What a difference a year makes. In early 2006, Cambridge Energy Research Associates (CERA) featured a session at CERAWeek titled, “Is the Time Finally Right for Renewables?” This year, the buzz is not only about rising costs and profit margins, but about the number of sessions devoted to energy efficiency, climate change and biofuels.
CERA Chairman Dan Yergin said Tuesday he has witnessed a profound shift by energy executives in the past year. The climate change and global warming debate has moved from the “if and whether” phase to “how do we respond?” It is “really striking” how quickly the language of renewables and climate change has evolved. Now, the discussion centers around “practical questions of implementation,” Yergin told the nearly 2,000 energy executives gathered in Houston for CERAWeek 2007.
Research and development (R&D) dollars are flowing into the oil and natural gas industry on a wave Yergin said he has never witnessed before.
“There’s a sense of an energy future that is more fluid than it was a few years ago. While the energy industry has long been at the forefront of new technology, it now is prospecting for ‘technological surprises,'” he added. “We’ve never seen so much emphasis on R&D as we’ve seen across the whole spectrum. Environment, climate change and [controlling carbon dioxide emissions (CO2)] is clearly a pivot point.”
The shift in debate comes amid signs that federal action on controlling CO2 emissions is not only likely but inevitable, he said. With the Democratic takeover of Congress last year and the recent publication of a United Nations study calling for immediate action on climate change, energy executives who may have once been skeptical are now embracing the issue, said Yergin. He also noted that many presidential candidates in the 2008 race already have issued their positions on greenhouse gas emissions — and more states will follow California’s lead to enact stricter controls.
Take, for example, the shift by ExxonMobil Corp. When Lee Raymond headed the world’s largest company, Raymond made his skepticism of global warming clear (see Daily GPI, May 26, 2005). However, Rex Tillerson, who succeeded Raymond in 2006, appears to have warmed to the warming debate. He said Tuesday that not only is the Earth warmer, but the energy industry has to take part in the policy debate.
“This is an issue that crosses all boundaries [and] impacts industry and governments, but most importantly, will directly impact consumers in every part of the world,” said Tillerson.
“Our industry has a responsibility to contribute to policy debates and to take concrete steps to reduce emissions,” Tillerson said. “We know our climate is changing, the average temperature of the Earth is rising, and greenhouse gas emissions are increasing. We also know that climate remains an extraordinarily complex area of scientific study.”
In ExxonMobil’s view, “the most effective approaches will maximize the use of markets,” Tillerson said. “This will help promote global participation and facilitate the rapid spread of successful initiatives. Consistent with a market-based approach, effective policies will ensure a uniform and predictable cost of reducing carbon emissions, maximize transparency, minimize complexity and adjust to new developments in climate science and the economic impacts of policies.”
All of those participating have to “frame the discussion in terms of the realities we face — the realities of growing demand and the need for affordable, reliable energy to enable the world’s consumers to achieve genuine improvements in their quality of life.”
Tillerson noted that “many policymakers think in increments of two, four or six years, based on election cycles. In contrast, those of us in the energy industry think in increments of two, four or six decades, based on timelines to gain access to new acreage, explore for, discover and bring to production the next sources of supply.
“This is an important point, because acting impulsively in setting energy policy with the expectation of immediate results will likely have negative consequences that will be felt for decades to come.”
He also cautioned attendees that they had to explain to both the “public and policymakers” how long it will take to not just initiate but also to implement change.
“There’s clearly a change going on in the environment,” Tillerson said. “We know the planet’s getting warmer. We know greenhouse gas emissions are rising as they have been with industrial activity. How all of that interrelates given all of the other things that affect the climate, that’s the hard part.”
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