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Part 1 - Biofuels: Really? Don’t Fuel Yourself

Posted to GridIntellect, LLC – A Veteran-owned Company in the Clean Power Professionals Group

image credit: From the 1964 Movie, "Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb"

Part 1 - Biofuels:  Really?  Don’t Fuel Yourself

By Stuart McCafferty and Eamonn McCormick

Oh Yes, They Most Certainly Knew

The major oil and gas companies are all enthusiastically jumping into the biofuel market, telling the world that it is “carbon-neutral” and that they are addressing climate change as good stewards of the environment. 

Really?

In 2015, Inside Climate News performed eight months of investigation interviewing ExxonMobil’s former employees and reviewing internal company documents. What they found, and what has not been disputed, is a long history of climate change research by the company that yielded the fact that burning fossil fuels and the release of C02 and methane into the atmosphere would lead to dangerous global warming.  Much of this work was performed throughout the 1970’s and 80’s – 40 years ago.

Exxon spent quite a bit of their own time and money on research.   Their own models and science concluded the risks of global warming.  “Yet starting in 1989, Exxon leaders went down a different road. They repeatedly argued that the uncertainty inherent in computer models makes them useless for important policy decisions. Even as the models grew more powerful and reliable, Exxon publicly derided the type of work its own scientists had done.”[1]

Really?

Shell also performed its own carbon emission research during the same time period.  Begun in April 1986 and completed in May 1988, internal research was conducted within Shell.  The resulting report called “The Greenhouse Effect” described the global warming effects of increased atmospheric carbon concentrations.  The “CONFIDENTIAL” document was created by the Shell Internationale Health, Safety and Environmental Division of Environmental Affairs for the Shell Environmental Conservation Committee (SECC).  This document discussed what Shell knew and feared.  It summarized that “man-made carbon dioxide, released into and accumulated in the atmosphere, is believed to warm the earth through the so-called greenhouse effect . . . Mainly due to fossil fuel burning and deforestation, the atmospheric CO2 concentration has increased some 15% in the present century to a level of about 340 ppm.  If this trend continues, the concentration will be doubled by the third quarter of the next century.”[2]

At the time (1986-88), Shell cited the Environmental Protection Agency and others that pre-industrial atmospheric concentrations could double to 600 ppm between 2040 and 2080.  As of October 2020, NASA data showed CO2 concentration levels were 415 ppm[3].  Using linear trending calculations, our estimates achieve approximately 535 ppm by 2075 – a 36% increase instead of the 43% estimates from Shell in the 1980’s.  However, their estimates for 2030 are 450 ppm, where ours are 440 ppm.  So, perhaps the Shell team overestimated, but they were not off by much.  Overall, pretty good modeling, engineering, and math.

Another very interesting observation from the internal report was that “the warming is not the entire story; all GCM’s[4] show an increase in the intensity of the global hydrological cycle.  If the planet is warmer more moisture will evaporate from the oceans, resulting in a (sic) increase of the atmospheric water concentration.”[5]  The report goes on to discuss implications to snow cover and sea ice – and the concern that such amplified global warming effects have not been witnessed in earth history since the end of the last ice age.  The other obvious implication is the increased frequency and strength of moisture-intensified storms in coastal regions of the world.

Amongst the report’s key conclusions was that the consequences to Shell included rising sea levels that would impact their offshore installations and coastal operational facilities with unknown scale.

In Shell’s defense, they recognized that coal produced more CO2 emissions per unit than natural gas, so the point could be made that their continued promotion of liquid and gaseous fossil fuels was better than the alternative.

The Shell Greenhouse Effect report is very well done.  It empirically predicted atmospheric trends and the consequences of increasing atmospheric carbon quite accurately based on our ability to observe the last 30+ years after the report was published.  It did not paint a pretty picture for the earth’s future if the trend continued.  Yet, despite their own internal concerns and warnings, Shell Oil has continuously increased oil production over the years since the report.  Admittedly, they have spent a good deal of R&D money on renewables (primarily wind) and supposedly “carbon neutral” biofuels, but that is another story we will talk about next.

But, really?

There are numerous reports of internal industry studies going back even further to the 1960’s, such as those conducted by the Stanford Research Institute (SRI) on behalf of the American Petroleum Institute (API), the largest trade association for the oil and gas industry.  The conclusions of the SRI reports provided API's hundreds of industry members with the same conclusions about the devastating environmental effects that would be created through continued burning of petroleum products.  The SRI study went even further to suggest that alternative non-polluting means for generating power and for powering vehicles was a national necessity.  They warned that by the year 2000 global warming could reach levels that could not be manageable or reversed.

