OPEC earned about $711 billion in net oil export revenues (unadjusted for inflation) in 2018
Saudi Arabia accounted for the largest share of total OPEC earnings, $237 billion
India only imports between 4.5 and 5 million barrels per day of oil, but it is shaping up to be the biggest competitive space for producers
OPEC is still making money, despite challenges coming from every which way.
Be it falling prices, market volatility, regional insecurity, trade wars, armed conflict, talks of recession, US production, electric vehicles and renewable energy, or US Iranian sanctions, OPEC still finds a way to generate billions in revenues.
Now, mixed with current production leaders are a few new players making a splash.
The 2018 net oil export revenues increased by 32% from the $538 billion earned in 2017, mainly as a result of the increase in average annual crude oil prices during the year and a slight increase in OPEC net oil exports.
Saudi Arabia accounted for the largest share of total OPEC earnings, $237 billion in 2018, representing one-third of total OPEC oil revenues.
EIA expects that OPEC net oil export revenues will decline to about $604 billion (unadjusted for inflation) in 2019, based on forecasts of global oil prices and OPEC production levels in EIA’s August 2019 Short-Term Energy Outlook (STEO), according to Hellenic Shipping News.
EIA’s forecasts that OPEC crude oil production will average 30.1 million barrels per day (BPD) in 2019, 1.8 million BPD lower than in 2018.
For 2020, OPEC revenues are expected to be $580 billion, largely as a result of lower OPEC production.
Important countries to watch for in the oil sector
5. India—Right now India only imports between 4.5 and 5 million barrels per day of oil, but it is shaping up to be the biggest competitive space for producers.
India is the third-largest oil consumer in the world. Previously, the biggest competition ground for oil producers was for sales to China, but with 1.37 billion people, India has the potential to impact the market much like China has.
4. Saudi Arabia—This Arab Gulf nation owns the world’s most profitable (oil) company, houses the second-largest proven oil reserves in the world, and has the most spare capacity of any country. Oil from Saudi Arabia fuels much of east Asia. Aramco is also expanding its exports to India to compensate for lost Iranian oil.
2. China—This country is the second-largest consumer of oil and is the largest oil importer in the world at around 10.64 million barrels per day. China is such an important oil consumer that any indication that economic growth in China is slowing sends oil prices tumbling.
1. United States –The U.S. is currently producing oil at record levels (12.3 million barrels per day according to the EIA). This is being driven by the shale oil industry. The U.S has shown its ability to impact other countries’ oil business, as it did with Iran’s exports in recent months. Presidential tweets also impact prices.
Author Hadi Khatib is a business editor with more than 15 years’ experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.
The state energy giant’s vast oil reserves – it can sustain current production levels for the next 50 years – make it more exposed than any other company to a rising tide of environmental activism and shift away from fossil fuels.
In the three years since Saudi Crown Prince Mohammed Bin Salman first proposed a stock market listing, climate change and new green technologies are putting some investors, particularly in Europe and the United States, off the oil and gas sector.
Sustainable investments account for more than a quarter of all assets under management globally, by some estimates.
Aramco, for its part, argues oil and gas will remain at the heart of the energy mix for decades, saying renewables and nuclear cannot meet rising global demand, and that its crude production has lower greenhouse gas emissions than its rivals.
But with the company talking again to banks about an initial public offering (IPO), some investors and lawyers say the window to execute a sale at a juicy price is shrinking and Aramco will need to explain to prospective shareholders how it plans to profit in a lower-carbon world.
“Saudi Aramco is a really interesting test as to whether the market is getting serious about pricing in energy transition risk,” said Natasha Landell-Mills, in charge of integrating environment, social and governance (ESG) considerations into investing at London-based asset manager Sarasin & Partners.
“The longer that (the IPO) gets delayed, the less willing the market will be to price it favourably because gradually investors are going to need to ask questions about how valuable those reserves are in a world that is trying to get down to net zero emissions by 2050.”
