The Cooperative Society Newsletter
April 2024, Issue 46
By E.G. Nadeau, Ph.D.
In early March 2024, Darren Woods, chief executive of ExxonMobil, the world’s largest investor-owned oil company, asserted that “‘The world is off track to meet its climate goals and the public is to blame.’ Exxon is among the top contributors to global planet-heating greenhouse gas emissions. But Woods argued that big oil is not primarily responsible for the climate crisis.”
As the article in The Guardian goes on to report, “Experts say Woods’s rhetoric is part of a larger attempt to skirt climate accountability. No new major oil and gas infrastructure can be built if the world is to avoid breaching agreed temperature limits but Exxon, along with other major oil companies currently basking in record profits, is pushing ahead with aggressive fossil-fuel expansion plans.”
‘’‘It’s like a drug lord blaming everyone but himself for drug problems,’ said Gernot Wagner, a climate economist at Columbia business school.’” (Quoted from the same article.)
In a similar vein to Woods’s comments, Amin H. Nasser, the CEO of Saudi Aramco, the world’s largest oil and natural gas company, recently labeled the phaseout of fossil fuels as a “fantasy.”
The source of 80% of CO2 emissions
To underscore what the real fantasyland is, one needs only to look at the recent headline-grabbing Carbon Majors Database Launch Report, page 31, published in April 2024. One of the most startling statistics in the report is that ”57 fossil fuel and cement producers [are] linked to 80% of global fossil CO2 emissions since the Paris Agreement” signed by 196 Parties at the UN Climate Change Conference in 2015. In other words, the world’s fossil fuel emissions could be radically reduced by changing the behavior of a few dozen companies.
Why aren’t we able to swiftly ameliorate the climate crisis? The basic answer is that the world’s economic problem-solving model is broken. We are deferring to those most responsible for global warming and other world problems – large for-profit corporations, powerful governments, and their enabling political and economic elites – to solve the very problems that they are responsible for creating and perpetuating. Wagner’s reference to drug lords is a very apt analogy.
So, we need a new paradigm, one based on putting the well-being of the many ahead of the profits and power of the few.
Supply and demand
In a December 2023 article I outlined one strategy for outmaneuvering the fossil fuel industry: reducing the demand for their products by continuing to reduce the relative cost of clean energy compared to dirty energy. As I wrote, “Basic economics tells us that no matter how much fossil fuel companies can produce, they won’t be able to sell their products if they are not competitive in the marketplace. In other words, dirty energy companies can control supply of their products, but they can’t control demand for them. As demand dries up, the market for oil, gas, and coal disappears.”
I cited the example of the European Union as employing such a demand-side strategy that puts its 27 member countries on track for net zero carbon emissions by 2050. A key part of the strategy is an Emissions Trading System that transitions EU companies from fossil fuels to clean energy such as solar, wind, and geothermal energy. A second component, as summarized by the European Commission, is to use a “Carbon Border Adjustment Mechanism (CBAM) . . . to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.”
Expanding the EU’s initiative
But the EU cannot fight this battle alone. The world needs a Carbon Reduction Initiative II – a broad, international coalition of countries that would accelerate their pace of change toward an increased use of clean energy. Coalition members could impose a tax on carbon emissions generated by domestic companies similar to the EU’s cap and trade system, and a border adjustment mechanism applied to the importation of carbon-intensive goods. If the United States, the United Kingdom, Australia, Japan, South Korea, and dozens of other countries were to enact such carbon taxes on domestically produced and imported goods, China, India, Russia, and other major oil-, gas-, and coal-producing states and companies would be far more inclined to abandon their dirty energy ways.
There are a range of other components to this demand-side strategy favoring clean energy over dirty energy. Clean energy is less expensive (and on course to being even more economical in the decades ahead). It’s also a far less risky long-term investment for companies and countries that are likely to face stranded assets when the value of their fossil fuel energy reserves decreases as demand drops off. The longer these countries and companies wait to join the clean energy bandwagon, the more expensive their energy transitions will be.
Clean energy also doesn’t pose the health risks of fossil fuels such as polluted communities; accidents arising from production, distribution, and industrial applications; and environmentally ravaged landscapes.
Legal challenges against fossil fuel companies are also on the rise within countries and in international courts. These costly challenges are based on the environmental degradation, overvaluation, and lies that fossil fuel companies have spread about the “benefits” of their products.
In summary, we are already beginning to break our addiction to fossil fuels as the world’s primary sources of energy. We can accelerate this recovery through concerted efforts to rapidly reduce demand for fossil fuels among most of the world’s countries.