Oil & Gas Industry aims to make global warming even warmer

Photo of oil well pumps
Oil well pumps. Image credit: CBC

There’s a growing mass mobilisation of world opinion against oil, which is “beginning to … dictate policies and corporate decisions, including investment in the industry” Mohammed Barkindo, the secretary general of OPEC said. Climate activists are “perhaps the greatest threat to our industry going forward”, he also said.
— from The Guardian and other press reports, July 5, 2019.

Mr. Barkindo is like the arsonist who sets fires for money and then complains that fire engines are threatening his business. He should know that ‘climate activists’ are not the only people delivering unwanted messages to the Oil & Gas Industry about global warming. Similar (although milder) messages are originating from within the industry’s own ranks. The problem is that, as yet, most of the industry’s bosses refuse to listen.

The International Energy Agency (IEA) is an intergovernmental body established in 1974 following the 1973 oil crisis. The agency’s purpose at the time was to respond to disruption in the supply of oil. Its mandate has since expanded and the agency now acts to provide member states, as well as as Russia, China, and India, with information and policy advice on energy security, economic development, and Environmental Protection.

The following chart in the IEA’s World Energy Outlook, shows the Agency’s estimate of total world energy demand to 2040 under what it calls its New Policies Scenario (NPS). The NPS, the report says, “Incorporates existing energy policies as well as an assessment of the results likely to stem from the implementation of announced policy intentions.” In other words, the chart represents the IEA’s business-as-usual prediction. The chart shows demand for fossil fuels (Natural Gas + Coal + Oil) steadily rising beyond 2020.

Estimated World energy demand by IEA
Estimated world energy demand to 2040 – business as usual. Image: International Energy Administration (IEA)

The next chart is from the same page of the same IEA report. It shows the Agency’s estimate of total world energy demand to 2040 under what it calls its Sustainable Development Scenario (SDS). The SDS, the report says, represents “an integrated approach to achieving internationally agreed objectives on climate change, air quality and universal access to modern energy.” In other words, the chart shows what the IEA estimates will happen to world energy demand, should the signatories to the Paris Accord follow up on on their commitments. Result: fossil fuel production falls.

The IEA’s estimated world energy demand to 2040 - Sustainable Developmemt Scenario. Image: IEA
The IEA’s estimated world energy demand to 2040 – Sustainable Development Scenario. Image: IEA

In what way is the Oil & Gas Industry reacting to this obvious policy message from a respected industry policy advisor? (1) It tries to ignore it. (2) It works to undermine the message in any way It can. One way it works to undermine the message is to produce estimates of its own showing that the world needs more fossil fuels, not less.

The following bar chart from BP’s ‘2018 Energy Outlook’ shows estimates of GROWTH in total worldwide energy consumption to 2040 according to nine different fossil-fuel focused organizations. All of them predict growth in the consumption of fossil fuels ranging from 0.3% to 0.9% per year. Note that BP has included an IEA estimate (4th from left), but one that is based on the Agency’s business as usual scenario, not on its Sustainable Development Scenario.

Bar chart showing growth to 2040 in worldwide energy consumption according to various organizations
Estimates of GROWTH to 2040 in total worldwide energy consumption according to various fossil-fuel-focused organizations. Image: from BP 2018 Energy Outlook

BP =   BP plc (formally British Petroleum)
CNPC = China National Petroleum Corporation
EIA = U.S. Energy Information Administration
IEA = International Energy Agency (OECD)
IEEJ = Institute of Energy Economics (Japan)
IHS = IHS Inc (a London based ‘Information Handling Services’ Company)
OPEC = Organization of Petroleum Exporting Countries
Statoil = Statoil ASA (Norwegian state oil co. now called Equinor)
XOM = ExxonMobil Corporation

Here’s what  BP says about its prediction labeled ‘BP ET scenario’ (first bar in the chart): Our report’s “Evolving Transition scenario suggests that a continuation of the recent progress and momentum in policies and technologies is likely to cause the growth in carbon emissions to slow markedly relative to the past. But this slowing falls well short of the sharp drop in carbon emissions thought necessary to achieve the Paris climate goals. We need a far more decisive break from the past .” (my underlining)

In other words, BP’s prediction assumes ‘business as usual’ as do all the other predictions shown in the chart. BP tries to distance itself from the implications of its own report by stating that the scenarios in its report “are not predictions of what is likely to happen or what BP would like to happen.” Nevertheless, its business as usual ‘scenario’ is taken by other Oil & Gas Industry heavyweights as a valid prediction that supports the industry’s business as usual behaviour.

For example, while ExxonMobil’s report titled ‘2019 Energy and Carbon Summery’ is peppered with references to emissions reduction and the goals of the 2015 Paris Accord, the company’s true position is exposed by two statements on page 9: “Natural gas will expand its role, led by growth in electricity generation and industrial output” and  “Rising oil demand will be driven by commercial transportation and the chemical industry.” See last bar in the chart.

