One of the most critical parts of meeting this dual challenge is to understand and address the risks posed by climate change. We believe that the risks of climate change warrant action.
A careful analysis of global needs and aspirations make it clear the world will need hydrocarbons to lift billions out of poverty. That is why it will be essential to find ways to reduce the greenhouse gas emissions associated with energy use.
At ExxonMobil, we are committed to engaging in dialogue about climate change at all levels of society – with governments, NGOs, academia, and the public.
We are also dedicated to working to reduce the risks of climate change in the most efficient way for society, while recognizing the importance of abundant and affordable energy in supporting economic growth.
Our commitment to positive action on climate change can be broken down into four components: engagement on climate change policy and planning; mitigating GHG emissions in our operations; development of products that help customers and consumers reduce GHG emissions; and investing in next-generation clean technologies.
Our energy future
To fully grasp the magnitude of the challenges before us, it is critical to recognise the importance of energy to society, as well as understand the fundamental drivers of energy demand.
Energy powers economies and enables progress throughout the world. It provides heat for homes and businesses; power for hospitals and clinics; fuel for cooking and transportation; and light for schools and streets. Energy also opens up trade and transportation, improves healthcare and sanitation, and expands education and individual opportunities. Expanding access to reliable and affordable energy will improve the lives of billions of people around the world – including the more than one billion who currently lack access to electricity, a staple of modern life that many in the developed world take for granted.
It is also important to recognise that demand for energy is projected to continue to grow as the world’s population increases and more people join the ranks of the middle class. ExxonMobil’s Outlook for Energy predicts the earth’s current population of 7.2 billion will have reached 9 billion by 2040. Most of this population growth will be in the developing world, which will also include the countries with the fastest growing middle classes. In fact, we estimate that as many as 3 billion people are expected to rise into the middle class by 2030, with most of the growth centered in India and China. This is welcome news as it means many will enjoy better living standards – better jobs, better healthcare, and better education.
At the same time, people in advanced economies will continue to need energy to sustain advanced technologies and fuel economic growth. All of these factors will contribute to a predicted 25 per cent increase in energy demand from 2014 to 2040.
But the world’s energy future is not just about growth. It also is about using energy more efficiently. Without efficiency gains we estimate global energy demand could have more than doubled.
The world will meet this growing need for energy with a wide array of energy sources and technologies, including wind, solar, and other renewables, as well as nuclear power and hydrocarbons such as oil and natural gas.
Our Outlook for Energy, along with those of the International Energy Agency, the U.S. Energy Information Administration, and other credible organisations, predicts that carbon-based fuels will continue to meet the majority of energy needs in the decades ahead. However, we also predict there will be a significant shift toward lower-carbon fuels, which, in combination with efficiency gains, will result in energy-related greenhouse gas emissions likely peaking around 2030 and then beginning to decline.
Indeed, with stable and sound policies, a brighter and cleaner energy future is ahead.
Sound climate policies
Technological advancements that change the way we produce and use energy will be instrumental to providing the global economy with the energy it needs while reducing greenhouse gas emissions. And history has shown that open, competitive markets create strong incentives for industry to invest in and develop breakthrough technologies.
Ultimately, however, the ability to pioneer and deploy advanced technologies to address the dual energy challenge will depend on whether or not governments adopt sound and effective policies that enable sustained investment, collaboration, and research.
We believe that effective policies will be those that:
- Promote global participation;
- Let market prices drive the selection of solutions;
- Ensure a uniform and predictable cost of GHG emissions across the economy;
- Minimise complexity and administrative costs;
- Maximise transparency; and
- Provide flexibility for future adjustments to react to developments in climate science and the economic impacts of climate policies.
When such principles inform public policy, they minimise overall costs to society and allow markets, not regulators, to determine the technologies that will be most successful. They also help long-term policies align with differing national priorities as well as adapt to new global realities.
The goal of climate policies should be to reduce the risks of serious impacts to humanity and ecosystems at minimum societal cost, while recognising other societal priorities, including the importance of abundant reliable and affordable energy to enable improved global living standards.
Policymakers around the world currently are considering a variety of legislative and regulatory options to achieve these ends. Among the various proposals, ExxonMobil believes a revenue-neutral carbon tax would be a more effective policy option than cap-and-trade schemes, regulations, mandates, or standards. A properly designed carbon tax can be predictable, transparent, and comparatively simple to understand and implement.
We know that managing the risks of climate change will require increased innovation and collaboration.
That is why ExxonMobil engages a variety of stakeholders – including policymakers, investors, consumers, NGOs and the public – on climate-related actives.
We employ a corporate-wide global climate change and GHG-issue management team with national and regional sub-teams. This team applies corporate-level policy principles and positions to external issues that arise at local, state, national, and regional levels to ensure consistency across the globe. ExxonMobil employees also hold key leadership positions with many trade associations that engage on climate change issues.
Our scientists have been involved in climate-change research and related policy analysis for more than 30 years, yielding more than 50 papers in peer-reviewed publications. Experts from our organisation have participated in the United Nations Intergovernmental Panel on Climate Change (IPCC) since its inception. Most recently, our scientists contributed to the IPCC Fifth Assessment Report in lead author, review editor and reviewer roles. Our scientists also participate in the work of the National Academy of Sciences, including its work to review the third U.S. National Climate Assessment Report and provide advice to the U.S. Global Change Research Program.
Additionally, we contribute to a wide range of academic and other organisations that research and promote dialogue on addressing climate change. We annually review our support of tax-exempt organisations and make appropriate adjustments. We publish a list of the 501(c)(3) organisations we support and update the list annually.
Reporting to shareholders
ExxonMobil annually updates shareholders on our views on climate change and how the company plans capital expenditures, assesses and plans for policies limiting greenhouse gas emissions, and works to reduce emissions as part of the Corporate Citizenship report. The company also periodically responds to specific shareholder requests.
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