Exxon deep dive part 1: How a dangerous product is sold as safe
You’ll have noticed a theme in the work of ACCR, and that of LobbyWatch’s posts: climate delay. That’s when a company begrudgingly accepts the need for climate action, then calmly sets about making that action as hard, slow and complex as possible.
A key part of this process is creating climate plans and policies that sound vaguely like they’re doing the right thing, but are either causing stagnation, or even a worsening of pre-existing climate harm.
I explored this in detail, in a recent post on the companies that are ‘running hard in the wrong direction’. In that piece, I referenced Oil Change International’s ‘Big Oil Reality Check’ — a grand report that summarises the intentions of the global fossil fuel majors, and highlights how far behind they all are. The worst offender, by far, was ExxonMobil:
After months of being harangued by a range of forces, the legendary laggards have finally switched mode, from outright denialism to the worst kinds of delayism. It’s been driven by the work of activist investors, particularly Engine No 1, a new American investment firm that is pressuring the company to commit to a refresh.
“ExxonMobil said today it plans further reductions in greenhouse gas emissions over the next five years to support the goals of the Paris Agreement and anticipates meeting year-end 2020 reductions”, declared a recent press release, in an attempt to feign, after decades of the worst, most aggressive opposition, that it’s now on board with climate action.
It shrugs off calls to set a net zero target, or to try and reduce the emissions produced when the product it sells is burned (“Scope 3”). “Rather than setting aspirational 2050 pledges, we will continue to take defined actions”, they say, directly echoing Australia’s Prime Minister, Scott Morrison.
In this first post, we’ll focus on what happens before the product is sold, and how Exxon is using the pre-sale process to try and brand what they sell as safe. This segment is known as ‘scope 1 and 2’ emissions, and it’s here that companies are focusing most of their marketing and branding efforts around climate delay.
In the second in this duo, I’ll focus on what happens after it’s sold — when the dangerous product’s impacts truly hit home. ‘Scope 3 emissions’ is a name that doesn’t really do it justice. But we’ll get to that soon.
Exxon’s new climate policy
Exxon’s core tactic here for feigning climate action is to essentially sell a completely unchanged product that is produced using slightly less dirty processes.
They plan to reduce the emissions intensity associated with methane leaks and flaring — both emissions-heavy parts of the fossil fuel extraction process — by 40–50% and 35–45% respectively. Sounds good, right? Well, as Earther’s Brian Kahn writes:
“[President] Joe Biden has repeatedly said he will crack down on the potent greenhouse gas, and it features prominently in his climate plan. In essence, Exxon is committing to something it’s almost certainly going to have to do anyways”
There’s this, too: “GHG INTENSITY: Plan to reduce greenhouse gas intensity in our Upstream operations 15–20 percent by 2025 (based on 2016 levels)”.
‘Upstream’ simply refers to everything you’d expect a big fossil fuel company to do: mining and drilling, and finding new fossil fuels (downstream is stuff like processing, refining, petrol stations and product sales).
This is sneaky, because ‘upstream’ isn’t the company’s entire emissions. It’s about half. And that’s not including the emissions from when the product is burned (scope 3, which we’ll come to later).
It’s split out in their January 2021 “energy and carbon” report:
Exxon’s product-making emissions (remember, this excludes ‘scope 3’, when the product is used) remain among the highest in the industry. Yet, they’re setting a target here that only refers to some of their product-making emissions.
It’s a clever trick. The ‘upstream’ caveat is essentially meaningless to those unfamiliar with the details, but reveals the lack of ambition for the company’s climate plans.
How the intensity trick works
The “Energy and Carbon” report also makes this intensity metric available in their data. This is what their headline target refers to, and assuming the other two remain steady, this is what their carbon target looks like:
Yep, that’s right. Exxon’s big new climate policy simply brings the intensity of that sub-section of emissions back down to what they were in 2012. One year after Game of Thrones first aired.
Guess what else happened that was pretty interesting? Exxon’s flagship climate target is worded as such: “The 2025 plans include a 15 to 20 percent reduction in greenhouse gas intensity of upstream operations compared to 2016 levels”. So what were 2016 levels?
