Yves here. It does not take much in the way of observational skills to notice that the war in Ukraine has give big bad fossil fuel companies a new lease on life. The leaky but tightening embargoes and self-sanctions on Russian oil and gas are leading to balkanized markets, as well as inefficient usage. For instance, shipping shale gas around the world (and building new pipelines, port facilities, and tankers) adds to both environmental and real costs. And shale does not make for great diesel or heating oil, begging the question of where the heavier grades come from, since the big reserves are in countries on the bad guy list: Russia, Iran, Venezuela (yes, Canadian tar sands produce some, but they mainly generate the light grades, and readers tell me we are already making full use of the heavier stuff).
The degree of resignation about sacrificing climate goals is reflected in reports that ESG oriented investors are relaxing or dropping requirements to divest or lighten up on fossil fuel exploration and development companies.
By Sharon Kelly. Originally published at DeSmogBlog
“Investing in new fossil fuel infrastructure is moral and economic madness,” UN Secretary-General António Guterres said as the Intergovernmental Panel on Climate Change (IPCC) released part of its latest report on Monday. This scientific summary, focused on how the world can cut greenhouse gas emissions, warns of the extraordinary harm to all of humanity caused by fossil fuels and the need for a rapid energy transition away from oil, gas, and coal, calling for meaningful changes over the next three years. “Such investments will soon be stranded assets, a blot on the landscape, and a blight on investment portfolios.”
That same day, oil giant ExxonMobil made an announcement of its own: a $10 billion final investment decision for an oil and gas development project in the South American nation of Guyana that the company said would allow it to add a quarter of a million barrels of oil a day to its production in 2025.
The IPCC’s call to action was urgent. “We are on a fast track to climate disaster,” Guterres said, reciting a list of consequences that have become all too familiar over the past few years — and warning of worse to come. “Major cities under water. Unprecedented heatwaves. Terrifying storms. Widespread water shortages. The extinction of a million species of plants and animals. This is not fiction or exaggeration. It is what science tells us will result from our current energy policies.”
The IPCC’s report marked the end of an era for fossil fuel producers, some observers said, establishing that, as The Guardian put it, the world has seen “a century of rising emissions [that] must end before 2025 to keep global heating under 1.5C, beyond which severe impacts will increase further, hurting billions of people.”
The disconnect between the two announcements, suggesting two markedly different trajectories for 2025, seems all the more glaring given that ExxonMobil itself has been an active participant in the IPCC “since its inception in 1988,” as the company wrote in a 2021 report. Exxon’s announcement that it plans to continue to pour billions of dollars into nonetheless expanding fossil fuel production — not just in Guyana but around the world — sends a strong message about the direction the company plans to steer, despite the warnings flowing from the IPCC, with consequences for us all.
Since the IPCC’s last report on climate change mitigation in 2014, the world has seen the renewable energy industry surge and some of the fossil fuel industry’s favored concepts, like carbon capture and sequestration, flounder.
Since 2010, wind energy costs have plunged 55 percent — and the costs of solar energy and lithium-ion batteriesdropped even further, a stunning 85 percent reduction.
And in 2020, ExxonMobil itself was delisted from the Dow Jones Industrial Average, bringing an end to a nearly century-long run.
Meanwhile, major carbon capture projects like Southern Company’s $7.5 billion attempt to build a coal-fired plant that could capture its own emissions were abandoned. Other closely watched carbon capture projects like Petra Nova and Boundary Dam have failed to live up to expectations.
As a result of that one-two punch, new fossil fuel projects may find themselves fighting against the tides, facing not just cheaper competition but also the drive to slash demand for their products to combat climate change. “Without carbon capture, coal and gas plants would need to retire about 23 years earlier than expected in order to hold global temperature rise to 1.5 degrees Celsius, and 17 years earlier in the case of the 2 C limit, according to the [IPCC] report,” E&E News explained this week. “To limit warming to 1.5 C, global coal use must drop 95 percent by 2050, the IPCC said. Oil must fall by roughly 60 percent and gas by about 45 percent.”
“It’s now or never, if we want to limit global warming to 1.5°C (2.7°F).” – #IPCC Working Group III Co-Chair Jim Skea on the release of IPCC’s latest #ClimateReport on the mitigation of #climatechange.
