all-EV target.
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