Reuters reported on Aug. 8 that Prince Mohammed was insisting on a $2 trillion valuation even though some bankers and company insiders say the kingdom should trim its target to around $1.5 trillion.
A valuation gap could hinder any share sale. The IPO was previously slated for 2017 or 2018 and, when that deadline slipped, to 2020-2021.
Aramco told Reuters it was ready for a listing and the timing would be decided by the government.
The company also said it was investing in research to make cars more efficient, and working on new technologies to use hydrogen in cars, convert more crude to chemicals and capture CO2 which can be injected in its reservoirs to improve extraction of oil.
SELLING THE STORY
Some would argue this is not enough.
A growing number of investors across the world are factoring ESG risk into their decision-making, although the degree to which that would stop them investing in Aramco varies wildly.
Some would exclude the company on principle because of its carbon output, while others would be prepared to buy if the price was cheap enough to outweigh the perceived ESG risk – especially given oil companies often pay healthy dividends.
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At a $1.5 trillion valuation, Aramco would be the world’s largest public company. If it were included in major equity indices it would automatically be bought by passive investment funds that track them, regardless of their ESG credentials.
And as the world’s most profitable company, Aramco shares would be snapped up by many active investors.
Talks about a share sale were revived this year after Aramco attracted huge investor demand for its first international bond issue. In its bond prospectus, it said climate change could potentially have a “material adverse effect” on its business.
When it comes to an IPO, equity investors require more information about potential risks and how companies plan to deal with them, as they are more exposed than bondholders if a business runs into trouble.
“Companies need to lead with the answers in the prospectus, rather than have two or three paragraphs describing potential risks from environmental issues,” said Nick O’Donnell, partner in the corporate department at law firm Baker McKenzie.
“An oil and gas company needs to be thinking about how to explain the story over the next 20 years and bring it out into a separate section rather than hiding it away in the prospectus, it needs to use it as a selling tool. And also, once the IPO is done, every annual report should have a standalone ESG section.”
Unlike other major oil companies, Aramco doesn’t have a separate report laying out how it addresses ESG issues such as labour practices and resource scarcity, while it does not publish the carbon emissions from products it sells. Until this year’s bond issue, it also kept its finances under wraps.
The company does however have an Environmental Protection Department, sponsors sustainability initiatives and is a founding member of the Oil and Gas Climate Initiative, which is led by 13 top energy companies and aims to cut emissions of methane, a potent greenhouse gas.
On Aug. 12 Aramco published information on the intensity of its hydrocarbon mix for the first time. It disclosed the amount of greenhouse gases from each barrel it produces.
Aramco’s senior vice president of finance Khalid al-Dabbagh said during an earnings call this month that its carbon emissions from “upstream” exploration and production were the lowest among its peers.
A study published by Science magazine last year found carbon emissions from Saudi Arabia’s crude production were the world’s second lowest after Denmark, as a result of having a small number of highly productive oilfields.
THE OIL PRICE
Aramco says that, with the global economy forecast to double in size by 2050, oil and gas will remain essential.
“Saudi Aramco is determined to not only meet the world’s growing demand for ample, reliable and affordable energy but to meet the world’s growing demand for much cleaner fuel,” it told Reuters.
“Alternatives are still facing significant technological, economic and infrastructure hurdles, and the history of past energy transitions shows that these developments take time.”
The company has also moved to diversify into gas and chemicals and is using renewable energy in its facilities.
But Aramco still, ultimately, represents a bet on the price of oil.
It generated net income of $111 billion in 2018, over a third more than the combined total of the five “super-majors” ExxonMobil (XOM.N), Royal Dutch Shell (RDSa.AS), BP (BP.L), Chevron (CVX.N) and Total (TOTF.PA).
In 2016, when the oil price hit 13-year lows, Aramco’s net income was only $13 billion, according to its bond prospectus where it unveiled its finances for the first time, based on current exchange rates. Its earnings fell 12% in the first half of 2019, mainly on lower oil prices.
