“If I wanted to kill [tax subsidies], the thing to do is for Exxon Mobil to go and invest heavily in [wind and solar] and then Congress would immediately cancel the tax subsidy. Actually what they would do is they would just cancel it for us…. So we are not going to go into investments that are dependent on a government providing a tax system to make them viable.”
– Rex Tillerson, Quoted in Russell Gold, “Exxon Mobil: We Like Renewable Energy Subsidies. Wink, Wink.” Wall Street Journal (March 6, 2009).
Last week at MasterResource, I posted on current US Secretary of State Rex Tillerson’s 2013 views on climate science in light of consumer energy needs. He referenced the pause in increasing global temperatures in light of rising concentrations of greenhouse gas concentrations. He noted the rank uncertainty concerning feedback effects.
Tillerson also asked: “To what good is it to save the planet if humanity suffers in the process of those efforts when you don’t know exactly what your impacts are going to be?”
This reminded me of a post back in March 2009, “ExxonMobil’s Tillerson on Renewable Energy: Realism amid Politics.” In the face of the Obama Administration, Tillerson explained why ExxonMobil in his era (as in Lee Raymond’s) said ‘no’ to wind power and solar power. (See Raymond here.)
That post follows:
As reported by Russell Gold at Environmental Capital, ExxonMobil CEO Rex Tillerson has made an incisive new argument against his company’s investing in government-dependent renewable energy.
“If I wanted to kill [tax subsidies], the thing to do is for Exxon Mobil to go and invest heavily in [wind and solar] and then Congress would immediately cancel the tax subsidy. Actually what they would do is they would just cancel it for us,” said Mr.Tillerson, during the annual analyst meeting at the New York Stock Exchange.
He added: “In reality, that is what I fear would happen. So we are not going to go into investments that are dependent on a government providing a tax system to make them viable.”
This is very interesting. Former ExxonMobil CEO Lee Raymond and now Tillerson have argued against investing in politically dependent renewables because they have been-there-done-that, with investor losses in the 1970s. And looking at the present and future technology of wind and solar relative to what ExxonMobil can realistically add, they are not sanguine about going forward in the same area.
But Tillerson is now saying something new:
If ExxonMobil were to enter the wind and solar market, then a clause in any new legislation could exclude the oil major from getting the production tax credit.
Say the venture is profitable on a bed of special government favor. The green scream would that the “polluter” is using profits from the “clean side” to subsidize the “dirty side.” Therefore, each company—perhaps of a certain size—should be subject to an “average emission test” under which taxpayer subsidies cannot be received if its overall energy production contains too much greenhouse-gas-emitting (oil and coal) energy production.
Thinking ahead in this way, a “green” strategy would be to get a company “hooked” on subsidies and then ratchet up the pressure on that firm to reduce its legitimate, consumer-driven, core energy activities. ExxonMobil is just smart enough to sniff this one out.
Russell Gold’s post continues:
Putting aside Mr. Tillerson’s dark commentary on how unpopular the company is in Washington D.C., he raises a point investors might want to consider.
Renewable energy has a lot of promise and hype, but it still needs government support. It is clearly getting that support today, but how long will the government policy underwrite renewable energy? How long will it be able to afford to underwrite renewable energy? How long will voters support green initiatives that create extra costs during this prolonged economic downturn?
This is good journalism reporting a worthy corporate stance—a rare one-two in today’s politicized discourse over energy policy.
What a great moment for free-market capitalism’s principled entrepreneurship, ™ when so much of corporate America is involved in political capitalism. Is there any doubt that ExxonMobil would be Adam Smith’s favorite company? It is certainly the consumer’s friend and the taxpayer’s friend.
Compare Raymond and Tillerson to the political entrepreneurs of the energy field such as the late Ken Lay (Enron), the disgraced John Browne (BP), and the value destroyer T. Boone Pickens (Mesa Petroleum, BP Capital). The best can still win in corporate America.
Perversely, for the second year in a row, a group of Rockefeller descendants are backing a shareholder resolution to have ExxonMobil invest in renewable energy, as reported in the Wall Street Journal. My response to this is: “Don’t Enron Exxon.” (Enron left its natural gas core to invest in solar, wind, energy efficiency, and so forth, with uniformly bad results.)
The disgruntled heirs of John D. have the energy sustainability vision of Ken Lay. They should not only leave well enough alone, they should rethink their whole political philosophy and applaud the management of what is now America’s star company.
Would that it were so….
One can go–with ease–to ExxonMobil’s various websites to find these bits of evidence to the contrary:
https://energyfactor.exxonmobil.com/science-technology/win-win-oil-gas-renewable-energy;
https://energyfactor.exxonmobil.com/science-technology/lubricating-wind-power/
https://cleantechnica.com/2011/05/02/wind-power-is-making-electricity-cheaper-exxon-wind-to-be-cheapest-source-of-electricity/
In corporate America–indeed in much of the Western World, little is as it appears to be. Although ExxonMobile has resisted involvement in actual production of wind machines, the company has been an eager “equity partner” for a lot of dumb and ugly, using wind LLCs as essentially dummy corporations and then using their government ordained financial perks as a dodge to avoid paying their tax obligations.
I can find none of our Big Energy companies doing otherwise. Such “partnership” is the principal enabler of the renewables scam, since the substantial company revenues are the perfect size for profit making via tax avoidance. All this is exquisitely legal and as American as _____ (readers should fill in the blank as they wish).
The other thing to add here, Rob, is a comment about Russell Gold, who has done generally yeoman work over the years exposing the dim and dumb of renewables–but always with a WSJ hedge, as with this statement in his article: “Renewable energy has a lot of promise and hype, but it still needs government support.”
In reality, renewable energy (read wind and grid solar) has NO promise. It’s ALL hype. In terms of enabling and maintaining modernity, it will always “need” government support to make it appear to function like conventional generation. Gold’s use of the modifier “still” promotes the idea that one day, which is always right around the Journal’s corner, renewables will be able to stand on their own, contributing to the commonweal of modernity. Hence, it is respectable for people to endeavor to persevere (I love this line from The Outlaw Josie Wales) as they continue to invest in such junk energy schemes. And, hey, such investment will continue to be tax deductible, minimizing risk.
Back door cronyism–you have educated me here. Thank you.
I’m delighted that you recognize that Boone Pickens has a horrendous track record as a prognosticator and crystal ball reader.
“How long will it be able to afford to underwrite renewable energy?” One word: Forever.
“If ExxonMobil were to enter the wind and solar market, then a clause in any new legislation could exclude the oil major from getting the production tax credit.”
ExxonMobil would enter wind and solar for the same reason as Warren Buffett.
Warren Buffett, considered one of the outstanding investors of all-time, has stated: “On wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit”.
Wind projects have a “financial benefits” stack. Buffett has investments in multiple wind sites, i.e., he has his own stack, as do many other multi-billion dollar entities.
Buffett and his cohorts hire tax accountants/lawyers to refine the subsidy-milking art form, as well as PR pros and RE lobbyists to continually increase the milking, via higher RPS targets and renewed subsidy periods.