Watch the trailer ? pic.twitter.com/rGbeuzLf9p
— IPCC (@IPCC_CH) April 4, 2022
Oil markets, of course, remain notoriously bumpy — and amid the upheaval spurred by Russia’s invasion of Ukraine, gasoline prices surged, creating windfalls for unhedged producers. On Monday, the same day as the IPCC report and the $10 billion Guyana investment decision, Exxon separately announced that it expects earnings in the first three months of this year to be the company’s best in seven years. However, Reuters noted, that doesn’t take into account the costs Exxon will incur from pulling out of Russia, which could erase up to $4 billion of the company’s expected earnings of roughly $9.8 billion this quarter.
Of course, oil and gas drilling can be a gamble for plenty of other reasons. Last week, Exxon reported failing to strike oil in its first well in a highly anticipated project near the coast of Brazil, another attempt to expand its South American oil production. A week earlier, Murphy Oil, one of Exxon’s partners in the project, had told investors that the oilfield could hold up to a billion barrels of oil (about a tenth of the amount believed to be in the oilfield in Guyana’s waters). An Exxon spokesperson told Bloomberg the company will “continue to integrate the data” from that dry hole “in order to better understand the exploration potential” in Brazil.
Meanwhile, company executives sought to frame Exxon’s $10 billion investment in the Yellowtail offshore drilling project in Guyanese waters as part of the “energy transition,” a phrase that’s commonly used to refer to the shift away from fossil fuels to renewables.
“Yellowtail’s development further demonstrates the successful partnership between ExxonMobil and Guyana, and helps provide the world with another reliable source of energy to meet future demand and ensure a secure energy transition,” Liam Mallon, president of ExxonMobil Upstream Company, said in a statement. “We are working to maximize benefits for the people of Guyana and increase global supplies through safe and responsible development on an accelerated schedule.”
But such statements are coming under increased scrutiny on the global stage. In his speech reacting to the IPCC report, the UN’s Guterres faulted politicians and business management alike for their roles in continuing to promote fossil fuels while paying lip service to energy transitions. “Some government and business leaders are saying one thing – but doing another,” he said. “Simply put, they are lying. And the results will be catastrophic.”
Unfortunately, I’m sure that many people’s eyes will glaze over, knowing that they have heard this threat many times before over the last couple of decades while the supposed severe consequences either fail to appear, are in the distant future or will affect other people a long way off. Climate disaster is a difficult concept to translate into urgent action; photos and videos of war are far more effective in spurring action by politicians and the general public. This eco-socialist thinks we need to find better methods to achieve what is needed.
As for the glazing over eyes, tackling air pollution is far more tangible (and beneficial) than drowning, starving polar bears. Have you seen this? https://www.nasa.gov/feature/esnt/2021/reducing-emissions-to-mitigate-climate-change-could-yield-dramatic-health-benefits-by-2030
Thank you and Best regards.
The oil companies have known about global warning since the 1970’s and that a major cause is the burning of fossil fuels. It hasn’t changed their business model for the last 50 years. We live in an economic system where making money is the objective and as Milton Freidman articulated, the only social responsibility that business has is to make money. President Biden outdid Trump in granting drilling leases which means that the emphasis will be on expanding oil production for the next 50 years because this is what the oil companies who are major donors want. The emphasis on reducing carbon emissions is largely based on carbon capture. The fact that climate change is an existential threat to civilization has no impact on policy. Meanwhile one of the major industries based on oil is plastics. It is now seen that microplastics are found deep in the tissue of our lungs. https://www.theguardian.com/environment/2022/apr/06/microplastics-found-deep-in-lungs-of-living-people-for-first-time Yet even this fact will do nothing to change our trajectory in a society where making money is the only goal. I don’t expect any change in the practices of big oil and their political supporters. We face a grim future.
Killing billions of people because of Climate Climate appears to be good goal for the Wealthy top tiers.
The IPCC is fundamentally a project of the fossil fuel interests, they hold huge sway over the reports that are produced and the solutions on offer which invariably massage what the science is actually saying.
The real issue is that the solutions the IPCC offer in public is wind and solar, which we all know cannot address the problems of intermittency and scalability on their own, Germany being the poster child example of this. They publicly ignore what their own science says that we need to drastically increase the use of nuclear energy, which can address the scalability and intermittency issue but instead we are left with one option if we want to continue with modern society, more fossil fuels.
You’ve got one big glaring problem with nuclear energy which has not been resolved: what to do with the waste material. The sacrificing of Ukrainian-Russian soldiers cos of some doofus generals/commanders ordering an assault right next to the sealed plant at Chernobyl should be grounds for serious consequences. They have died/or are dying of radiation poisoning. Are you familiar with it? Add in Fukashima-Daiiche, and ages ago, Three Mile Island. We are running out of time, and Mother Nature is (family blog) off!
