By Daniel Gilbert
Exxon Mobil Corp. says future regulations to protect the climate
don't threaten the value of its oil and gas reserves, arguing that
economies will need the fuels too much to embrace drastic cuts in
greenhouse-gas emissions.
In response to shareholder pressure, the U.S.'s biggest energy
company, published two reports Monday affirming that climate change
poses a risk to society. But Exxon pushed back against investor
concerns that potential restrictions on burning fossil fuels will
make it too expensive for Exxon to pump its oil and gas, calling
such a scenario "highly unlikely."
"We are confident that none of our hydrocarbon reserves are now
or will become 'stranded,'" Exxon said in one report published on
its website, responding to a request from several
sustainability-focused groups representing shareholders.
Exxon's view came as the United Nations Intergovernmental Panel
on Climate Change issued a report Monday that found that global
warming is already having an impact and called for steps to slow
its effects. Separately, the White House last week directed federal
agencies to limit greenhouse-gas emissions as part of a broader
effort to tackle climate change.
Investors will continue to push the company to account for
increased restrictions on carbon emissions, said Andrew Logan of
Ceres, an advocacy group that helped coordinate proposals seeking
disclosure on climate change.
Exxon has long assumed that regulations will make it more
expensive to produce oil and gas, and estimates a cost of $80 a ton
of carbon emissions by 2040 in Western countries. But the company
said that cutting such emissions by 80% through that time frame, a
target some scientists say is needed to slow global warming, would
cost the average U.S. household almost $2,350 a year in additional
energy expenses.
While such a scenario is possible, Exxon said, "it is difficult
to envision governments choosing this path in light of the negative
implications for economic growth and prosperity that such a course
poses."
The Irving, Texas-based oil company estimates that the world
will consume 35% more energy in 2040 than today and contends
renewable sources of energy, like wind and solar power, aren't
enough to meet that demand. Instead, Exxon is focusing on burning
energy more efficiently and cutting emissions.
Footnoted in the two reports are hints of how Exxon plans to use
concerns over climate to its advantage, by promoting natural gas as
a fuel that gives off fewer emissions than coal or oil. The U.S.'s
biggest gas producer, Exxon is among several companies seeking
permits to export the fuel abroad where prices are higher.
Allowing U.S. companies to export domestic gas, Exxon noted,
"could further the adoption of this cleaner-burning fuel by
countries that currently rely on more carbon-intensive forms of
energy."
Write to Daniel Gilbert at daniel.gilbert@wsj.com
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