In July 2014, ExxonMobil announced a $1bn investment to add new capacity to its refinery at Antwerp in Belgium. It was some rare good news for the European refining industry — the construction of a unit to convert heavy, higher sulfur oil from the “bottom of the barrel” into more valuable products such as diesel fuel — at a time when mounting concern about climate change was casting doubt on investment in fossil fuel infrastructure.
But according to Barbara Underwood, New York state’s attorney general, when Exxon decided to spend money on the refinery, it was being less prudent about the costs of future environmental regulation than it suggested to investors. The battle between Exxon and New York has put a spotlight on the question of how oil companies talk about the implications of climate change for their business, and the outcome of the civil suit filed this week will be closely watched. The state began investigating Exxon three years ago, originally on the theory that the company hid evidence on how fossil fuels were contributing to climate change.
In the course of the investigation, Exxon handed over hundreds of thousands of pages of documents to the attorney general’s office. From those, the attorney-general has built a very different case, which focuses on what the company told its investors about its planning for the risks that curbs on greenhouse gas emissions posed to its business.
Under Rex Tillerson, chief executive since 2006, Exxon moved away from simply rejecting or ignoring the weight of scientific evidence on climate change. In March 2014, after pressure from shareholders, the company published a report titled Energy and Carbon — Managing the Risks, which explained how it was using what it called a “proxy cost of carbon” to reflect its expectations about possible future restrictions on emissions. It did not give full details of that price but said that in some areas, it might approach $80 per tonne of carbon dioxide by 2040. That price was not a forecast, but a proxy for an expected set of policies and regulations that would have a similar effect, the company said.