Concerns about future demand for fossil fuels have weighed on the sector. Since 2016, when Prince Mohammed first flagged an IPO, the 12-months forward price to earnings ratio of five of the world’s top listed oil companies has fallen to 12 from 21 on average, according to Reuters calculations, lagging the FTSE 100 and the STOXX Europe 600 Oil & Gas index averages.
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AN INFLUX OF CAPITAL
Using a broad measure, there was global sustainable investment of $30.1 trillion across the world’s five major markets at the end of 2018, according to the Global Sustainable Investment Review here, more than a quarter of all assets under management globally. That compares with $22.8 trillion in 2016.
For a graphic on More investors commit to ESG investing png, click here
“Given the influx of capital into the ESG space, Aramco’s IPO would have been better off going public 5-10 years ago,” said Joseph di Virgilio, global equities portfolio manager at New York-based Romulus Asset Management, which has $900 million in assets under management.
“An IPO today would still be the largest of its kind, but many asset managers focusing solely on ESG may not participate.”
The world’s top listed oil and gas companies have come under heavy pressure from investors and climate groups in recent years to outline strategies to reduce their carbon footprint.
Shell, BP and others have agreed, together with shareholders, on carbon reduction targets for some of operations and to increase spending on renewable energies. U.S. major ExxonMobil, the world’s top publicly traded oil and gas company, has resisted adopting targets.
Britain’s biggest asset manager LGIM removed Exxon from its 5 billion pounds ($6.3 billion) Future World funds for what it said was a failure to confront threats posed by climate change. LGIM did not respond to a request for comment on whether it would buy shares in Aramco’s potential IPO.
Sarasin & Partners said in July it had sold nearly 20% of its holdings in Shell, saying its spending plans were out of sync with international targets to battle climate change. The rest of the stake is under review.
The asset manager, which has nearly 14 billion pounds in assets under management, didn’t participate in Aramco’s bond offering and Landell-Mills said they would be unlikely to invest in any IPO.
Additional reporting by Ron Bousso in London and Victoria Klesty in Oslo; Editing by Carmel Crimmins and Pravin Char
DUBAI (Reuters) – When Saudi Aramco was on the verge of a deal last year to buy a stake in an Indian oil refinery, its boss quickly boarded a company jet in Paris and flew to New Delhi.
Chief executive Amin Nasser arrived unannounced early on April 11, 2018, finalised the agreement and signed it later that day. Negotiators had just finished hammering out the details.
His last-minute flight, after a business trip to France with Crown Prince Mohammed bin Salman, underlined the importance of the deal both to Saudi Arabia and its huge state oil firm.
The planned investment in the $44-billion (£35 billion) refinery and petrochemical project on India’s west coast is a prime example of how Aramco is trying to squeeze value out of each barrel of oil it produces by snapping up refining capacity, mainly in fast-growing Asia.
But it also underlines the challenge Saudi Arabia faces in reducing its heavy economic reliance on oil. The results of its programme to diversify have been mixed, some projects are moving slowly and others are too ambitious, economic and energy analysts say.
Prince Mohammed’s stated goal of being able to “live without oil” by as early as 2020 looks set to be missed.
“Saudi Arabia’s oil addiction is as strong as ever…economically, of course, the Saudi economy runs on oil. Oil still dominates GDP, exports and government revenues,” said Jim Krane, energy fellow at Rice University’s Baker Institute.
“That said, Saudi Arabia is changing its relationship with oil. The dependence remains. But the kingdom is squeezing more value out of its oil,” he said.
The slow progress means the Saudi economy is likely to remain hostage to oil prices for longer than planned. Any delay in implementing change also risks denting Prince Mohammed’s image as a reformer.
SECURING THE FUTURE
Announcing his plan three years ago, the Crown Prince said Saudi Arabia must end its “oil addiction” to ensure the world’s biggest oil exporter and second largest producer cannot be “at the mercy of commodity price volatility or external markets.”
