Stanford President John Hennessy and Executive Director of GCEP Sally Benson introduced Mr. Tillerson, CEO of ExxonMobil since 2006. GCEP was founded in 2002 and is funded by a collaborative decade-long investment of $225 million dollars by ExxonMobil, General Electric, Schlumberger, and Toyota. ExxonMobil is the largest donor with a $100 million dollar stake in the program. ExxonMobil’s investment was largely contested when announced in 2002 with some climate change advocates and groups claiming “Big Oil” would taint the scientific process. Mr. Tillerson, in his speech, stated otherwise.
“Although our focus is on commercial applications, ExxonMobil’s more than 14,000 scientists and engineers belong to the broader technical and scientific community dedicated to energy and environmental problem-solving through technological innovation.”
ExxonMobil has provided more than $6 billion in technology investment for efficient energy usage and advancement in supply. Stanford’s GCEP program has been a part of ExxonMobil’s effort with 63 full-term research programs at 24 institutions and involvement with 18 Stanford departments. GCEP has produced 14 patent applications and nearly 160 peer-reviewed publications. One patent, a method for synthesizing hydrogen from biological reactions, was approved in April of last year.
Tillerson characterized our current energy concerns as a “dual challenge” where GCEP and ExxonMobil are attempting to meet the energy needs of global economic growth while reducing our carbon footprint. His remarks were quite sobering regarding our obligations to provide affordable energy while maintaining our duties to minimize our environmental impact.
“Growing populations in developing countries who are seeking higher standards of living will drive …increased energy demand, which is expected to be 35 percent higher in the year 2030 than it was in the year 2005, despite the current and temporary economic conditions.”
China’s current rate of fossil fuel consumption will rival that of Europe and the US combined by 2030, rising from 4 metric tons to 5.8 metric tons per capita. ExxonMobil’s current solution is a global approach involving diverse investment in a variety of economically affordable energies.
ExxonMobil is currently investing in a wide range of technologies varying from wind, solar, and nuclear energies to high-efficiency engines and alternative fuels. Recently developed technologies such as Homogeneous Charge Compression Ignition (HCCI), an engine that combines the efficient aspects of diesel and gasoline engines, have provided new, alternative possibilities to current technologies. The engine, according to ExxonMobil, is capable of 30 percent better fuel economy and lower emissions. This example is one of dozens the CEO cited that combined both economical fuel consumption with a reduction or elimination of fossil fuel emissions. The technologies were not limited to just market applications but covered the interests of ExxonMobil, too.
“Each day …we track more than 12,000 energy variables. Efforts like these have economic as well as environmental benefits. Since 2000, we have identified $1.5 billion in potential efficiency savings, approximately 60 percent of which have been captured to date.”
The efforts of ExxonMobil, based upon the data provided by Mr. Tillerson’s speech, have the potential to reduce carbon dioxide emissions by 100 million metric tons each year. While yearly world carbon outputs from fossil fuel burning approach 5 billion metric tons every year, the numbers put forth by Mr. Tillerson are still promising. ExxonMobil has invested heavily in cooperative generation, known as “cogen,” where excess heat from the power generation process is implemented into the refining process for fossil fuels. This is expected to remove 1 million metric tons of greenhouse gas emissions from the atmosphere yearly.
Mr. Tillerson was exceptionally apolitical during his speech and in his subsequent responses to the audience’s questions. However, Tillerson did offer his opinion on the adoption of a cap-and-trade system for carbon:
“[W]e believe that a carbon tax would be a more effective policy option to reduce greenhouse-gas emissions than alternatives such as cap-and-trade. Pricing carbon through a direct and transparent tax could incentivize the search for lower-emissions energy solutions while also providing the stability and predictability industrial companies need to make long-term, capital-intensive investments in equipment and research.”
“It is rare that a business lends its support to new taxes. But in this case, given the risk-management challenges we face and the alternatives under consideration, it is my judgment that a carbon tax is the best course of public policy action.”
Following the CEO’s remarks, members of the audience were allowed some time for questions. The questions, often accusatory toward the CEO, his corporation, and the industry, still managed to remain relatively civil. A humorous exchange transpired when an audience member pressed Mr. Tillerson several times on his “sticking to talk points” and suggested he become “more passionate” about his views. In response, the CEO quipped, “English studies, right?”
Tillerson’s responses to the audience’s questions defended many of his company’s decisions. He argued against an audience member’s accusation that his corporation has been “obstructionist” in the climate regulatory process. Instead, he said he felt they had a duty to be cautious when there was such a significant uncertainty in global climate models. He pointed out that ExxonMobil is the only energy company with members on the International Panel of Climate Change (IPCC).
One of the more notable questions from an audience member asked why his corporation “exploits” energy resources in other countries but “fails” to use resources in the United States. Tillerson said our government will have to change certain policies for energy exploration to continue in the US and placed blame on foreign governments for exploitation.
He concluded his talk with words of support for the future of climate and energy research. “With stable policies, long-term vision, the free exchange of ideas, sustained investment, and the power of human ingenuity, we will prove equal to the great energy challenges of our time—and achieve our shared aspiration of a brighter future for all.”
The transcript of Mr. Tillerson’s speech to the Stanford community and GCEP can be found on ExxonMobil’s website. Audio of the speech is expected to be on Stanford iTunes but, at the time of publication, has not yet been posted.