January 26, 2007
What a difference a year and maybe a movie makes
Posted to Author: Yulsman, T. | Climate Change
by Tom Yulsman
Consider this quote: “We believe climate change is a serious issue and that action must be taken.” Last year, that might have been said by an environmentalist in testimony before Congress — or maybe not, because discussion of the issue in Congress was controlled by Republicans who were more interested in what ExxonMobil had to say on climate change. But those words were actually spoken today by Ken Cohen, ExxonMobil’s vice president for public affairs.
In a conference call with bloggers, Cohen outlined the company’s positions on the issue, coming intriguingly close to endorsing one policy response to global warming over another: a carbon tax as opposed to a cap and trade system.
"Most economists who have looked at this issue would come away saying a carbon tax makes the most sense," Cohen said. "It’s the most efficient policy. The most sector-neutral. It doesn’t favor or disfavor one part of the economy over another."
Was the company prepared to endorse this approach? "If Exxon- Mobil were to come out in favor of a carbon tax today, many people would react and say that if we’re for it, there must be some problem with it," Cohen half-joked. "We do look seriously at carbon tax proposals.”"But the devil is in the details, he said, and Exxon-Mobil’s position on any policy proposal will depend on how it’s structured. "It is a regressive tax," he noted. "Do we want it to be revenue neutral? We could take out another regressive tax, like the sales tax. How pure is the tax? Does it apply across the economy? Or does it apply only to one sector and not others?"
What I found remarkable was not his thinking on this and other policy issues per se but the very fact that a high ExxonMobil official thought it was important enough to take an hour and fifteen minutes out of his day to chat about options for global warming mitigation with a bunch of bloggers.
Well, maybe seriously. I guess that still remains to be seen.
As readers of Prometheus no doubt know, a day before the State of the Union address, the heads of 10 major U.S. corporations called on the president to support mandatory caps on greenhouse gas emissions. The group included the chief executives of GE, Duke Energy, DuPont, PG&E, Alcoa and others. The corporations have joined together with leading environmental organizations, including Environmental Defense, the Natural Resources Defense Council, the Pew Center on Global Climate Change, and the World Resources Institute, to form the United States Climate Action Partnership. USCAP has put forward a plan designed to cut U.S. annual emissions of greenhouse gases by 70 to 90 percent of today’s production in just 15 years.
Cohen did not endorse or reject this approach. "This is part of a very healthy process," was about as far as he would go. Even so, there is something startling about ExxonMobil now taking part in the discussion about policy options, instead of spending lavishly to enforce gridlock. Last year, Britain’s Royal Society estimated that ExxonMobil gave $5.685 million in 2005 to 39 groups it said misrepresent the science of climate change. This year, ExxonMobil promised the society that it would halt this funding. And it has cut off its support of the Competitive Enterprise Institute.
An earthquake occurs when enough strain builds up along a fault line, causing the ground on opposites sides to suddenly break free and shift violently. In the past few years, we’ve witnessed a steady build up of strain along the fault line marking the divide between the science of global warming on one side, and public, corporate and political perceptions on the other. The scientific evidence clearly linking human activities to a warming climate has been pulling hard on the fault for years, causing some creep but no major release. Over the past year, the strain began to build even more. For example, in a poll sponsored last January by Pew Internet and the American Life Project, 64 percent of those surveyed said they believed global warming "is the result of human activity such as driving cars and burning fuels." Soon thereafter, 86 evangelical Christian leaders publicly urged prompt action on an initiative to fight global warming.
And then came the movie. "An Inconvenient Truth" premiered in May, and since then it has grossed $24,146,161 at the box office here in the U.S., making it the third highest grossing documentary film since the early 1980s. By August, polling was showing that 61 percent of Americans believed global warming was "a problem that requires immediate government action." (PDF)
Since then, Pew surveys show public support for immediate action subsiding a bit. But with California’s initiative to tackle climate change, the Democratic take over of Congress, the introduction of at least four major bills to reduce greenhouse gas emissions, and strong support for action by ten major U.S. corporations, the fault line has finally broken. And now, apparently, not even ExxonMobil can deny that reality.
But now what? After corporate titans called on Bush to take strong action on global warming, his spokesperson, Tony Snow, told them not to hold their breath: "The President has always believed, when it comes to climate change, that the best way to achieve reductions is through innovation, and to figure out ways to come up with energy sources that are going to meet our economy's constant demand for energy, and at the same time, do it in a way that's going to be friendly for the environment."
Fair enough. But as we all know, we got no innovation in the president’s State of the Union address — just pablum and a throw-away line about climate change. And as Clifford Krauss pointed out in yesterday’s New York Times, "Thirty years after it was founded by President Jimmy Carter, the National Renewable Energy Laboratory at the edge of the Rockies here still does not have a cafeteria." One year after Bush visited NREL during his last spasm of support for renewable energy, "the money flowing into the nation’s primary laboratory for developing renewable fuels is actually less than it was at the beginning of the Bush administration."
Overall, the administration’s 2007 budget request for the DOE’s office of Energy Efficiency and Renewable Energy totaled $1.176 billion. That’s half a billion less than its request for NASA’s solar system exploration program, and peanuts compared to the $3 billion NASA was seeking for the program to send people to the Moon and Mars.