It turns out that the 2016 numbers actually changed between the 2020 and 2021 Exxon ‘carbon summary’ reports:
Thanks to that subtle little historical revision, Exxon can release an extra ~1.3 tonnes of CO2-e per unit of production. Assuming 2019 levels of production, that’s around 1,280,000 millions tonnes of extra emissions by 2025.
Okay, take a breath. Let’s re-centre ourselves. Of all of Exxon’s emissions, we’re only talking about the emissions from making the product here (scopes 1 and 2), not the emissions released when their product is burned (scope 3). That’s about 20% of all Exxon’s emissions.
Actually, it’s more like 10% of total: only half of the ‘scope 1 and 2’ is ‘upstream’ (the rest is ‘downstream’ and ‘chemical’). And the number that’s being targeted for a reduction here isn’t total emissions.
Here’s the kicker: even this small percentage of their total emissions isn’t being addressed in an honest way. Because this target refers not to total amount of emissions released, but the intensity of their production processes.
So what impact does this target have on their total emissions?
Using the data in the 2021 Energy and Carbon report, we can actually reverse engineer an approximation (and it’s a rough one) of what the actual emissions of the company would release, if we assumed high performance on their intensity target (20%), and they kept making the same amount of product as 2019:
Of course, the assumption I’m making here is wrong. They’re not going to ‘keep making the same amount of product’. Although Exxon promise an “absolute” reduction in their 2021 report, remember this is only part of the process — meaning it could easily be cancelled out in the other parts of the business not covered by the target.
Indeed, last year, Bloomberg revealed leaked internal documents from ExxonMobil, revealing that they actually planned to grow their business such that the emissions above would grow from 122 MTCO2-e in 2017 to 124 in 2021, and 143 in 2025 (with a tiny sliver cut off each from their initiatives to cut emissions, such as carbon capture and renewables):
It was pre-pandemic, but at the very least it’s an estimate not of what will happen but of the twinkle in their eyes and their vision of the future.
By 2030 analytics firm Rystad estimates that Exxon will increase production by 52%. We don’t know exactly how the company’s output will change, simply because they don’t tell anyone. That means we can’t calculate the meaning of their climate targets — we can only determine exactly how much sneakiness can come about from using an intensity target.
In their 2021 update, they’re insistent that they don’t need to reduce production to be responsible climate actors. “With respect to energy supply, production reductions by individual companies would have no impact on demand or consumption of energy, and would simply result in production shifting from one producer to another”, they write — the standard ‘drug dealer’s defence’. They obsess over their operational emissions, while avoiding the impacts of the use of their product.
None of this is new. They have been cancelling out their small efforts in emissions intensity reductions by expanding production for years now. In fact, Exxon outlines in their “energy and carbon summary” just how much their emissions would be falling, if they had stopped expanding a decade ago:
“The greenhouse gas emissions from acquisitions, expansions, new developments and facilities (shown as growth projects) increased approximately 5 percent in 2019 compared to 2018”, write Exxon in their report. It’s no secret: any attempts to reduce their emissions “intensity” is cancelled out by their aggressive need to expand and grow.
Carbon intensity has become a major tool of climate delay within the fossil fuel industry. It isn’t limited to Exxon, of course, with other players like Shell and Total (for countries except Europe) using it, and even Uber. It’s complicated, operating only as a emissions reduction when certain other variables are fulfilled, and mostly not doing anywhere near as much as these targets need to be. The single exception: Equinor has set an emissions intensity target of zero, which is effectively the same as an absolute target of zero.
Not all climate action is equal: sometimes, something badged as an emissions reduction policy explicitly leads to massive increases in emissions. Exxon was the very last holdout from classic, old-school, out-and-proud denialism, and have officially joined the fake-solutions fray. But it is likely that they will remain a valuable marker of the worst end of the spectrum; acting against the interests of people and planet.
This post has focused on the emissions from fossil fuel companies as they create the product they sell. The second post will be an exploration of the emissions released when the product is sold and used — the far greater impact, and the one that these companies really don’t want to talk about.
