Climate Bullies: Dems Ask S.E.C. to Target Shell

by Marlo Lewis on March 8, 2016

in Blog

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Reps. Ted Lieu (D-Calif.), Peter Welch (D-Vt.), and Matt Cartwright (D-Penn.) are at it again. In October, they asked Securities and Exchange Commission Chair Mary Jo White to “investigate ExxonMobil’s past filings to determine whether security laws were violated by failing to disclose material risks related to climate change.” This week they asked her to investigate Shell Oil’s filings to determine if the company “similarly violated securities laws by not properly disclosing climate-related risks.”

Lieu et al. claim the oil companies have known for decades about the seriousness of climate change risks, yet hid those risks from the public by funding ‘denier’ groups. As evidence, they cite an L.A. Times article titled “Big oil braced for global warming while it fought regulations.” The Times reporters claim both companies made significant investments to protect their facilities from sea-level rise, hence must have known how dangerous climate change is. Let’s see if there is anything to that line of argument.

I. Is Private Adaptation Evidence of the Desirability of Energy Rationing?

The Times article begins by noting that a few weeks before the 1997 Kyoto climate summit, Exxon took out full page ads challenging the scientific basis of the treaty, yet a year earlier made investments to better withstand warming-induced sea-level rise:

“Let’s face it: The science of climate change is too uncertain to mandate a plan of action that could plunge economies into turmoil,” the ad said. “Scientists cannot predict with certainty if temperatures will increase, by how much and where changes will occur.”

One year earlier, though, engineers at Mobil Oil were concerned enough about climate change to design and build a collection of exploration and production facilities along the Nova Scotia coast that made structural allowances for rising temperatures and sea levels.  

“An estimated rise in water level, due to global warming, of 0.5 meters may be assumed” for the 25-year life of the Sable gas field project, Mobil engineers wrote in their design specifications. The project, owned jointly by Mobil, Shell and Imperial Oil (a Canadian subsidiary of Exxon), went online in 1999; it is expected to close in 2017.

Evidence of duplicity? Only if one starts with the assumption that mitigation–i.e. politically-imposed restrictions on affordable energy–is smart climate policy. Just because it may be prudent for an individual energy company operating in a particular environment to invest in adaptation does not necessarily mean it would be wise or moral to put an energy-starved planet on an energy diet. Privately-funded adaptation is superior to politically-imposed mitigation (energy rationing) in several ways:

  1. Private firms that invest in adaptation with their own capital have a strong incentive to ensure that gains exceed losses. Politicians and bureaucrats who enact and implement climate mitigation programs have no such incentive. The only skin they have in the game is partisan and political, not financial.
  2. If projected climate risks subsequently prove to be exaggerated, no one except the company that invested in adaptation is out of pocket. In contrast, a global climate treaty puts whole economies at risk by inflating energy costs and potentially misdirecting trillions of dollars in capital investments for little if any discernible reduction in future global temperatures or sea levels.
  3. It is relatively easy for individual firms to terminate unproductive adaptation investments if subsequent data falsify their risk assessments. It is exceedingly difficult for nations to repeal failed regulatory policies or withdraw from misguided multilateral treaties.

Ironically, the very example cited by the Times shows how dumb climate mitigation can be as a risk management strategy. In 1997, Exxon estimated sea levels would rise 0.5 meters in 25 years, according to the Times. The actual rate of sea-level rise over the past 24 years is 3.3 mm/year. That works out to a 25-year sea-level increase of about 0.08 meters–only one-sixth the rate  Exxon reportedly “assumed.” What did Exxon know about sea-level rise in 1997? That there would be six times as much over the next quarter century as would actually occur.

How fortunate we are that Exxon only decided to risk its own capital based on errant speculation rather than lobby for the Kyoto Protocol, a treaty that could have cost the U.S. economy hundreds of billions of dollars in lost GDP and higher energy prices, yet would theoretically reduce 21st century sea-level rise by only 1.4-3.7 cm, according to Tom Wigley of the National Center for Atmospheric Research.

II. What Did Big Oil Know?

To expose the duplicity of Exxon, Mobil, and Shell, the Times notes that those oil companies chose to “emphasize doubt and uncertainty” in their opposition to Kyoto even though NASA scientist James Hansen “asserted with ‘99% confidence’ that global warming was occurring” in 1988–the same year UN IPCC was formed to “examine its future impact.”

The Times neglects to mention that Hansen’s 1988 warming forecast was way off base.


Figure explanation. Red: Hansen’s business-as-usual (no climate policy) scenario. Orange: Hansen’s emission freeze at 1980s level scenario. Yellow: Hansen’s drastic emission-reduction scenario. Light blue: Remote Sensing System (RSS) satellite temperature record. Dark blue: University of Alabama in Huntsville (UAH) satellite temperature record. Although emissions increased as much as in Hansen’s BAU scenario, observed temperatures are lower than in Hansen’s drastic emission-reduction scenario. Source: John Christy

Lieu et al. also cite an exposé published in Inside Climate News, which claims that Exxon climate modelers knew how bad global warming was in the late 1970s. Nope. In the late ’70s Exxon knew exactly what James Hansen knew in 1988–that fossil-fuel emissions would cause 2-3 times as much warming as actually occurred (h/t David Middleton).