He spoke after a fall in crude oil prices boosted the Saudi fiscal deficit to about 15% of gross domestic product in 2015, slowing government spending and economic growth.
This year the deficit could hit 7% of GDP, according to the International Monetary Fund, as oil-related growth slows following production cuts led by the Organization of the Petroleum Exporting Countries.
Aramco is central to the Crown Prince’s reform plan in several ways, not least because its planned partial privatisation will generate income for the reforms.
The company has also been involved in most of the kingdom’s high-profile deals in the last two years as it increased investment in refining and petrochemicals.
In that time, Aramco has announced at least $50 billion worth of investments in Saudi Arabia, Asia and the United States. It aims to almost triple its chemicals production to 34 million metric tons per year by 2030 and raise its global refining capacity to 8-10 million barrels per day (bpd) from more than 5 million bpd.
In March last year, Aramco finalised a deal to buy a $7 billion stake in a refinery and petrochemicals project with Malaysia’s Petronas. A month later, Nasser and a consortium of Indian companies signed the initial deal that would give Aramco a stake in the planned 1.2 million bpd refinery in India’s western Maharashtra state.
In February of this year, Aramco signed a $10 billion deal for a refining and petrochemical complex in China. Last month it signed 12 deals with South Korea worth billions of dollars, ranging from ship building to an expansion of a refinery owned by Aramco.
“This is what I call the back to basics approach to economic diversification in the Gulf,” said Robin Mills, chief executive of energy consultancy Qamar Energy in Dubai. “The energy industry has the assets, capital and skills, so it’s the engine of new projects – refining, petrochemicals, gas and so on.”
MR UPSTREAM LOOKS DOWNSTREAM
In March, Aramco said it was acquiring a 70 percent stake in petrochemicals firm Saudi Basic Industries (SABIC) (2010.SE) for $69.1 billion from the national wealth fund, known as the Public Investment Fund (PIF).
Aramco is gaining new markets for its crude and building a global downstream presence – the refining, processing and purifying end of the production line. Its aim is to become a global leader in chemicals.
“We are not investing left and right, we are investing in the right markets, we are investing in the right refining assets, we are investing where we create value from fuels to chemicals,” Abdulaziz al-Judaimi, Aramco’s Senior Vice President for Downstream, told Reuters in May.
Nasser, previously known by Aramco employees as Mr Upstream, is leading the downstream expansion. He wants to bring Aramco’s refining capacity closer to its oil production potential, which is now at 12 million bpd.
Aramco wants gradually to match the downstream presence of its big competitors and, like Saudi Arabia as a whole, to reduce its vulnerability to any downturn in demand for crude oil or oil price volatility.
“You want to secure your demand in key markets,” said an industry source familiar with Saudi Arabia’s oil plans. “You have to become more dynamic, to become more adaptable, you have to make sure that you secure your future. Malaysia was one example, India was another.”
For years, Aramco has been a regular crude supplier to Indian refiners via long-term crude contracts.
Yet while it has stakes in refineries or storage assets in other important Asia markets such as China, Japan and South Korea – and owns the largest refinery in the United States – it has not secured that same access in India, a fast-growing market for fuel and petrochemicals.Slideshow (2 Images)
“India is a market that you just can’t ignore anymore,” an industry source said.
Aramco has also shifted its marketing strategy in China. It is now more oriented towards independent refiners to boost Saudi crude sales after years of dealing almost exclusively with state-owned Chinese firms.
But overall, plans to wean Saudi Arabia of oil have advanced slowly.
Few details have emerged of a $200-billion solar power-generation project announced by the PIF and Japan’s SoftBank in March 2018. It is unclear how or when the project will be executed, and Saudi’s Arabia’s energy ministry is moving ahead with its own solar projects.
In a blow to potential investment, the image of Saudi Arabia and the reputation of the Crown Prince have been damaged by the murder of journalist Jamal Khashoggi in the Saudi consulate in Istanbul last year.
