Ken Cohen, Exxon Mobil’s public affairs vice-president, is a sharp-looking former lawyer. He’s also head of the company’s political action committee in the US and chairman of the company’s foundation.
But Cohen is the man Greenpeace says is the architect of Exxon’s funding of organisations that oppose the mainstream agenda of trying to curb manmade climate change. Greanpeace and other environmental groups also say that Exxon has no interest whatsoever in developing renewable energy facilities.
After years of public and private fighting over oil spills and, more recently, climate change, it is today plain to see that Exxon and Greenpeace simply loathe each other.
Exxon says it funds all kinds of groups within the public policy debate, not just climate change policy groups, and does not always agree with everything said by the groups it funds.
On renewable energy, Exxon is unapologetic about its absence from the sector since the 1980s, citing the International Energy Agency’s forecast that 80% of the world’s rapidly growing energy needs will be met from traditional fuel sources over the next 20 years. Instead of renewable energy, the company says new technology and efficiencies, encouraged by emissions capping and trading, are the key to tackling global environmental threats.
Exxon denies that it has ever opposed the science of climate change. “The risks to society from climate change warrant action now,” Cohen said at a London media briefing in June. Exxon fully accepts, Cohen says, that of the “large growth in CO2 emissions … much of that is tied to man’s activities”.
Exxon’s stance, according to Cohen, is that there is a 60% chance of a 2°C temperature rise by the end of the century and a 25% chance of a 3°C rise. “We need to put policies in place to mitigate [the risks],” says Cohen, adding that this will include working with environmental groups. Cohen sites costly arrangements the company has with MIT, Stanford, Yale, and the UK’s Hadley Centre as examples of how it contributes to research on climate change and solutions.
Funding controversy
Greenpeace and other environmental campaigners say Exxon also directs resources to right-wing groups that deny climate change is caused by human action or is a problem, flying in the face of mainstream science - Greenpeace recently produced a list of “climate change denial groups” it says are funded by Exxon.
The influential non-governmental organisation claims Exxon is not being upfront about how the company and its foundation give money to lobby groups. Some critics speak darkly of Exxon having a direct influence on the Bush administration’s generally recalcitrant attitude to the problem of growing carbon emissions.
While many corporate foundations operate completely separately from their founder companies, Exxon’s appears to break this mould. Cohen chairs the foundation, which, he proudly told journalists at the recent meeting, disburses millions of dollars a year. The figure in 2005-6 was almost $140 million.
Cohen says Greenpeace is “flat wrong” that the groups Exxon funds are climate change deniers. Included in Greenpeace’s list of “climate deniers”, said Cohen, were venerable organisations such as the American Enterprise Institute, a respected economics organisation that does not fit the mould, and the Aspen Institute, a respected environmental group. Cohen also says that one of the groups purported to be a climate change denier by Greenpeace was in fact only engaged in campaigning for US tort law reform.
“It’s interesting to be called flat wrong by a flat earther,” retorts Greenpeace UK spokesman Ben Stewart. He says the “vast majority” of Exxon-funded groups on the Greenpeace list have “climate change outreach programmes” designed to create scepticism about global warming.
Exxon says it fully complies with the US tax office requirement that it lists the names and addresses of grantees, the purpose of grants, and the amounts. The company says that on its website, its “World Giving Report” includes grants made not only by the Exxon Mobil Foundation but also by Exxon Mobil Corporation. “Exxon Mobil Corporation voluntarily makes the information on corporate grants available to the public even though no law requires us to do so,” Cohen told Ethical Corporation.
“In their report to the Internal Revenue Service, they have named 14 different organisations that were given climate specific grants,” says Kert Davies, Greenpeace’s US research director. Davies says the purpose of the programmes these grants support - labelled by Exxon as “climate change education efforts” or “media and opinion leader outreach” - is the denial of climate change and its causes.
And Greenpeace says that in Exxon’s World Giving Report there is no description of these grants. “Our complaint is very specific; they are hiding all these climate change grants,” says Davies.
The United States Climate Action Partnership, which includes Shell, Dow Chemical, Alcan, Siemens and BP, is currently asking the federal government “to quickly enact strong national legislation to require significant reductions of greenhouse gas emissions”.
Meanwhile General Electric is set to spend ever more money on climate change solutions. Companies such as Wal-Mart, Staples, Timberland and many others are increasingly keen on greening their supply chains and stores. Opponents of Exxon say it is way behind the modern corporate curve.
Exxon will next review the groups it funds in November this year. Cohen would not confirm if there were plans in place to remove some of the more contentious names from its funding lists. The grants it gives are not huge. Two controversial groups, the Heartland Institute and the George C Marshall Institute, for example, received about $200,000 between them in the current financial year.
Misunderstood?
