Tillerson at Exxon trial: Global warming a ‘real issue... with us now, forevermore’
Published: Nov. 1, 2019, 3:46 p.m. EDT
That’s the former oil executive in a court appearance this week replete with existential musings on climate change and some tactics for commanding a fossil-fuel giant in an evolving world.
Rex Tillerson, ExxonMobil Corp.’s (XOM) former CEO and short-tenured Secretary of State in the Trump administration, is helping defend his former company against New York charges that Exxon intentionally misled investors in accounting for the financial risk of climate change. Exxon denies wrongdoing.
Related: Big Oil’s stalled response to climate change is straight out of Big Tobacco playbook, report says, as Exxon trial to begin
Tillerson touched on the complications of meeting growth expectations in an oil-dependent economy.
“If the economies are going to continue to not just perform, but grow, if people are going to continue to want to improve their quality of life, sustain their quality of life, they’re going to have to have energy, a lot of it, and the demand is going to keep growing,” Tillerson said, according to a report on Bloomberg and other major outlets covering the trial.
“So there’s this natural tension” between that desire for growth and fixing climate change, “and that’s really the challenge that policymakers and legislators are confronted with,” he said, according to the reports.
During his roughly 10-year run at the top, the company supported the concept of a carbon tax, backed the international Paris agreement on combating climate change and created a “proxy cost” metric to inform its decision-making around emissions and future regulations, Tillerson stressed at trial. “I wanted to put into place more than talking about the fact that we knew this was serious,” he said.
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The actual issue at stake at trial is whether the company is being straight with investors over how “serious” climate risk is for Exxon.
The suit says the company essentially kept two sets of books — telling the public that it was fully taking into account the costs of potential future climate regulations, while lowballing those costs behind the scenes as it made investment decisions and assessed the value of its oil and gas reserves, the Associated Press said.
Read: Climate change will break the housing market, says David Burt, who predicted the 2008 financial crisis
On items including a big project in Canada’s oil sands, Exxon internally used lower numbers than it projected publicly to calculate climate costs, Democrat Letitia James’ state’s attorney office says. The company says it did nothing wrong, didn’t deceive investors and had no incentive to underestimate the future costs of climate change.
Still, Exxon executives did discuss among themselves the fact that its two-part system for measuring climate impacts didn’t always put the same price tag on potential carbon costs, according to evidence brought to light at the trial. Tillerson said the different numbers “were for different uses within the organization” — one a “proxy cost” for predicting how regulations worldwide might reduce demand for oil and gas, and the other a “greenhouse gas cost” used to figure how local regulations might affect specific projects, the AP said.
The trial seeks $476 million to $1.6 billion in damages for shareholders but the case is seen potentially influencing the likelihood of other climate-change suits or new regulation.
Shares in Exxon, which along with rival Chevron (CVX) issued earnings Friday, were on pace for their largest one-day percentage increase since Oct. 21, and were among the top 10 performers on the Dow Jones Industrial Average (^DJI) on Friday. The gains also tipped the scales back to yearly gains, with Exxon stock up 0.7% year to date and on track for its best year since 2016.
Read: Exxon, Chevron profits slide on lower oil prices
The Associated Press contributed.
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