Oil giant comes in from the cold


Independent, January 10, 2008

By Stephen Foley in New York

The boss of ExxonMobil, the world's largest oil company, has called for a carbon tax to tackle global warming, marking a volte-face by the firm once described by Greenpeace as Climate Criminal No 1. Assailed from all sides by scientists and a new cadre of US politicians, led by the President-elect, Barack Obama, the landmark concession by Rex Tillerson represents a nod to realpolitik after years when the company denied the existence of man-made global warming.

Exxon had already dropped its funding of lobby groups which deny the science of climate change and begun to take a softer public line, but even Mr Tillerson admitted that propounding a carbon tax had stuck in the craw until recently. However, with European-style "cap and trade" rules governing carbon emissions moving up the agenda in the US, a carbon tax may be the least worst option, he said. Environmental groups gave a sceptical response to Exxon's U-turn, calling it a deliberate attempt to torpedo the movement for outright carbon caps and any early switch to alternative energy. "A carbon tax is also the most efficient means of reflecting the cost of carbon in all economic decisions from investments made by companies to fuel their requirements, to the product choices made by consumers," Mr Tillerson said in a speech to the Woodrow Wilson Centre for International Scholars, a Washington think-tank. "As a businessman it is hard to speak favourably about any new tax. But a carbon tax strikes me as a more direct, a more transparent and a more effective approach."

The chief executive's comments are aimed at moving ExxonMobil decisively to the centre of the political debate about global warming in a year that will see world leaders meet in Copenhagen to establish a successor to the Kyoto treaty on climate change something that threatens to fatally weaken the long-term prospects for oil companies who are refusing to invest in alternative energy, such as Exxon.

Last year, Exxon came under pressure from descendants of the oil magnate John D Rockefeller, who said it would go the way of the dinosaur unless it shifted positions on climate change. Use of its oil and gas output is estimated to dump 500 million tons of carbon into the atmosphere each year.

A "cap and trade" system sets limits on carbon output and allows polluters to buy permits from companies which reduce their own emissions. The nascent system established in Europe was failing to lead to the reductions its proponents expected, Mr Tillerson said, and its extension into the US would create "a new Wall Street" of brokers and speculators who would make long-term planning impossible.

By backing a carbon tax, the Exxon chairman has put himself in the unusual company of the former US vice-president Al Gore and Mr Obama's designated head of the National Economic Council, Larry Summers.

But Greenpeace which has waged a multi-decade war against Exxon, its denial of man-made climate change and its secret funding of renegade scientists warned Mr Tillerson's intervention was a smokescreen for its attempt to slow down the switch to alternative fuels. "A carbon tax is a political poison pill," said Kert Davies, a research director at Greenpeace. "No politician in the US would propose something with the word tax in it. Being in favour of something makes Exxon look like it is being intellectual, but this threatens to derail the prevailing international discussion."

Exxon argues that raising the cost of carbon-emitting fuels could change consumer behaviour and spur the entrepreneurship needed to boost solar, wind and other alternative power sources, but that these alternatives are not now sufficiently technologically advanced to meet the ambitious targets demanded of them. Separately, this week Mr Tillerson dismissed Mr Obama's proposed targets for alternative energy use, saying "let's not kid ourselves".

Under the previous chairman, Lee Raymond, Exxon took a belligerent approach to environmental protest, dismissing man-made climate change as a fantasy, and his $400m (264m) retirement package in 2006 aroused major controversy. Greenpeace called him the Darth Vader of climate change.

Since his appointment, Mr Tillerson has largely sought to strike a more amenable public relations stance, stressing the work that Exxon has done to reduce emissions from its own operations and the new technologies it is selling to help businesses use fuel more efficiently.

Yesterday, Greenpeace challenged ExxonMobil to come up with a detailed proposal for a carbon tax high enough to significantly reduce demand for its products.

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