When I asked Ken Cohen, ExxonMobil’s VP, what he thought about this, he said "it’s not just a function of dollars alone. For example, Stanford [to which the company has given lavishly for energy research] has told us, ‘Don’t give us more money.’" The reason, according to Cohen: Stanford doesn’t quite know how to spend additional funding.
Maybe it’s an arguable position. But I’m curious to hear what Stanford has to say about this! More to the point, Cohen did not exactly leap at the opportunity to lend support to expanded government R&D efforts in energy efficiency and renewables. At the same time, he acknowledged that much needs to be done to bring these technologies along. "Right now, 80 percent of the world’s energy demand is met with traditional fuel, oil, natural gas and coal," he said. "By the year 2030, it will still be the case that most of the world’s energy will be supplied by those sources. That’s a function of their flexibility, and the fact that they are cost effective and scalable on a global basis. So, for example, solar energy, while viable for niche applications, needs a paradigm shift to allow it to be scaled up and be as effective as traditional fuels."
If that paradigm shift is to come, Cohen seemed to suggest that it will happen largely because of private R&D, not government exertion. "The market is a very efficient allocator of resources," he concluded.
So much for ExxonMobil throwing it’s impressive bulk behind a government-led, Moon-shot R&D effort for energy efficiency and renewables. But at least Cohen pretty much admits what the company’s position is. Bush, on the other hand, talks big about government spending on energy innovation. But his actions don’t come remotely close to matching his words.
And that may well mean that we’ll have to wait two years for policy action. But it’s clear now that if nothing else, either a carbon tax or a cap and trade system is inevitable sooner or later. If ExxonMobil is not shooting either of those options out of the water — if, in fact, it is very publicly saying that policy responses not only are inevitable but necessary, and that one option actually makes more economic sense than the other (the carbon tax) — then action is much closer than I had thought possible just a few months ago.
"Let’s all agree that action should be taken," Cohen said. "We should be talking about the effective actions that we should take to start us on a path to reduce CO2." He even acknowledged that science could conceivably show that the widely discussed target of stabilizing carbon in the atmosphere at 550 parts per million is too low.
Now, after the earthquake, we find ourselves in a remade landscape.
Forget the movie; think "November 2."
Posted by: Amy Ridenour at January 26, 2007 10:49 PM
Good post, Tom. And all of this change despite the recent "Stern and Drang" and hand-wringing about fanaticism.
Posted by: TokyoTom at January 27, 2007 02:50 AM
"USCAP has put forward a plan designed to cut U.S. annual emissions of greenhouse gases by 70 to 90 percent of today’s production in just 15 years."
That should be "cut ***to*** 70 to 90 percent of today's production in 15 years".
Not "by" 70 to 90 percent...that would mean emissions of 0.3 to 0.1 of current emissions.
Posted by: Mark Bahner at January 27, 2007 08:44 PM
I agree with Amy, at least in part: I bet the election had more to do with any change in position than the movie. $24 million in gross receipts is pocket change, especially when most of it came out of the pockets of people who already believe.
Also, $5,685,000 donated over several years to "climate skeptics" is pocket change too. Not just to Exxon Mobil, but when compared the sums currently spent on climate change research. That looks to me like a token effort rather than some grand obstructionist conspiracy. It's barely enough to fund the cafeteria at NREL.
Your blog post illustrates what some of us who know zip about climate change science have been pointing out about climate change policy: It is insufficient to use the existence of a problem as the basis for leaping to a solution. Very little research has been conducted on policy alternatives that would be effective (actually achieve promised global GHG reductions), efficient (achieve these reductions at minimum cost in transactions costs, rentseeking, and wealth transfers), and politically acceptable (votes in favor today won't result in loss of re-election tomorrow). California's recent action is emblematic: it is meets the test of political acceptability but not the tests of effectiveness or efficiency. The UN program discussed recently in the NYT and here meets none of these criteria.
Finally, opinion polls are useless as scientific instruments for measuring sustainable public support, much less the public's willingness to pay. For proof, you only have to compare polls on Iraq performed three years ago versus today.
Which of the advocates of aggressive and immediate action on climate change think a similar decline in public support over just three years would not destroy the program?
Posted by: Richard Belzer at January 28, 2007 07:52 AM
Tom, I appreciated your questions and comments on the conference call on friday. I'm currently composing my response to the call, and while it's not finished yet, I imagine it will read quite a lot like yours when complete. I think you really nailed the significance of the change in ExxonMobil's stance on climate change.
Are we going to see Exxon lining up with BP, Duke and the rest of the US Climate Action Partnership? Probably not. Will Exxon be a valuable ally in pushing for climate change legislation? No. But the simple fact that not only are they now no longer actively funding and supporting an effort to confuse and delay action on climate change, they are also openly stating that they think something should be done about climate change and that policy solutions are both necessary and inevitable.
Even if Exxon isn't going to help us pass climate change legislation, at least it doesn't look like they are going to be a major roadblock anymore, and that is not an insignificant change in the political landscape. We are, after all, talking about the largest publicly-traded energy company in the world (actually the largest publicly traded company in the world).
(The fact that the VP for Public Affairs of said largest company in the world would take an hour and fifteen minutes out of his schedule to talk with several bloggers is also a telling indication of the growing influence of blogging and the strange age we now live in. Perhaps Time was right when the selected 'You' as the 2006 Person of the Year!)
Thanks again for your questions and analysis. Cheers,
Posted by: Jesse Jenkins at January 28, 2007 09:43 PM