The U.S. energy industry missed an opportunity to help shape the Obama Administration’s climate change policy. Big producers like Exxon Mobil and Chevron have largely shunned efforts by their European counterparts to develop a common stance on climate change that could influence policy.
In May, Exxon chief executive Rex Tillerson made it clear that his company would not join the discussion. Exxon, he told shareholders at the company’s annual meeting, didn’t intend to “fake it” when it came to addressing climate change. Instead, he noted that climate models predicting the impact of rising global temperatures “just aren’t that good.”
Exxon doesn’t want to waste its time on reducing emissions when those efforts may not work or may be unnecessary if current climate models prove to be flawed.
“Mankind has this enormous capacity to deal with adversity,” Tillerson said. “Those solutions will present themselves as the realities become clear. I know that is a very unsatisfying answer for a lot of people, but it’s an answer that a scientist and an engineer would give you.”
Tillerson’s comments reflect Exxon’s long-stand position on global warming, but it also reflects the U.S. oil industry’s habit of dismissing public concerns it believes are unfounded – concerns that typically are at odds with the company’s short-term financial interests.
This is the same sort of dismissiveness that left natural gas producers on the sidelines when Obama’s Environmental Protection Agency unveiled its plan in early August for reducing carbon emissions by 32 percent by 2030. As I wrote earlier, natural gas should have been a key part of that plan. But the industry largely ignored mounting public concern about environmental contamination from hydraulic fracturing. Now, public opinion polls show a majority of Americans have a negative view of fracking, and their opposition is growing.
By attacking climate change forecasting models, Tillerson is using scientific uncertainty to create a smokescreen around climate change models. It’s not that answers aren’t presenting themselves, it’s that the answers that are emerging so far don’t present a clear benefit to Exxon and its ilk.
“The reality is that the models are good – scientific uncertainty will always exist,” says Ian Sutton, a risk management consultant and author.
Few industries are better at dealing with large-scale risk and uncertainty than the oil industry. Its executives frequently make the sorts of decisions based on limited or conflicting data that now presents itself in the climate debate.
“In fact, it is likely that the climate models are a good deal more accurate than many of the models that oil industry uses in its business,” Sutton says. “Moreover, having worked in process risk management for companies such as these I know how well they handle risk and uncertainty in other business areas — these are the waters in which they swim.”
But when it comes to climate change, they refuse to get in the pool. This stubborn institutional denial is costing the industry dearly. Public discourse – and policy making — has moved on, and the energy industry, at least in the U.S., no longer has a meaningful voice on the issue. Future regulations will be written without its input.
Sutton takes issue with Tillerson’s notion that “solutions will present themselves.” Mankind didn’t solve its biggest problems by waiting for solutions to emerge. It took people who were willing to think differently, to broaden human understanding and take risks to precipitate change. Just as Thomas Newcomen invented the steam engine to address an impending energy crisis – the decline of forests that provided wood for fuel – so do the energy companies of today face the challenge of energizing a world facing environmental and financial limits.
In Tillerson’s own industry, Houston oilman George Mitchell pursed the development of fracking for almost two decades, driving his company to the brink of financial ruin in the process, because he believed it was possible to unlock huge oil and gas reserves trapped in shale formations. Had he waited for an answer to present itself, the American energy renaissance now underway would not have happened.
While Tillerson believes his is an answer that a scientist and engineer would give, Sutton notes that the two disciplines are not the same. Scientists’ responsibility “is to develop models to do with resource depletion and climate change that accurately reflect the observed data and then to make sensible and defensible predictions,” he says. “Engineers, on the other hand, are expected to take those models and develop technology that can address the problem at hand.”
Instead, Tillerson and many of his fellow oil executives seem unwilling to address or even acknowledge that there is a problem at hand. Far from being the answer an engineer or a scientist would give, his “answer” shows the short-sightedness of a finance guy.
The issue of whether climate change is occurring is moot. Public policy is being made based on the assumption that it is, and public opinion largely supports those initiatives. Rather than embrace the challenge of reducing carbon emissions, Exxon and many other U.S. oil companies seem like spectators on the shores of 15th century Spain, warning about the edge of the earth as the Santa Maria sails toward the horizon.
Loren Steffy is a managing director with the communications firm 30 Point Strategies. He is a writer at large for Texas Monthly and the author of Drowning in Oil: BP and the Reckless Pursuit of Profit and The Man Who Thought Like a Ship. Follow him on Twitter: @lsteffy; on Facebook or at lorensteffy.com.