BP’s ‘2018 Energy Outlook’ contains a surprisingly frank statement (underlined above) concerning the Paris Accord and how to achieve its goals. “We need a far more decisive break from the past” the writer of the report states.  Very true. Thing is, the decisive break from the past is going to hit the industry whether it likes it or not. More storms, more droughts, more floods, and more climate activists will see to that.

In the mean time, there’s only one way to meet the Paris climate goals and that is to cut fossil fuel production. Taxing carbon emissions will not do the trick; that’s just a silly game and the fossil fuel pushers know it. Taxing fossil fuels at the well or mine head and/or at ports of entry will work. Better still, mandate the elimination of fossil fuels as some jurisdiction are already beginning to do. One thing for sure: don’t expect help from the fossil fuel crowd. They are not part of the solution, they are the problem.

Oil & Gas elephant spooked by EV mouse — for good reason

Photo of EV charging station
Electric Vehicle charging station. Image: City of Hoboken NJ

The oil and gas industry is losing market share to clean energy technologies such as wind and solar. But it’s the electric vehicle (EV) that poses the most pressing threat to the industry. Here’s why:

The car-owning public reacts negatively to high gas prices. Politicians of all strips are sensitive to that fact. Even politicians who recognize the environmental need to reduce fossil fuel production are reluctant to take actions that could drive up prices at the pump. Taxing the carbon in fossil fuel emissions rather than taxing the carbon content of fossil fuels as they are produced is an example of this reluctance — it distances the politician from the effect. And even that feeble political action is further weakened by the failure to set the carbon price high enough to cause meaningful reduction in fossil fuel use. A switch from gasoline to electric powered cars will remove the political fear of pump prices and leave the oil and gas industry vulnerable to direct carbon pricing.

Many of the country’s newer natural gas powered electricity generating plants might last for another thirty years or more. This means that the complete replacement of fossil fuel power with cheaper renewables could take decades. The situation with electric vehicles is different. The average life expectancy of a car is 10 years or less. As EV prices drop and public acceptance increases, a shift to EVs could result in a complete replacement of the existing fleet of vehicles within a period of 10 to 15 years. Motor gasoline accounts for about 24% of total fossil fuel energy currently used in the U.S., a big chunk of the fossil fuel industry’s market. The shift would, at the same time, create new opportunities for wind and solar powered electricity generation.

Oil and gas industry executives are well aware of the threat posed by EVs. It explains the industry’s hatred of the EV incentive program. The program, introduced in 2015 under the Obama administration, offers a tax credit of $2,500 to $7,500 per new EV purchased for use in the U.S. Initial funding for the program was capped at about $2-billion. The oil and gas industry, concerned that Congress may decide to extend funding for the program, has ramped up its propaganda machine to try and prevent that from happening. As usual, when it comes to spreading disinformation about climate science and clean technologies, the industry calls on its mercenary propaganda troops to do the lying for them (see Apr.21 post — How the Oil and Gas Industry gets others to fight for its life). The propaganda effort described below shows the lengths the industry will go to fight what is a relatively small program.

A coalition of 34 fossil-fuel-funded, free market advocacy groups (see image below) delivered a letter May 9 to Congress (addressed to Senators Grassley and Wyden, and Representative Brady and Neal) urging members to protect “all American families by opposing an expansion of the electric vehicle tax credit.” The coalition is led by the American Energy Alliance (AEA), a not-for-profit organization that, according to its website, “engages in grassroots public policy advocacy and debate concerning energy and environmental policies.” The AEA, according to Desmogblog, is run by a former lobbyist for Koch Industries. The letter claims that the EV subsidy is unpopular, overwhelmingly benefits the rich, and amounts to a wealth transfer to California at the expense of all other states. It also claims that electric cars are not cleaner than cars powered by internal combustion engines.

Image of 34 fossil fuel funded, free market advocacy groups logos
Coalition of fossil fuel funded, free market advocacy groups organized to oppose expansion of the federal EV subsidy program. Image: eenews

As mentioned above, the U.S. EV subsidy is relatively small. Since its start in 2015, the program has handed out a total of about $20-billion in the form of income tax credits. By comparison, the U.S. fossil fuel industry receives about $27-billion annually in direct federal subsidies. The industry letter to Congress says nothing about that. The following bar chart shows the amount of annual subsidies each of the G7 nations currently hand out to support their fossil fuel addictions. It’s time they sought treatment.

Bar chart showing how G7 countries subsidize fossil fuel industry
Image: Natural Resources Defense Council (NRDC)

Note that the bar chart above shows only the direct subsidies to the fossil fuel industry. The industry also receives a massive indirect subsidy due to the fact that it does not pay the cost of damages — global warming, climate destabilization, etc. — caused by the burning of its products.