- 🔎 Market Mysteries
🔎 Market Mysteries
Are fossil fuel companies the rightful villains of the climate crisis?
Yes, fossil fuel companies should definitely take a lot of heat for knowingly misinforming, misdirecting, and impeding efforts to combat human-made climate change. However, focusing the narrative exclusively against fossil fuel companies ignores the responsibility of the government and the largest consumers. Corporations need to decrease their dependency on fossil fuels rapidly, and policymakers need to stop getting in the way.
Why are people angry with fossil fuel companies?
Energy companies have known for decades that their products could have devastating effects on the planet and tried to hide it. The American Petroleum Institute, as early as 1968, understood that burning coal, oil, and gas releases dangerous pollution that traps heat in our atmosphere, warming the planet and disrupting Earth’s climate systems. By the 1980s, Exxon and Shell's internal scientists had confirmed these discoveries, and bipartisan Congressional committees were working on climate policies to address carbon emissions. As fossil fuel-driven climate change made it all the way into late President Bush’s campaign pledges, the industry realized the attention and business risks had grown too large. The fossil fuel industry borrowed Big Tobacco’s playbook for misinformation about the dangers of their product for the next several decades. Even as the general public grew more aware of the risks, the misinformation strategies, lobbying, and greenwashing continued. Exxon execs were recorded discussing their plots as recently as 2021.
Energy companies continue to show little regard for consumer safety. Only two-thirds of fossil fuel companies have committed to reducing operational pollution in line with global safety targets. Few include the emissions from burning gas, oil, and coal in their pledges. Several major energy companies have already walked back promises made two years prior after a return to record-breaking profits. Those profits weren’t reinvested in a clean energy transition. Investors are giving up trying to engage them on responsible long-term investments, and more than $40 trillion of pensions, endowments, and other institutional funds have divested from fossil fuels. The companies have quietly set plans to expand their fossil fuel production well beyond scientists’ safe guidance, investing $103 million daily in exploiting new oil and gas fields for the rest of the decade. This planned production will unlock the equivalent of a decade of carbon emissions from China. Fossil fuel companies will keep pumping oil regardless of the consequences as long as there’s demand.
Why don’t we shut them down?
America is still caught in a debate about the impact of burning fossil fuels on climate change. However, the counter consensus keeps shrinking as the world faces more extreme heat and severe weather. There is now an undeniable bounty of scientific evidence and certainty that the planet is warming and humans are to blame. The implied uncertainty of predicting the future, let alone unprecedented weather and ecological events, leaves room for debate about the urgency and severity of consequences. Unfortunately, the reality seems to be that things are getting worse far more quickly than scientists predicted, but the misinformation machine is still active. One can only speculate why leaders serving in theoretically not-for-profit positions with ample resources and information would choose to deny a thoughtful transition to clean energy. Pollution is bad. We’ve moved on from lead and asbestos. We should continue to improve the safety and efficiency of our energy technology.
We can’t shut down fossil fuel companies today anyway. Besides the concerns for the 8 million workers in the energy industry, most of our energy use cannot yet be supplied by wind or solar. Electricity only accounts for a fifth of our total energy use. We still need to burn fossil fuels to heat our homes, fuel our cars, and power our industrial production, heavy machinery, and more. But a transition to renewables is not only possible but accelerating. New government policies have accelerated investment toward clean energy, electric cars, home energy efficiency, and home electrification. Electric vehicle sales are soaring. All but one of America’s existing coal plants are more expensive to keep operating than to replace with clean energy. Renewables should pass coal as the world’s biggest electricity source by 2025. Forty percent of employment in the US energy sector is now focused on clean energy. Those jobs offer higher pay at a more accessible education level, too. We still need fossil fuels to power the world today, but the alternatives are expanding rapidly.
Is blaming fossil fuels the best strategy?
Placing all of the blame on the supplier neglects the reality of the market. The consumers and the market regulators must bear responsibility as well. Governments worldwide continue making pledges to reduce dependence on fossil fuels while funding fossil fuel expansion. Explicit global subsidies to facilitate the consumption of fossil fuels have doubled in the past two years. Total government financial support for this antiquated energy system ballooned to $7 trillion in 2022.
Consumers need to be held accountable. We’re not talking about individuals. Corporate consumption of fossil fuel energy generates 70% of the world’s greenhouse gas emissions. America’s biggest companies have the funding and resources to invest in the innovations required to transition to a cleaner energy economy. Some are taking leadership roles, but more need to step up. Big tech companies like Google have demonstrated how quickly trillion-dollar companies can shift to renewable energy, influencing not only their operations but upgrading the whole grid. Tesla inspired Ford and General Motors to set ambitious goals for transitioning to all-electric vehicles and expanding the charging network infrastructure. Plug Power, Nike, and Air Products are investing in green hydrogen. United and Delta are scaling sustainable aviation fuels to cut emissions by 80%. JPMorgan, Microsoft, and Apple have been instrumental in funding early-stage carbon capture innovation. The most significant players must keep taking ownership of the transition, funding innovation, and slashing their dependence on fossil fuels.
How do we get companies to cut back on fossil fuels?
The word of the movement is net-zero emissions. Companies need to track the amount of greenhouse gases emitted into the environment as a result of their operations and existence and take steps to reduce or offset those emissions as much as possible. These pledges can include shifts to renewable energy, sustainability improvements for their products, or shifting their shipping vehicles to electric. Many have started doing this, and the numbers are increasing, but there’s still a long way to go.
Corporate emissions reporting is still a bit of a mess. We’ve discussed that the process is primarily voluntary within the US and lacks standardization and consistency. Global organizations have started aligning on sustainability reporting, but the United States is still behind on standards and enforcement.
The inconsistency and lack of standardization for reporting emissions and sustainability improvements open room for criticism and obstruction. In parallel with attacks on corporate diversity initiatives, lawmakers have sought to block investors from considering environmental risks or asking companies to report them. The battle between fossil fuel-friendly lawmakers and global environmental responsibility trends seems far from over.
While the power of the fossil fuel industry remains resolute against the potential for a safer, cleaner, and more inhabitable future, we need to move quickly to avoid the trajectory of the worst effects of climate change. We must demand more net-zero pledges and faster shifts toward renewable energy infrastructure.
The Scoop Team
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