Admission from Exxon Mobil

Unconventional oil and gas will fry climate: ExxonMobil report

Barry Saxifrage

Vancouver Observer,

5 January, 2014

ExxonMobil's influential global energy report, "The Outlook for Energy: A View to 2040", says that new technologies like fracking and tar sands are unlocking a gusher of oil and natural gas.

Our ability to extract new sources of fossilized carbon is growing even faster than we can burn them up. ExxonMobil reports that the amazing surge in "unconventional" sources of oil and natural gas is so great that humanity can continue to burn ever increasing amounts of fossil carbon for well over a century.

And that is exactly what they expect the world will do.

The oil and gas giant expects humanity
will meet two-thirds of our increased energy demand by choosing to burn even more oil and gas than we do now.

In contrast, they expect people to choose new renewable energy sources for less than a quarter of our new energy supply.

The result will be that renewable energy sources will continue to lose ground to fossil fuels through 2040 and beyond. The energy production gap between fossil fuels and renewable energy will grow 35% larger than it is today.

ExxonMobil's report paints a big, bright, beautiful picture of the future made possible by burning ever increasing amounts of fossil carbon. The pages of their report brim with happy people gazing at shimmering cell phones and jelly bean pretty charts.

Off the climate cliff

Unfortunately for most of humanity, all that extra fossil fuel burning also comes with one very big downside. If we do burn that much more fossil carbon the resulting climate pollution will crank the global thermostat up by 4^OC. And that, scientists and global leaders say, will inflict climate misery on humanity for thousands of years.

ExxonMobil includes a colourful chart showing the surge in climate pollution that will result from burning all that extra oil and gas. They even provide the numerical data in a table at the end of the report.

What they don't talk about, however, is what all the climate pollution means for your future. They never mention how hot the planet will get or what changes that is expected to bring.

The missing chart

To find out what their expected levels of climate pollution will mean for us I turned to the International Energy Agency (IEA). The IEA publishes three climate pollution scenarios that will lead to global warming of +2^OC, +4^OC and +6^OC respectively.

My chart below shows ExxonMobil's emissions projections in the context of the IEA's three global warming scenarios. Take a look:

As you can see, ExxonMobil's projections closely match the IEA pathway to a planet that is 4^OC hotter.

Their projections also closely match BP's "most likely" projections made last year. It seems the economic energy models of the oil supermajors agree that humanity will continue to burn ever more fossil carbon instead of switching to cleaner energy sources to preserve a safe climate future.

Climate scientists say that the threshold for "dangerous" climate changes and tipping points is +2^OC. The nations of the world, including Canada and the USA, have pledged to keep global warming below this dangerous +2^OC threshold.

"Devastating"

The World Bank says the +4^OC world we are headed for will be "devastating" for humanity. Their own recent study calls such a future a "climate catastrophe" that "simply must not be allowed to occur" because "there is also no certainty that adaptation to a 4°C world is possible."

The U.N. Secretary-General Ban Ki-moon says climate changes at that level would pose an "existential challenge for the whole human race - our way of life, our plans for the future."

International Monetary Fund director stated bluntly that in a world that hot, "future generations will be roasted, toasted, fried and grilled."

Biz-as-usual will be even worse

Amazingly, ExxonMobil's emissions projections aren't a "business-as-usual" scenario.

They assume "that governments will continue to gradually adopt a wide variety of more stringent policies to help stem GHG emissions." This includes a carbon price rising to $80 per tonne of CO2 (tCO2) in OECD nations, like Canada and the USA.

A carbon price of $80 is much too low to prevent climate disaster according to ExxonMobil. And yet it is also far above what we have the political will for so far.

BC, Alberta and Canada

For example, here in BC we have one of the highest carbon prices in the world at $30 per tCO2. We would need to increase that $2 every year for twenty five years in a row to get to $80 by 2040. But the political will to increase it has evaporated. The current Clark government has declared a multi-year freeze on it.

As ExxonMobil's economic and energy modelling shows, $80 per tCO2 isn't a lot. Raising the BC Carbon Tax to $80 will increase gasoline prices by 9%. Gasoline prices in BC have increased ten times more than that in just the last few years. Over in the UK, gas taxes are 80 cents higher per litre than in BC. The BC Carbon Tax would need to rocket beyond $350 per tCO2 before our gasoline prices matched what the English already pay today.

These examples show why carbon prices will need to be higher than $80 to ensure a safe climate future.

Meanwhile, Alberta next door charged a carbon price of less than $1 per tonne of CO2 in their province last year. (Math: $160m paid in emissions compliance divided by 210m tCO2 from fossil fuel burning = $0.76 per tCO2).