Leading businessmen and politicians boycotted an investment forum meant to showcase the kingdom’s new future away from oil, and it was only big deals with Aramco that saved it.
Also, the partial privatisation of Aramco has been delayed since it set out its plans to acquire the stake in SABIC, though senior Saudi officials including Energy Minister Khalid al-Falih have said it could now happen in 2020-2021.
The PIF, chaired by Prince Mohammed, was meant to receive around $100 billion from the flotation. Instead it will get around $70 billion from the sale of its SABIC stake.
The PIF made its mark on the global stage three years ago by taking a $3.5- billion stake in Uber Technologies. But since 2016, the PIF’s direct investments overseas stand at just $10.5 billion, according to Refinitiv data, and many of the fund’s announced commitments have yet to materialise.
The funds’ main investments over the past two years were inequity shares in companies such as electric car makers Tesla (TSLA.O) and Lucid Motors and Gulf e-commerce platform Noon.com.
Such deals would not necessarily attract inward foreign investment, help develop industries or create jobs.
Additional reporting by Marwa Rashad and Hadeel Al Sayegh; writing by Rania El Gamal; editing by Ghaida Ghantous and Timothy Heritage
New York (CNN Business) The epic American oil boom is just getting started. OPEC, on the other hand, is stuck on the sidelines. US oil production is on track to spike to a record 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas alone is expected to soon top 5 million barrels per day in oil production — more than any OPEC member other than Saudi Arabia. Oil plunges back into bear market The surge in American barrels — led by the Permian Basin in West Texas — has offset oil blocked by US sanctions on Venezuela and Iran. But all of that US oil is also contributing to a supply glut that last week sent crude into another bear market. OPEC has been forced to scale back its output — a trend that could continue as the cartel tries to prop prices back up. “We continue to see the Permian representing the key driver of global oil supply growth for the next five years,” Goldman Sachs analyst Brian Singer wrote to clients on Monday.
US daily output could soon top 14 million
The shale oil revolution has made the United States the world’s leading producer, surpassing Saudi Arabia and Russia. The ferocity of the US shale oil revolution has caught analysts off guard several times over the past decade. Rystad Energy ramped up its year-end US output forecast by 200,000 to 13.4 million barrels per day. In May, the United States likely produced a record 12.5 million barrels of oil per day, the firm added. All but four million of those barrels were from shale oilfields. That growth is expected to continue. The United States is on track to end 2020 by producing 14.3 million barrels per day, Rystad projects. That’s slightly higher than the firm previously estimated and nearly triple 2008’s output. Of course, analysts could have to rein in those blockbuster forecasts if oil prices crash significantly further. That would force American frackers to preserve cash and pull back on production.
OPEC’s production hits five year low
OPEC remains in retreat as the cartel tries to balance the market by putting a floor beneath prices. OPEC’s oil production tumbled to 29.9 million barrels per day in May, the lowest level in more than five years, Rystad said. OPEC output is down 2.6 million per day since October 2018 — the month before oil prices crashed into the last bear market. Khalid al-Falih, Saudi Arabia’s energy minister, said on Friday that OPEC is close to a deal to extend its production cuts. Those cuts, which Saudi Arabia has borne the brunt of, are due to expire at the end of June. The stock market is ‘spoiled’ by rate cuts” We think that OPEC will at least maintain its output cuts, and maybe even deepen them at their next meeting,” Caroline Bain, chief commodities economist at Capital Economics, wrote in a note to clients on Monday. Rystad dimmed its projection for Saudi Arabia’s oil production from 10.6 million barrels per day to 10.3 million.