The big glaring nuclear waste problem is a fiction, it is not true. The waste is in fact the best thing about nuclear, almost all of it can be burned up in a fast reactor. It is literally hundreds of years worth of fuel that we don’t even need to mine for, it is sitting there waiting for us in giant casks.
Compare to the risks of not using nuclear… global climate change, absolute dependence on dwindling fossil fuel supplies and the ensuing wars. There is no comparison, though there are many who would like you to believe there is.
Every household in the Northeast could add a layer of lead sheeting to the basement and keep a canister of nuclear waste there to warm the house for the winter, and heat water for showers. The Summers might be a little problem but maybe people could move the canister of nuclear waste to a lead-lined storage shed in the backyard until the late Fall. It worked for the Martian. /s
What planet do you live on? I’m a NASA brat from the very beginning in the late 1950s. My Dad worked for the NRL in Washington, D.C. as an engineer/telemetry designer. When Sputnik hit the skies, the MICC went into immediate response. Funds were transferred from the Navy and Air Force into a new agency. We’re talking ASAP. The new agency was called the National Aeronautics and Space Administration (NASA). Dad already had a rep so he was one of the first civilian scientists picked for the new Agency. He met folks like Werner von Braun who he said was a “asshole” personally. Sorry Yves. My Dad designed the telemetry (guts) for the great-grandpappy to the James Webb Space Telescope. It was called the OAO (Orbiting Astronomical Observatory). It launched successfully in 1969 along with its sister crafts, the OSO and OGO. Nuclear energy? Radiation poisoning? These craft were initially powered by nuclear, but they developed solar capability cos of WWII and the atomic bombs. Radiation poisoning was/is a real hair raiser and the main reason why. My mother also went to work at NASA in administration. You should have heard the talk at the dinner table about the military. The satellites were already sending back data about the damage the oil bunch were doing. My parents hated the incompetence of the military. All this info is open record so you can look it up.
What a load of hot air. Go do yourself a favor and search for the 2022 military victims of Chernobyl. This is an international news site, and there are legit links. Then go look at the info on the James Webb Space Telescope. It is powered by solar energy, and boy, does it work! Wonder why?
No matter how bad the Nazis were I just could never get by head around how one human would be so brutely cruel to another human. With Exxon it is the same, but their crimes are magnitudes GREATER – they are war criminals in the greatest war in history – the war against climate change and they are without question the greatest enemy the planet Earth could have. Plus they do this KNOWING full well that Climate Change was coming as early as the late 1960s and early 1970s – and they ignored, denied it was real, and spend hundreds of millions to create a wall of lies to confuse people and without the slightest hint of remorse, guilt or seemingly zero concern for their children and great children – quite simply – they are MONSTERS and they need to be stopped – NOW.
This article suggests that by 2050 there will be only a 31% participation
https://electrek.co/2021/10/26/electric-vehicles-projected-to-make-up-31-of-the-global-fleet-by-2050/
It also suggest that the number of fossil fueled vehicles will peak in 2038.
“Electric vehicles will grow from 0.7% of the global light-duty vehicle (LDV) fleet in 2020 to 31% in 2050, reaching 672 million EVs, predicts the US Energy Information Administration (EIA).
The EIA estimates that the global LDV fleet overall – both gas and electric – contained 1.31 billion vehicles in 2020, and it expects this fleet to grow to 2.21 billion vehicles by 2050 as the result of an increase in economic activity, population, and private mobility.
It also predicts that the global gas and diesel LDV fleet will peak in 2038 as the result of significant EV sales growth.
The EIA defines LDVs as “passenger and fleet cars and trucks with a gross vehicle weight rating of 8,500 pounds or less.” It defines electric vehicles as any LDV with a charging plug, and that definition includes all-electric vehicles and plug-in hybrid electric vehicles.:”
If you follow this the production from the platform suggested will have decline significantly. Further the way us taxes work the company take the total cost of the well up to the point of production and divide by the reserves, and for any given year multiply by the production of reserves ifor the year in question. So given the way it works the costs of the project will quite possibly be offset by cost deplection by 2050. Depending on the production decline curve of the wells in question. Note that in offshore platform have a design lifetime of 25 years as well. So since the demand for transport fuels will not likey decline before 2040 there is a very good chance it will pay off.