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Thursday, January 18, 2007

Tim Haab: Speaking with the Enemy

Recently, I wrote about being asked to participate in a conference call on global warming issues with Exxon's VP of public affairs. I couldn't do it because of a teaching conflict, and I thought people who work in the area might ask better questions, so I referred them to Tim Haab and John Whitehead at Environmental Economics.

I just got an email from the Exxon representative thanking me for suggesting Tim - they were very pleased that he wrote up such a detailed account of the call - so I thought I'd make you aware of what Tim has written.

Tim's response comes in three posts. In Part I he says:

Speaking with the Enemy--Part I, by Tim Haab: This is the first of three posts on a recent conference call I took part in with the VP for Public Affairs of ExxonMobil, Ken Cohen, on Exxon's recent (apparent) change in positions on climate change policy. Part one deals with the background on Exxon's climate policy position. Part two lays out some of my reactions to Exxon's seemingly new position. Part three sums up with some random observations.

For years I have been brainwashed to believe that ExxonMobil represents all that is inconsistent between big business and environmental responsibility. After all, the Exxon Valdez oil spill served to propel environmental valuation--my preferred field of research--into the mainstream of economic research.  So when representatives from APCO, a PR firm, called to ask if I would participate in a conference call with Ken Cohen, VP for Public Affairs at Exxon Mobil, on Exxon's recent softening on climate change I agreed. Keeping in mind that I am not a journalist and that I was trying to get the gist of what everyone was saying while trying sound coherent myself, here's my thoughts on the conference call yesterday. Keep in mind, this is not a report on the conference call, but rather my impression of what was said.

First some background. Here's a story on MSNBC.com detailing the beginnings of Exxon's changing stance on climate change. The upshot:

Oil major Exxon Mobil Corp. is engaging in industry talks on possible U.S. greenhouse gas emissions regulations and has stopped funding groups skeptical of global warming claims —  moves that some say could indicate a change in stance from the long-time foe of limits on heat-trapping gases.

In December, Rex Tillerson, CEO of ExxonMobil gave a talk in Boston where he outlined Exxon's stance on climate change policy:

Policies that promote free markets and investment and strengthen export-import partnerships broaden the diversification of our nation's energy portfolio and enhance our energy security.

Policies that promote stable tax, regulatory and legal frameworks over the long-term encourage the investments needed to not only meet current needs, but also the technological advances required to meet future needs while reducing environmental impacts.

Policies that promote open access to untapped oil and natural gas resources in our own country can help reduce our dependence on imports in an effective and environmentally-sensitive way. Ours is the only country in the world with major oil and natural gas resources that as a matter of policy denies its own citizens the economic benefits of developing and utilizing those resources that belong to its citizens.

So what would such a climate change policy look like? Just prior to the call (5 minutes), we received a packet outlining Exxon's talking points for a climate policy framework. Here are Exxon's "First Principles" of climate policy design:

  1. Maximize use of markets
  2. Ensure a uniform and predictable cost of carbon across the economy
  3. Promote global participation
  4. Minimize complexity to reduce administrative costs
  5. Provide transparency to companies and consumers
  6. Build flexibility into policy design to accommodate ongoing understandings of climate science and the economic impact of policies

Fully equipped with this information, the call started. In on the call were Pam Franklin (moderator from APCO), Ken Cohen, Geoffrey Styles (from the energy outlook blog) and Carter Wood (from shopfloor.org, a blog for the National Association of Manufacturers).

Here are Tim's second and third posts, Speaking With the Enemy Part II and Speaking With the Enemy Part III. Tim concludes part III with:

So what did I take away from the experience? Exxon is a company run by good business economists. They are unapologetic about their stance that profits matter and markets work. I applaud them for that. They are also realistic enough to know that perceptions matter. With the obvious writing on the wall that climate policy is coming, they have clearly made the decision that being in on the conversation is better than being the whipping post. When Carter Wood asked Mr. Cohen how he responds to critics that say this is purely a business/rent seeking decision, I wanted him to say "Who cares?" (he didn't, he was much more diplomatic). Rent seeking leads to sound economic decisions. If public opinion is such that advocating climate change policy is profitable, that's a win for everyone. Who cares if the motives are profit or environmental conscience. If the outcomes are the same, do motives matter? In this case I say no and I am glad that Exxon is in the climate policy conversation.

Now if we could just get them to revisit that whole Valdez mess...

    Posted by on Thursday, January 18, 2007 at 11:20 AM in Economics, Environment, Policy | Permalink  TrackBack (0)  Comments (2)


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