Tackling climate risks with technology

October 15, 2009

Support for oil and natural gas innovation can reduce emissions.

As Americans look for ways to access more supplies of reliable, affordable energy while at the same time reducing emissions, answers are emerging from what may seem an unlikely source — the oil and natural gas industry.

Technologies developed by U.S. companies like ExxonMobil are improving the way we produce and consume oil and natural gas, which meet about 60 percent of U.S. energy needs today.

Compared to wind, biofuels and other alternatives, oil and natural gas innovations often are overlooked. Yet technological progress in these conventional fuels holds immediate potential to help reduce emissions on a significant scale — all while boosting our economy.

For example, a technology developed by ExxonMobil enables us to produce more of the United States’ vast resources of tight gas – natural gas trapped in rock formations as dense as concrete. Natural gas used for electricity can reduce carbon-dioxide emissions by approximately 60 percent versus coal. The United States has an estimated 100-year supply of natural gas available to help meet anticipated growing demand for electric power generation. Thanks to technology, this clean and abundant resource is helping meet our energy and environmental goals.

Another promising technology pioneered by ExxonMobil is called Controlled Freeze Zone. This technology, which reduces the cost and complexity of separating carbon dioxide from produced natural gas, could help enable carbon capture and storage systems to reduce greenhouse gas emissions.

Such innovations do not come easily. They take money, time and expertise to develop and implement on a large scale. According to a recent study, the oil and natural gas industry has demonstrated its commitment, having invested more than $58 billion in new low-emission technologies from 2000 to 2008 — which is 44 percent of the total spent by all U.S. industries and the federal government combined.

To ensure such long-term investments continue, sound and stable government policies are needed.

Congress is considering curbing emissions through a cap-and-trade system. Yet such systems result in costs that are volatile and unpredictable, raising risks associated with planning and investment decisions. They also are costly and complex, and therefore vulnerable to manipulation.

A more effective approach would be a revenue-neutral carbon tax. Predictable, transparent and comparatively simple, a carbon tax also would impose less administrative cost. And, if revenues were returned to consumers through a tax cut or dividend, it could not only curb emissions but also help re-energize our economy.

To tackle the challenges of climate change, innovation is essential. Oil and natural gas companies such as ExxonMobil stand ready to continue investing in emissions-reducing technology. Government can help by pursuing sound, stable policies that make these investments possible.

Working together, we can grow our economy, enhance our energy security and protect our environment.