There is a time to weep and a time to laugh. And the recent letter from ExxonMobil urging President Trump not to exit the Paris climate agreement provides a time for both, with a heavy emphasis on the latter. Let us review the letter in detail, subjecting its assertions to the most basic principles of policy analysis.
Related reading: The Absurdity That Is the Paris Climate Agreement
“ExxonMobil supports the Paris Agreement as an effective framework for addressing the risks of climate change.” Really? If we apply the EPA climate model under a set of assumptions that strongly exaggerate the effectiveness of international emissions reductions, the Paris emissions cuts would reduce temperatures by 2100 by 0.17 degrees if achieved by 2030 and maintained fully on an international basis through 2100. And that would be at a cost of at least 1 percent of global GDP, or roughly $600 billion to $750 billion or more per year, inflicted disproportionately on the world’s poor. ExxonMobil may view that outcome as “effective,” but there is little reason for Mr. Trump to do so.
The Eiffel tower is illuminated in green with the words “Paris Agreement is Done”, to celebrate the Paris UN COP21 Climate Change agreement in Paris, France, November 4, 2016. Reuters
“The Paris Agreement is the first major international accord to address climate change that includes emissions reduction pledges from both developed and developing economies.” Actually, it does not, for two reasons. First, the agreement contains no mechanism to enforce the “pledges,” and it is difficult to see how enforcement might be implemented even in principle. Is anyone going to invade someone else over greenhouse gas (GHG) emissions? In a world with massive human tragedy and refugee migration, proliferation of weapons of mass destruction, and all the other modern manifestations of the inhumanity of man, moral suasion is laughable as a source of implicit enforcement.
Second, the “pledges” are incorporated in Intended Nationally Determined Contributions (INDC), which for the most part promise GHG emissions cuts relative to a “business as usual” baseline, that is, relative to a future emissions path unconstrained by any policies at all. Since emissions are closely correlated with economic growth, a nation can “achieve” its promise by overestimating future economic growth slightly; when future growth proves lower than projected, the same will be true for GHG emissions. Thus will the “commitments” be met without any actual change in underlying emissions behavior at all. INDC fulfilled!
Consider the Chinese “commitment”: They promise that their GHG emissions will peak “around 2030.” How high will that peak be? No one knows. What will their emissions be after the peak? No one knows. And if their emissions continue to rise after 2030, what will anyone do about it? The question answers itself.
“[The pledges from developing economies are] critical, as developing countries already account for a majority of greenhouse gas emissions.” The letter fails to note the obvious, to wit, that it is the developing economies that can least afford the higher energy costs of climate change policies. Accordingly, a “green climate fund” has been established so that the developed economies can subsidize the developing ones. It is supposed to raise $100 billion per year; thus far a total of about $10 billion has been “pledged.” ExxonMobil presumably supports the green climate fund—it is other people’s money—as such transfers are the only tool with which to induce the less developed economies to participate. But it is economic growth that the developing world needs above all else. Is putting those economies on climate policy welfare consistent with development of the institutions needed to reduce poverty and thus increase willingness to invest in environmental protection? Surely ExxonMobil understands this larger dimension of the problem. Or does it?
Related reading: An Agreement to Prop up the Climate Industry
“We believe that the United States is well positioned to compete within the framework of the Paris Agreement.” Translation: The Paris agreement will increase energy costs for everyone, but because the US has a lot of cheap natural gas—asubstantial part of which is produced by ExxonMobil—we will have a competitive advantage within the agreement. Well, maybe so, but we will have even more of a competitive advantage if we exit the agreement while Germany and the other Western economies insist on remaining within it. Does it make sense to shoot ourselves in the foot merely because others have shot themselves in both feet? According to ExxonMobil: Yes!
“Greater natural gas utilization has helped the United States [prevent] 1 billion metric tons of CO2 from being emitted into the atmosphere since 2005.” Wow. Global GHG emissions are about 36 billion tons per year, or very roughly 400 billion tons “since 2005.” So “greater natural gas utilization” by the US has reduced GHG emissions by 0.25 of a percent. The temperature effect in the year 2100, again using the EPA climate model: 0.00002 degrees. ExxonMobil should ask itself how useful such propaganda exercises are likely to prove in the long run.
“It is prudent that the United States remain a party to the Paris Agreement to ensure a level playing field, so that global energy markets remain as free and competitive as possible.” Wow again. The Paris agreement is an obvious cartelization mechanism, designed to reduce the competitiveness of fossil fuels in favor of wind and solar power and other such forms of energy that cannot compete without subsidies and government meddling in markets. That the Paris agreement is government meddling on an international scale merely proves the point. That ExxonMobil, apparently with a straight face, can defend the Paris agreement on the grounds that it will enhance the freedom and competiveness of global energy markets is, to be blunt, Orwellian.
So there we have it. In the view of ExxonMobil, the US should stay in an agreement that would have virtually no impact on future temperatures, but at a very large cost, on the basis of emissions promises that are unenforceable and largely meaningless, so as to preserve US competitiveness even though leaving the agreement would do so even more effectively, while ensuring free and open competition that just happens to favor ExxonMobil’s natural gas assets. Only inside the Beltway could anyone hope that such silliness would be taken seriously.