We could go on and on about the other major oil companies and what they knew, but you get the point.  Exxon Mobil and Shell’s behavior and lack of action for the better good of society were matched equally by the short-sighted “profit above all else” mentality embraced by the entire oil and gas industry.

Figure 1:  From the 1964 Movie, "Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb"

 

The whole situation reminds me of Slim Pickens bull-riding the atomic bomb whooping and hollering in full Texas cowboy attitude and attire to his own suicidal demise in the 1960’s movie, “Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb”.  I have a plan!  Yeeha!  Boom!

The End is Near for Carbon Emitting Petroleum Products

Due, in part, to low crude prices, tightening carbon emission regulations, and their soiled reputations with the general population, oil companies are recognizing their love affair with oil and gas drilling is coming to an end.  Exxon is actually losing money in 2020 and was removed from the Dow Jones Industrial Average in August 2020 after being a key component since 1928.  In fact, the only remaining oil company still included in the DJIA is Chevron.  Exxon also recently announced that they plan an additional 15% workforce cut in 2021 and a write down of up to $20B in Q42020.  Across the board, oil companies are making less profits and their market capitalization value is in steady decline.  Obviously, some of the more recent decline can be blamed on COVID-19 and a massive reduction in world economies and the need for petroleum products.  But the chart below shows that the downward trend was already in place well before the pandemic threw gasoline on the fire (sorry, had to say it!) of oil and gas company’s fall from grace as Wall Street money machines.

Figure 2:  Stock Prices for Shell and Exxon Mobil Since 2014.  Source:  TD Ameritrade

The point is that oil and gas companies are in serious trouble.  According to Deloitte, an incredible 107,000 US oil and gas jobs (7%) vanished between March and August 2020.  And, Deloitte went on to state that these jobs are unlikely to return anytime soon, if ever.  The appetite for petroleum products is vanishing, just like the jobs in the industry.  There is no confusion or argument about the harm that burning fossil fuels presents to the environment anymore.  America and the rest of the world are going on carbon diets, embracing renewable energy and batteries, electric vehicles, and other means to reduce their consumption of hydrocarbon petroleum products. 

Most of all, though, oil companies have lost the trust and admiration of the investment communities and the public.  The environmental damage that has been done, and the fact that the oil companies knew what would likely happen as a result of the continued burning of fossil fuels are hard for most people to find excuses for.  The reputations of oil and gas companies are in the toilet.  Everyone recognizes that we cannot go “cold turkey” and get off petroleum products immediately.  But, make no mistake, that is the trajectory we are on.  And, the oil and gas industry is acutely aware of all of this.

So, what would you do if you were them?

The next article will talk in more detail about what the oil and gas industry is doing to try to change the public’s perception, what biofuels are, and what benefits and concerns are associated with them.  Stay tuned!

Part 2 of this series is available here.

Sources

Exxon: The Road Not Taken, https://insideclimatenews.org/content/Exxon-The-Road-Not-Taken, 2015

Shell:  The Greenhouse Effect, https://www.documentcloud.org/documents/4411090-Document3.html#document/p4/a415539, May 1988

 


[1] Exxon Confirmed Global Warming Consensus in 1982 with In-House Climate Models, https://insideclimatenews.org/news/18092015/exxon-confirmed-global-warming-consensus-in-1982-with-in-house-climate-models, LISA SONG, NEELA BANERJEE, DAVID HASEMYER, September 22, 2015

[2] 1988 Shell Confidential Report on The Greenhouse Effect, https://www.documentcloud.org/documents/4411090-Document3.html#document/p4/a415539, Shell Greenhouse Effect Working Group, May 1988

[3] NASA Global Climate Change, https://climate.nasa.gov/vital-signs/carbon-dioxide/, October 2020

[4] GCM is the acronym (Global Climate Model?) for one of the global models Shell used in its climate change studies

[5] 1988 Shell Confidential Report on The Greenhouse Effect, https://www.documentcloud.org/documents/4411090-Document3.html#document/p4/a415539, Shell Greenhouse Effect Working Group, May 1988

Discussions

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Matt Chester's picture
Matt Chester on Dec 2, 2020

Most of all, though, oil companies have lost the trust and admiration of the investment communities and the public.  The environmental damage that has been done, and the fact that the oil companies knew what would likely happen as a result of the continued burning of fossil fuels are hard for most people to find excuses for.  The reputations of oil and gas companies are in the toilet.  Everyone recognizes that we cannot go “cold turkey” and get off petroleum products immediately.  But, make no mistake, that is the trajectory we are on.  And, the oil and gas industry is acutely aware of all of this.

That's why even when you see promotion of Shell wind turbines or Exxon's moves towards renewables, they are rightly met with a raised eyebrow and skepticism. Token greenwashing won't do it!

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