Venezuela, Iran under pressure
OPEC’s output could be further hurt by problems in some of its member countries. Iran’s oil exports have plunged because of US sanctions. The years-long collapse of Venezuela’s oil industry has been accelerated in recent months by US sanctions and sprawling blackouts in the South American nation. “There appears little prospect of a recovery in output from Iran or Venezuela any time soon,” Bain wrote. Violence is also threatening oil production in Libya and Nigeria. All told, Rystad Energy estimates 1.3 million barrels per day of oil production is at risk in those four OPEC nations. “Risks to short-term supply are undoubtedly still plentiful,” Rystad analyst Bjørnar Tonhaugen said in the report.
Will crude slide below $50?
Despite all this, analysts aren’t predicting a spike in oil prices. If anything, forecasters are bracing for more pressure on prices, due in part to robust US production. Brent, which has tumbled about 15% since late April to $63 a barrel, should finish the year at around $60 a barrel, according to Capital Economics. The US economy is about to break a record. These 11 charts show why US oil prices, trading at about $54 a barrel, are down nearly 19% since late April. Recent selling has been driven by a spike in oil inventories that suggest demand for crude is deteriorating. Goldman Sachs said that a reversal in the oil demand metrics will be required to prevent US oil prices from sinking below the $50-$60 range.”Our real concern is over demand weakness,” consulting firm Facts Global Energy wrote in a report on Monday. “Have we entered an era where demand will keep falling and we have a lot more oil on our hands than expected?”
Polluters, as all those big energy producers (Big Oils, OPEC members and non members alike) are labelled, appeared to be ‘undermining’ UN climate Paris agreement. In effect, Oil, Gas and Coal world giants are exploiting a lack of conflict-of-interest protection at UN climate talks to push for continued fossil fuel use despite its contribution to catastrophic climate change through expensive lobbying campaigns because as it happens these oil, gas and coal giants could stand to waste trillions in a moderate world climate change. Patrick Galey elaborates on Phys.org.
The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.
Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.
Two of the companies—Shell and Chevron—said they rejected the watchdog’s findings.
“The fossil fuel sector has ramped up a quite strategic programme of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.
“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”
The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.
At the same time, the International Panel on Climate Change—composed of the world’s leading climate scientists—issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.
InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.
It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.
“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.
It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.
The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.
“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.
The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.
In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.
With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.
Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.
AFP contacted all five oil and gas companies mentioned in the report for comment.
“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.
“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”
A spokeswoman for Shell—which the report said spends $49 million annually on climate lobbying—said it “firmly rejected” the findings.
“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.
BP, ExxonMobil and Total did not provide comment to AFP.
To date, nine cities have
sued the fossil industry for climate damages. California fisherman are going after oil companies for their role in warming the Pacific Ocean,
a process that soaks the Dungeness crabs they harvest with a dangerous neurotoxin.
Former acting New York state attorney general Barbara Underwood has
opened an investigation into whether ExxonMobil has misled its
shareholders about the risks it faces from climate change, a push current
Attorney General Leticia James has said she is eager to keep up. Massachusetts
attorney general Maura Healey opened an earlier investigation into
whether Exxon defrauded the public by spreading disinformation about climate
change, which various courts — including the Supreme Court — have refused to block despite the company’s pleas. And in Juliana vs. U.S., young people have filed suit against the
government for violating their constitutional rights by pursuing policies that
intensify global warming, hitting the dense ties between Big Oil and the state.
These are welcome attempts to hold the industry
responsible for its role in warming our earth. It’s time, however, to take this
series of legal proceedings to the next level: we should try fossil-fuel
executives for crimes against humanity.
a Reasonable Doubt
Just one hundred fossil fuel producers — including privately
held and state-owned companies — have been responsible for 71 percent of the
greenhouse gas emissions released since 1988, emissions that have already
killed at least tens of thousands of people through climate-fueled disasters
Green New Deal advocates have been right to focus
on the myriad ways that decarbonization can improve the lives of working-class Americans. But an important
complement to that is holding those most responsible for the crisis fully
accountable. It’s the right thing to do, and it makes clear to fossil-fuel
executives that they could face consequences beyond vanishing profits.