“We are not a denier,” says Cohen. The company is, he says “at the table, with our sleeves rolled up”, although he admits the company has “not done enough” when it comes to meetings and explanations of its position. “Starting in 2005 we’ve taken that on,” says Cohen.
Activist shareholders disagree. A major US pension fund, Calpers, complains that a senior Exxon executive, Michael Boskin, refuses to meet with it to discuss the issue.
But other shareholders are more apathetic.
At Exxon’s AGM in late May only 28% of shareholders supported a resolution asking the company to disclose its plans for complying with greenhouse gas reductions targets in countries that have ratified the Kyoto Protocol. A resolution by Christian Brothers Investment Services asked Exxon to document its sources for questioning climate change science. This received only 10% support at the meeting.
Cohen believes that campaigners have twisted the company’s position on the Kyoto agreement on climate change, which the US government refuses to ratify, to market the firm as not believing in dangerous manmade climate change.
Exxon “wants a mechanism” to tackle climate change, he says, but it must involve “steps that make sense” and include nations in the developing world. The company still has “concerns” about Kyoto, he said.
These steps that involve the developing world in climate agreements are essential, says Cohen, because, as he puts it, in developing countries “they want what we’ve got, and they are going to get it”. Cohen is keen to show that the company has more solutions up its sleeve than just energy efficiency.
Upstream solutions
Exxon is in favour of what it calls “upstream cap and trade” of carbon emissions, where the “cost” of carbon-rich fuel sources would be paid at the point of its extraction, before the carbon was released into the atmosphere.
This might be when coal is mined or sold, or when petrol is refined from crude oil. Governments would have to think about a “price cap” to protect the industry, and allow businesses to pass on the costs to consumers, Exxon says.
Exxon’s proposed solution, when compared with the EU’s “downstream” cap and trade system - where companies pay to emit carbon dioxide as they emit it - would operate more genuinely “like a carbon tax” and fix the price of carbon, says the company. According to Exxon, this avoids the problems of working out emissions caps sector by sector as in the EU’s downstream system.
Exxon says the upstream system should be part of discussions on post-2012 solutions - the Kyoto Protocol and the next round of the EU emissions trading scheme both expire in 2012. Exxon does not write off the idea of a downstream cap and trade system, but as Cohen puts it, Exxon wants policymakers to “lean towards upstream cap and trade with a price protector” as a simpler solution.
The company says emissions allowances should be sold, not given away, under such a system, and that the tax would create a huge revenues for government treasuries, which could be used to fight climate change.
If the upstream capping and trading proposed by Exxon applied to only US based refineries and not those abroad, that could pose a problem, say some experts. Production could be “shifted to where they have no constraints, relocating emissions”, says Mauricio Bermudez-Neubauer, senior analyst at Point Carbon, a research firm in London.
Another major problem is that the logical outcome of such a system would be “coal rationing”, says Bermudez-Neubauer. And implementation would be major challenge for governments - higher prices for fuel and power would be a hot potato many administrations might not have the political will to handle.
Exxon’s proposals, perhaps accidentally, and somewhat ironically, mirror those of a UK environmental group, Kyoto2.org. The organisation campaigns for similar ideas to be put in place when the current Kyoto accord expires, but says it has not had direct contact with Exxon (see below).
Despite Exxon’s new enthusiasm for tackling manmade climate change, the topic only gets a brief mention in the company’s new corporate citizenship report, in which it commits to improve energy efficiency by 10% between 2002 and 2012 across its US refining operations, while cutting nitrogen oxide and sulphur dioxide emissions by 70% from 2000 levels.
The report’s few lines on climate change state: “Meaningful approaches must be affordable to consumers, applicable in the developed and developing world, and allow for continued economic growth and improvements in living standards. Technological advances will be critical.”
Kyoto2’s proposals for tackling climate change
The purpose of Kyoto2 is to design from first principles a system for greenhouse gas regulation that will be “effective and economically optimal”, says its founder, Oliver Tickell.
This is a better idea, he says, than trying to tinker with existing, deeply flawed systems such as the Kyoto Protocol and the EU’s emission trading scheme. Kyoto2 says the world should focus on:
1. Upstream cap and trade on fossil fuels
2. The inclusion of developing nations (indeed all nations) in the framework
3. The sale of greenhouse gas/fossil fuel production rights (K2 proposes a hybrid auction mechanism)
4. The use of the funds so raised to tackle the causes and the consequences of climate change.
Tickell says of Exxon: “It is perhaps surprising to find this correspondence with what Exxon are saying”. Elements of Kyoto2’s proposals that Exxon might find attractive, Tickell believes, include the creation of “a free, open and non-discriminatory global market in greenhouse gas rights”, and the production of a “level playing field” for businesses worldwide. The idea behind Kyoto2, he says “does away with the massive carbon accountancy exercise and associated complexities and expense that arise out of “country-based” systems such as Kyoto1”.