A torrent of criticism for oil giant ExxonMobil's environmental plan
Energy — di Valentina Neri
ExxonMobil announces its emissions reduction plan by 2025. According to environmentalists, however, it is “woefully inadequate”.
A torrent of criticism for oil giant ExxonMobil's environmental plan
ExxonMobil announces its emissions reduction plan by 2025. According to environmentalists, however, it is “woefully inadequate”.
It is certainly not an easy time for oil giants. Caught between uncertain economic prospects for the entire sector and a public increasingly convinced of the absolute necessity of a green transition, ExxonMobil has announced with great fanfare its emissions reduction plan for 2050. But it has failed to convince investors and environmentalists.
Dark times for big oil
The lockdown measures imposed to contain the coronavirus pandemic sent oil prices plummeting. In spring, for the first time in history, they even recorded negative values. With the optimism brought by vaccine development, prices began to climb again, to the point that Brent (one of the main benchmarks, alongside WTI) in recent weeks touched 50 dollars a barrel, the highest peak in nine months. A straightforward return to pre-pandemic levels, however, remains out of the question. The International Energy Agency (IEA) reiterates as much: for the current year, average demand will be 8.8 million barrels per day lower than last year. The 2021 rebound will be only partial, given the ongoing restrictions on international travel.
BREAKING: Brent crude oil hits $50 a barrel for the first time since March | #OOTT More on @TheTerminal
ExxonMobil announces $20 billion in write-downs
Oil giants are responding as best they can. Many have scaled back drilling and cut jobs. Others have pursued mergers and acquisitions with the aim of slashing costs. Among them is Houston-based multinational ConocoPhillips, which bought Concho Resources for 9.7 billion dollars. The announcement came just days after Chevron completed its acquisition of Noble Energy, thereby securing a foothold in the Israeli market.
Another route is what in financial parlance is known as a writedown — the devaluation of certain assets owing to the fact that their market value has fallen below the figure recorded in the balance sheet. This is what ExxonMobil has done. In 2010, the Texan oil company had acquired XTO Energy, a US shale natural gas producer, for 30 billion dollars. Since then, natural gas prices have undergone a prolonged decline. Among the investments that have lost value are certain assets in Argentina and Canada. The company has therefore decided to carry out a mega write-down of between 17 and 20 billion dollars. Without, however, touching dividends — a decision that has left some analysts puzzled.
ExxonMobil's environmental plan
In the midst of this far from favourable conjuncture, on Monday 14 December ExxonMobil announced its environmental strategy for 2025. Specifically, it promises a 15–20 per cent reduction in greenhouse gas emissions from oil fields compared with 2016 levels. At the same time, it wants to reduce methane intensity by 40–50 per cent and flaring intensity (the practice of burning off excess natural gas) by 35–45 per cent across its global operations. These targets are described as consistent with those of the Paris Agreement on climate, which, indeed, the company assures it has always supported from the outset.
"@exxonmobil's newly announced five-year plan is too little, too late." - Kathy Mulvey, @UCSUSA #climatecrisis #BigOil
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bit.ly/3gO42Zt
According to what Edie.net reports, however, a degree of scepticism is spreading among investors and environmentalists. First of all, the targets relate only to the so-called scope 1 and 2 — that is, emissions generated directly by the company or connected to purchased electricity. Scope 3 is excluded, which encompasses a vast array of items: the supply chain, employee business travel and product use. The latter is a matter of enormous weight for a company that produces and markets fossil fuels, the primary drivers of the greenhouse gas emissions that are condemning the climate.
Whether this plan is genuinely in line with the Paris Agreement also raises considerable doubts. The Union of Concerned Scientists, an NGO involving citizens and scientists, describes it as "woefully inadequate." "Companies that fail to keep pace with the demands of science threaten their own future, while also endangering all of us through the growing impacts of climate change and the systemic risks to the global economy," declares Kathy Mulvey, a spokesperson for the NGO.