More immediately, a push to try fossil-fuel
executives for crimes against humanity could channel some much-needed populist
rage at the climate’s 1 percent, and render them persona non grata in
respectable society — let alone Congress or the UN, where they today enjoy
broad access. Making people like Exxon CEO Darren Woods or Shell CEO Ben van Beurden well known and widely reviled would put names
and faces to a problem too often discussed in the abstract. The climate fight
has clear villains. It’s long past time to name and shame them.
Left unchecked, the death toll of climate change
could easily creep up into the hundreds of millions, according to the Intergovernmental Panel on
Climate Change (IPCC), in turn unleashing chaos and suffering that’s simply
impossible to project. An independent report commissioned by twenty governments in 2012
found that climate impacts are already causing an estimated four hundred
thousand deaths per year.
Counting a wider range of casualties attributed to
burning fossil fuels — air pollution, indoor smoke, occupational hazards, and
skin cancer — that figure jumps to nearly 5 million a year. By 2030, annual
climate and carbon-related deaths are expected to reach nearly 6 million.
That’s the rough equivalent of one Holocaust every year, which in just a few
short years could surpass the total number of people killed in World War II.
All caused by the fossil-fuel industry.
Knowing full well the deadly consequences of
continued drilling, the individuals at the helm of fossil-fuel companies each
day choose to seek out new reserves to burn as quickly as possible to keep
their shareholders happy. They use every possible tool — and they have many —
to sabotage regulatory action.
That we need to instead strip fossil fuels from the
global economy isn’t up for debate. Without the increasingly distant-seeming
deployment of speculative, so-called negative emissions technologies, coal
usage will have to decline by 97 percent, oil by 87 percent, and gas by 74
percent by 2050 for us to have a halfway decent shot at keeping warming below
1.5 degrees celsius. That’s what it will take to avert pervasive, catastrophic
climate impacts that will destabilize the very foundations of society. (Keeping
warming to a more dangerous 2.0 degrees celsius will require decarbonization
that’s almost as abrupt.)
A recent report by
Oil Change International detailing the climate costs of continued drilling lays
the problem out in simple terms: either we embark on a managed decline of the
fossil-fuel industry, or we face economic and ecological ruin. Simply put, the
business model of the fossil-fuel industry is incompatible with the continued
existence of anything we might recognize as human civilization.
Barring a major course correction, that business
model — and more specifically, the executives who have designed and executed it
— will be responsible for untold suffering within many of our lifetimes, with
the youngest and poorest among us bearing a disproportionate burden, along with
people of color and residents of the Global South.
As recent research and reporting have documented,
some of the world’s biggest polluters have known for decades about the deadly
threat of global warming and the role their products play in fueling it. Some
companies began research into climate change as early as the 1950s. These days,
none can claim not to know the mortal danger posed by their ongoing extraction.
Crime Against Humanity
Technically speaking, what fossil-fuel companies do
isn’t genocide. Low-lying islands and communities around the world are and will
continue to be the worst hit by climate impacts.
Still, the case against the fossil-fuel industry is
not that their executives are targeting specific “national, ethnical, racial,
or religious” groups for annihilation, per the Rome Statute,
which enumerates the various types of human rights abuses that can be heard
before the International Criminal Court. Rather, the fossil industry’s behavior
constitutes a Crime Against Humanity in the classical sense: “a widespread or
systematic attack directed against any civilian population, with knowledge of
the attack,” including murder and extermination. Unlike genocide, the UN
clarifies, in the case of crimes against humanity,
it is not necessary to prove that there is an
overall specific intent. It suffices for there to be a simple intent to commit
any of the acts listed…The perpetrator must also act with knowledge of the
attack against the civilian population and that his/her action is part of that
Fossil-fuel executives may not have intended to destroy the world as we know it. And climate change may not look like the kinds of attacks we’re used to. But they’ve known what their industry is doing to the planet for a long time, and the effects are likely to be still more brutal if the causes are allowed to continue.