Environment Canada projects that Alberta's extremely low carbon pricing will result in such a huge surge in climate pollution that the province will single-handedly wipe out all the climate cuts in all the rest of Canada.

Despite clear warning that their weak policies are leading to national failure, Alberta has never raised their carbon price. Even discussing charging more than their current $1 per tCO2 in the future is proving to be politically toxic.

At the national level, the Harper government has vilified carbon pricing for years as a socialist scheme that will destroy the economy. Recently, Prime Minister Stephen Harper announced that his long-promised climate regulations for our oil and gas sector would be delayed yet again. This time "indefinitely".

ExxonMobil reaps benefit, shirks responsibility

ExxonMobil benefits from selling fossil fuels but appears to take no responsibility for any of the climate damage their products cause.

They sold over a trillion dollars in fossil fuel products in the last three years. Profits approached a billion dollars a week. And yet the responsibility they assume for the megatonnes of CO2 their products will cause is zero. Their report mirrors this benefit-responsibility disconnect. They spend many pages talking about the benefits of their products and not a single word about the climate consequences of using them.

Studies show that the disconnect between who benefits from fossil fuels and who takes responsibility for the resulting CO2 is growing ever wider in recent years. More than 60% of global economic benefit from fossil fuels is now out of sync with the UN's decades-old carbon accounting system for CO2 responsibility.

The UN accounting system puts all the CO2 responsibility onto the nations that burn fossil fuels. But nations also benefit from selling fossil fuels to others and from consuming products and services made elsewhere using fossil fuels. The explosion in global trade in fossil fuels, products and services means that assigning all the CO2 responsibility to those burning fossil fuels no longer accurately reflects who benefits. The accounting system is full of "carbon responsibility leakages".

If we are going to avoid the "climate catastrophe" ExxonMobil's own data shows we are headed for, everyone who benefits from fossil fuels will need to start shouldering some of the responsibility for the climate pollution. That needs to happen for moral, fairness and successful policy reasons.

The outlook for different energy sources

I'll wrap up with a brief look at how ExxonMobil expects the different energy sources to evolve...

Surge in unconventional oil

ExxonMobil expects nearly half of the oil supply in 2040 to come from "unconventional" oil. As conventional liquid oil supplies dry up ("peak oil"), new technology is stepping in to convert gooey, solid and gaseous fossilized carbon into liquid form.

Even as global oil production rises, the estimated size of the global recoverable resource base continues to increase.

Globally, while conventional crude production will likely decline slightly over the Outlook period, this decline will be more than offset by rising production from supply sources enabled by new technologies — including tight oil, deepwater and oil sands.

By 2040, about 45 percent of liquids supply will be from sources other than conventional crude and condensate production

Surge in unconventional natural gas

Likewise, an explosion of new technologies have unlocked tremendous amounts of "unconventional" natural gas.

The world has about 200 years of natural gas.

Estimates of recoverable gas have doubled in the last 10 to 15 years as hydraulic fracturing and horizontal drilling technologies have unlocked the prospect of recovering unconventional gas.

About 65 percent of the growth in natural gas supplies through 2040 is expected to be from unconventional sources

Coal not the cause of increased CO2

ExxonMobil projects that humans will increase coal burning for a decade or so before cutting back slowly. By 2040 they expect coal burning to be at the same level it is now.

However, they also expect CO2 levels to be 19% higher by 2040. With coal burning at the same level it means all the increase in CO2 emissions in 2040 (up 19% from today) will be caused by increased oil and gas burning.

Renewable energy falls farther behind  

By 2040, the report projects the energy production gap between renewable energy and fossil fuels will grow spectacularly wider.

Today fossil fuels produce 226 quadrillion more BTUs of energy than all renewable energy sources. By 2040, ExxonMobil expects that gap to grow to 305 quadrillion more BTUs from fossil carbon.

All the global efforts to develop less climate damaging sources of energy like wind, solar, geothermal, biomass, biofuels and hydropower will lose ground to a far larger surge in "unconventional" fossil carbon sources.

Simple solution is waiting 

The solution to the climate crisis is simple: require climate pollution to pay an ever-increasing fee for the damage it does.

ExxonMobil itself prefers a simple carbon tax as the solution. In fact they already use a $60 per tCO2 internal carbon price in their decision making.

As their data shows, that carbon price will need to be a lot higher than $80 per tCO2, and will need to appear a lot sooner than 2040, if we are to avoid  a future of extreme climate misery that their emissions projections say is headed our way.