When you fill up your tank and drive away from a gas station, is the resulting carbon pollution your fault? Or the fault of the oil giant that supplied the fuel?
Darren Woods, the CEO of Exxon Mobil, the largest publicly traded oil company in the world, has a clear answer. In a rare interview Woods explained to the media last week that the “dirty secret” behind why the world was not on track to zero carbon emissions was that it was simply too expensive. In doing so, he subtly placed the blame for the emissions caused by the burning of oil and gas on his company’s customers.
“The people who generate the emissions need to be aware of and pay the price for generating those emissions,” he told Fortune’s Leadership Next podcast. “Ultimately, that’s how you solve the problem.”
The relevant emissions, which are created when oil and gas are actually burned, represent 80 to 95 percent of the global emissions associated with oil companies. In energy wonkland, these emissions are known as “Scope 3.” Three years ago, under pressure from activist investor groups, Exxon reluctantly revealed for the first time the sheer scale of its own “Scope 3” emissions. The company estimated that the products it sold in 2019 resulted 730 million metric tons of carbon dioxide. For reference, this is 11 percent of what the entire United States released that year.
Big emissions have big consequences. Research from the Union of Concerned Scientists has tracked the direct and indirect emissions of fossil fuel producers to ocean acidification, the rise in global temperaturesand wildfires in the western United States.
Activist investor groups have called on oil companies to reduce Scope 3 emissions, but Exxon will instead focus on the direct emissions that come from oil drilling and power plants (Scope 1) and the fuel or electricity purchased for things like driving of machinery or its power. offices (scope 2). Exxon sued two of these investor groups in January on the resolutions they submitted to demand faster emissions reductions, arguing that the repeated submissions amounted to abuse of the shareholder proposal system. It’s an aggressive move that some experts see as a sign that Exxon is committed to shutting down discussions about responsibility for the full extent of its emissions.
This issue is a hot topic in oil company boardrooms, according to Laura Peterson, a corporate analyst at the Union of Concerned Scientists. “Clearly they find it a threat,” Peterson said. “I think that they know, because their emissions are very high, that they’re not going to be able to evade them just through carbon sequestration as their climate transition plans claim, and that it’s going to open them up to litigation. And so they just try to suppress it.”
Oil companies have long tried to avoid responsibility for carbon emissions. A 2021 study that examined Exxon’s memos, studies and ads over the past half-century found that the oil giant used rhetoric to shift the blame for climate change onto average people, their customers. In public communications, the company focused on “consumers” and “demand”, implicitly pointing the finger elsewhere. BP used a similar strategy, the popularity of the idea of calculating your personal “carbon footprint”. in marketing campaigns in the early 2000s.
Exxon is one of the few major oil companies it has so far failure to set any targets for reducing its Scope 3 emissions. The company’s board of directors argued that applying these targets to companies would cause “significant, unintended consequences for society”. Woods wrote that the current way Scope 3 emissions are calculated will encourage bad behavior from companies and force consumers to turn to dirty energy sources such as coal. “It’s like saying that requiring calorie information on restaurant menus will force people to eat junk food,” Peterson said. a blog post.
As countries move to regulate Scope 3 emissions, companies are scrambling to stop them. At the end of February, Reuters reported that the US Securities and Exchange Commission plans to drop a requirement forcing companies to disclose these emissions of its proposed climate risk rules for corporations. This would place the responsibility for those emissions on customers. But California is heading in a different direction, passing a law last year that will eventually require large companies doing business in the state to disclose their Scope 3 emissions — including corporate giants like Exxon.
Of course, it is difficult to disentangle exactly who bears how much of the debt for the emissions that led to the climate crisis: Big Oil? Governments? Rich countries? Billionaire? Normal people? It is a combination of all of the above. Oil companies make the case that this is a “demand” problem – as long as people drive cars and therefore demand fossil fuels, then they must keep producing the gas.
However, a 2022 report by the Intergovernmental Panel on Climate Change concluded that people demand “services,” not fossil fuels specific. In fact, the panel found that people could live comfortably with far fewer fossil fuels. “Demand-side” solutions, including shifts in how buildings are built, how people get around and what they eat, have the potential to reduce emissions by 40 to 70 percent across all sectors by 2050.
Climate advocates argue that oil companies, with their history of spreading climate disinformation and trying to block policy to move away from fossil fuels, bear much of the blame for climate change. Across the country, about 30 lawsuits have been filed by cities, states and Native tribes seeks to hold Exxon and other fossil fuel companies accountable for misleading the public about the harm of using their products.
“They’re responsible for a lot of climate damage, and they’re responsible for misleading the public in the past, which has led to more damage,” Peterson said. “And now they’re basically saying they shouldn’t be responsible for disclosing these emissions because it’s just not relevant to their business.”
Not surprisingly, Exxon’s CEO wants to move past the whole history aspect. “That was 30 years ago,” Woods told Fortune last week. “I mean, today the world has moved on. Understanding this challenge has moved on. I think where we are today, how can we contribute to a solution set, not debate the past?
