Bill McKibben: Oil’s Grip is Weakening

May 11, 2020

New Yorker:

On some long-distant day when some as-yet-unborn historian sits down to write the story of climate change—the story of the greatest crisis humans ever faced—it’s possible that they’ll choose an anecdote from this past week as a way into the story. Amid the coronavirus pandemic, it understandably didn’t get much notice, but JPMorgan Chase announced on Friday that Lee Raymond will no longer serve as the lead independent director of the world’s largest lender to the fossil-fuel industry.

I’ve told the backstory at much greater length here, but, briefly: Raymond was a key Exxon executive from the nineteen-eighties onward—the years when the company was one of the most profitable in the world. (If you want a full account, read Steve Coll’s majestic “Private Empire.”) Those were also the years when Exxon’s scientists discovered—before it was publicly an issue—that climate change was real and dangerous, and when Exxon’s executives decided to join with others in the industry to cover up that truth. Raymond gave the single most audacious speech of the era, telling a World Petroleum Congress audience in 1997, on the eve of the Kyoto climate talks, that the planet was cooling, and that it made no difference if we acted then or waited a quarter century.

Raymond retired from Exxon as C.E.O., in 2005, having earned a reported six hundred and eighty-six million dollars; in his retirement, his job was to help run the board at Chase. Advocates have urged Chase to remove him as lead independent director because of his climate-denying past, and last month the New York City comptroller, Scott Stringer, joined the fight, pledging to vote the city pension fund’s Exxon shares against Raymond; he persuaded the New York State comptroller and the Pennsylvania state treasurer, in turn, to join him. One can only speculate, but this clearly put pressure on giant investors such as BlackRock, who have been making climate-friendly noises; in any event, as the Financial Times reported, Chase has removed Raymond from his position, though he remains on the board.

The effect is probably practical and definitely symbolic—Raymond’s removal ratifies the notion that, after a decade of relentless campaigning by activists, Big Oil is no longer quite as big. It’s true that, in the same week, much of the industry got the bailout that it had been asking for from Washington. But that was scant cause for celebration: the International Energy Agency released new numbers, predicting that global oil demand would drop nine per cent this year. As economists at the Institute for Energy Economics and Financial Analysis pointed out, the fossil-fuel sector really faces long-term solvency problems, not just short-term liquidity woes. Demand growth had been slowing in recent years, as regulatory pressure began to mount, as a result of all that activism, and as renewable energy got cheaper. Even before covid-19 really bit, Exxon had been “humbled,” according to Bloomberg Businessweek, becoming a “mediocre” company. Now it seems entirely likely that we have seen peak oil demand, a moment that the oil companies had predicted wouldn’t come for decades. Here’s the energy analyst Kingsmill Bond’s precis: “If demand for fossil fuels bounces back in 2021 by half the amount it fell in 2020, and grows at 0.5% a year, it would take 8 years to get back to where the industry started. And in the meantime, the renewable energy revolution has not stopped.”

This process will accelerate in places where governments rebuild their economies with Green New Deals, and lag in places where a move back to private cars combines with cheap gas prices to keep the S.U.V. era alive a little longer. But the key point is that, as the industry flags, so will its political power. “The ability of the industry to dictate to governments will weaken,” Bond said, “and the capacity of incumbents to frustrate the growth of renewables will reduce.” Exit Lee Raymond, stage right.

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