Fossil Emissions Deliver 'Nature Hike Through Book of Revelation': Gore

Three high-profile critiques shed light on the mounting moral and financial issues facing Big Oil: an incisive TED talk by climate icon Al Gore, a scathing New York Times op-ed on the industry’s “last man standing” approach, and an influential research entity’s rebuke of its flawed business model.

“Every night on the TV news is like a nature hike through the Book of Revelation,” said Nobel Laureate Gore, the former U.S. vice-president who founded the Climate Reality Project, in his recent TED talk, referring to the alarming and apocalyptic news imagery of flooding, wildfires, and other dire environmental issues plaguing the planet.

Gore went on to name two of the biggest obstacles to global climate action: Big Oil’s Orwellian ascendance into the epicentre of global climate negotiations, and the trillions of dollars in global subsidies that have been keeping the fossil fuel industry afloat.

A third obstacle he briefly addressed is the role of Big Oil in blocking climate action in legislative assemblies and courts. “Every piece of legislation, whether it is at the municipal, the regional or provincial level, the national level, or the international level, they’re in there with their lobbyists and with their fixers and their revolving-door colleagues doing everything they can to slow down progress,” Gore said.

Recalling United Nations Secretary General António Guterres’s description of the fossil industry as the “polluted heart of the climate crisis,” and decrying Big Oil’s deployment of “fraud on a massive scale” and “falsehoods on an industrial scale,” Gore condemned the industry’s “brazen” seizure of control of the COP process: a power move that “has been building for quite some time.”

COP 26 in Glasgow saw a fossil delegation larger than the largest national delegation, then last year COP 27 saw oil and gas delegates outnumbering “the combined delegation of the ten most affected countries on climate”. This year will find COP 28 hosted by the United Arab Emirates, a petro-state whose current rhetoric on climate action far outstrips reality, as revealed by this July 2023 update from Climate Action Tracker.

The COP will be presided over by Sultan Al Jaber, the UAE’s minister of industry and advanced technology and special climate envoy, who also happens to be CEO of the Abu Dhabi National Oil Co. (ADNOC), a state-owned fossil with emissions greater than ExxonMobil’s and “no credible plan whatsoever to reduce them,” Gore said.

Al Jaber and others argue that fossils should be included in the COP process because they “know a lot about energy”. Gore responded with a set of criteria, like checkboxes, that oil and gas companies would need to satisfy to demonstrate their sincerity: Do they actually have real net-zero commitments and a genuine phasedown plan? Are they committed to full disclosure? Are they going to spend windfall profits on the transition? Are they committed to transparency? Will they be in favour of reforming the COP process so that the petro-states don’t have an absolute veto on anything the world wants to discuss or act on?

Gore also challenged the industry’s notion that carbon capture and storage is a viable climate solution. Ongoing research is a good though expensive thing, but “let’s not pretend it’s for real,” he said.

As for carbon sequestration through Direct Air Capture (DAC), Gore pointed the fundamental physics problem behind a technology that involves “vacuuming” the air for the 0.035% fraction of carbon dioxide it contains.

Oil companies so fervently interested in DAC “don’t even pretend to catch the methane or the soot or the mercury or the particulate pollution that kills nine million people a year around the world,” he said.

He added that any flourishing of carbon offsets will likely make fossil companies’ net-zero commitments meaningless, recalling revelations in May that 93% of Chevron’s offsets “were worthless and junk,” and “only aimed at 10% of their emissions in the first place.”

Meanwhile, fossil fuel subsidies have increased five-fold since 2020, exceeding US$1 trillion last year, Gore said. Then 60 of the world’s largest global banks put another $5.5 trillion into the fossil industry in the years since the Paris climate agreement.

“Preposterously, 49 of these have signed net-zero pledges.”

A just-published second-quarter earnings analysis of the five biggest oil and gas companies (ExxonMobil, Chevron, Shell, BP, and TotalÉnergies) by the Institute for Energy Economics and Financial Analysis (IEEFA) finds that these huge sums of dollars continue to flow into an industry whose business model is now “a far cry from the blue-chip investment thesis that investors historically demanded from the oil and gas industry.”

Digging into the industry’s “cloudy prospects”, IEEFA identifies three core truths about what sustains it, beginning with the “disconcerting” fact that drilling for fossil fuels now requires that prices never stop rising.

“Oil companies have long since exploited the cheapest and most abundant underground deposits, so they must forever chase smaller, harder to reach, and higher-cost barrels,” writes IEEFA. “Improvements in extraction technology have helped keep cost increases in check, but geology trumps technology: As the best oil deposits are exhausted, costs go up.” After that, “financially speaking, Russia’s invasion of Ukraine was the best thing to happen to the oil and gas industry in over a decade,” with colossal fossils “benefitting handsomely” from oil prices that skyrocketed over fears of supply disruption and sabotage.

The sharp spike in prices led to fossil cash flows cresting “to their highest level ever,” allowing the companies to generate enough spare cash to boost shareholder payouts, retire debt, and stockpile cash “all at the same time.”

But the “Ukraine dividend” has now ended, and three of the five (ExxonMobil, Chevron, and Total) “have had to dip into their cash reserves in order to maintain dividends and share buybacks,” a tactic with a very long pedigree in the industry.

“From 2005 through 2020, the supermajors collectively paid about $325 billion more to investors than they generated in free cash flow,” IEEFA writes, citing its own past research. “They were able to generate a cash surplus that they could use to replenish cash reserves and pay down debt in only three of those years.”

Commenting on the now standard practice of selling off so-called “non-core assets” to raise money—and framing it as a sound business strategy—IEEFA writes that “selling a profitable enterprise in order to finance dividends can strike long-term investors as a risky move, a little like selling family heirlooms to pay for a night on the town.”

Ultimately, “the global oil giants can still draw down on cash reserves for a while to keep dividends flowing. They can borrow more money, or sell off assets.”

But what they cannot do is “count on more geopolitical turmoil” or the machinations of an oil cartel to inflate prices, meaning their strategy is “the opposite of a sustainable, low-risk business model.”

And yet, the fossil industry is “projected to spend more than $500 billion this year on identifying, extracting, and producing new oil and gas supplies and even more on dividends to return record profits to shareholders,” writes Jason Bordoff, founding director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, after spending “less than 5% of its production and exploration investments on low-emission energy sources in recent years.” This suggests the industry is “unable or unwilling to power the transition forward.”

Arguments for incapacity ring hollow, Bordoff notes, pointing to a sector that has “the technological and engineering prowess to advance clean energy.”

In the end, oil and gas industry leaders “face a stark choice,” he writes. “Either match their rhetoric with actions demonstrating convincingly that they are prepared to invest at scale in clean energy, or acknowledge that their plan is to be among the last producers and bet on a slower transition.”

Others are not willing to make that bet, Gore said in his TED talk. “We have everything we need and proven deployment models to reduce emissions by 50% in the next seven years,” even as “we will still need better grids, more resilient grids, more solar and wind, much more regenerative agriculture,” he said. “That’s a way to really pull carbon out of the air.”

Above all, Gore said, it’s essential not to succumb to despair. “We are going to do this. And if you doubt that we as human beings have the will to act, please always remember that the will to act is itself a renewable resource.”