As for the IPCC, far from knowing in 1988 that anthropogenic global warming (AGW) was a planetary emergency, the organization did not profess to know that AGW was real until several years later. The IPCC’s First Assessment Report (FAR), published in 1990, concluded that the size of recent warming was “broadly consistent with predictions of climate models” but was “also of the same magnitude as natural variability” (p. 6). Hence, “The unequivocal detection of the enhanced greenhouse effect is not likely for a decade or more.”

Similarly, the IPCC’s Second Assessment Report (SAR), published in 1995, famously concluded the “balance of evidence . . .suggests a discernible human influence on global climate” (p. 22). That too is not an assertion of what is demonstrably true, only what the “balance of evidence” “suggests.”

More importantly, those scientific “consensus” statements assert nothing about the dangerousness of AGW, nor do they shed any light on the core practical question of whether a global mitigation regime might be a cure worse than the alleged disease.

III. Big Gotcha or Empty Suit?

Let’s proceed now to the big gotcha in the Times article and Lieu et al.’s request for an S.E.C. probe of Shell Oil:

In 1989, before Shell Oil joined the Global Climate Coalition, the company announced it was redesigning a $3-billion North Sea natural gas platform that it had been developing for years.

The reason it gave: Sea levels were going to rise as a result of global warming.

The original design called for the platform to sit 30 meters above the ocean’s surface, but the company decided to raise it by a meter or two.

The company’s then-chief offshore engineer, Chris Graham, said rising sea levels and increasing wave heights were “really showing” during the late 1980s and early 1990s, and the company was taking them seriously. A rash of storms and monster waves that had battered the North Atlantic and Gulf of Mexico during those years was particularly concerning, and engineers wondered whether climate change might be behind it.

“The tipoff to there being changes came from hurricanes,” said Bob Bea, another Shell offshore engineer at the time who also worked for the global engineering firm Bechtel. “Even back in those days . . . hurricane intensities were changing.”

If you’re already planning to spend $3 billion on a 470-meter facility, what’s the harm in adding another meter or two to make it more resilient to possible sea-level rise? It also stands to reason that a greater degree of certainty is required to justify coercive restructuring of global energy markets over many decades than a one-time privately-funded investment in a particular facility. Shell’s design modification on its “Troll” gas rig is therefore not inconsistent with skepticism about the reality of an imminent climate catastrophe. Nor is it evidence of the desirability of a climate treaty that could cost the global economy trillions yet avert only a hypothetical 1.4.-3.7 cm of sea-level rise.










Photo of Shell’s 472-meter ”Troll” gas rig 

As regards the supposed “tipoff”–hurricane intensities changing “even back in those days”–that is just another failed prediction.

There has been no overall change in the strength and frequency of landfalling hurricanes in the five major hurricane basins since 1970.

Weinkle et al 2012







Source: Weinkle et al. 2012

There was no significant change in global tropical accumulated cyclone energy (ACE) from 1970 to 2014, and a significant decline in ACE from 1990 to 2014:

Klotzbach and Landsea Global ACE 1970-2014







Source: Klotzbach and Landsea 2015

The frequency and strength of U.S. landfalling hurricanes have actually declined since 1900:







Pielke Jr US Hurrican Power Dissipation Index 1900-2013 





There has been no trend since 1900 in “normalized” U.S. hurricane damage (losses adjusted to reflect changes in population, wealth, and CPI).

Pielke Jr Normalized US Hurricane Damage 1900-2012






IV. Wrong on All Counts

Lieu et al. conclude their letter to the SEC Chairman as follows:

Based on the allegations above, it appears U.S. security laws may have been violated. Shell engineers knew about climate change and took internal actions based on its knowledge of climate change. Yet, Shell funded and publicly engaged in a campaign to deceive the American people about the known risks of fossil fuels causing climate change.

Wrong–or at least totally unproven–on all counts. Shell engineers did not know that the upswing in hurricane intensities during the 1990s was a long-term trend driven by AGW rather than a decadal fluctuation typical of natural variability.

Contrary to Lieu et al., a company’s self-funded investment to harden energy infrastructure is not some sort of secret confession that suppressing energy production worldwide is a good idea. It is certainly not evidence that the benefits of climate mitigation policies outweigh the costs.

The L.A. Times does not quote a single statement by any Shell official that contradicts what was actually known in 1997 or later about climate change, and neither do Lieu et al.

V. Civics 101

Time to restate the obvious. Democracy is an adversarial process. Interests that disagree on policy will inevitably challenge the certitude or accuracy of claims made by their opponents. Free societies rely on the marketplace of ideas to sort out the claims and counterclaims of rival interest groups, parties, and political movements. But those of authoritarian bent easily lose patience with a process that does not guarantee them victory in advance.

So they cheat. They reimagine a narrow provision of the Clean Air Act to mean that EPA can enact far-reaching climate policies that would be dead on arrival in Congress. They deny that the “most ambitious climate change agreement in history” is a treaty to pretend the Senate has nothing to say about it. They peddle flimflam and sophistry and call it science.

Finally, when all of that fails to work, climate bullies like Lieu, Welch, and Cartwright demand that regulatory agencies prosecute dissent to chill speech and silence opponents. Rescuing America from politicians and activists who believe government exists to bankrupt companies they don’t like should be–but so far isn’t–an avowed goal of all the GOP presidential candidates.

Lieu et al. have many prominent allies including Sen. Sheldon Whitehouse (D-R.I.), activist scientists like the RICO20, New York AG Eric Schneiderman, Hillary Clinton and Sen. Bernie Sanders (D-Vt.). Whether their campaign of political plunder succeeds or fails may well hinge on the outcome of the 2016 elections.


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