‘Eco-friendly transition’ followed by costly ‘fossil fuel U-turn’
Exxon acquires shale oil drilling company
NYT “It’s difficult to escape from fossil fuels”
Lego “New materials, carbon emissions increase again”
US ‘oil dinosaur’ Exxon Mobil announced on the 11th (local time) that it will spend 80 trillion won to purchase a shale oil drilling company. Oil companies, which had been investing in renewable energy to reduce carbon, have turned their attention to investing in fossil fuels.
As the geopolitical crisis escalates and international oil prices rise following the Ukraine war and the Israel-Hamas war, some analysts say that signs of a retreat from the ‘expensive’ energy transition are becoming visible.
The New York Times (NYT) analyzed, “Exxon assessed that it would be difficult for the U.S. energy policy to significantly move away from fossil fuels despite the Joe Biden administration’s efforts to transition to renewable energy.”
ExxonMobil announced today that it will acquire Pioneer Natural Resources, one of the top three U.S. shale oil drilling companies, for $59.5 billion (about 79.7 trillion won). This is the largest acquisition since Exxon merged with Mobil in 1999 ($81 billion). Through this acquisition agreement, Pioneer shareholders will receive 2.3234 shares of Exxon stock for each Pioneer stock. Through their announcements, both companies raised expectations, saying that this transaction is expected to be completed in the first half of next year.
Pioneer is a shale oil drilling company that mines crude oil and gas mixed in sedimentary rock layers. With this acquisition, both companies have secured an unrivaled position in the Permian Basin in Texas, one of the largest shale oil production areas in the United States. “The combination of the two companies will create long-term value beyond what each could do on its own,” ExxonMobil CEO Darren Woods said in his statement, adding, “It also benefits America’s energy security.” In response to criticism from environmentalists that this is a regression in carbon reduction efforts, CEO Woods defended the company’s efforts to recycle more than 90% of the water used in the Permian Basin.
Regarding Exxon’s large-scale investment in fossil fuels, some say that the United States has decided that the United States will ultimately maintain fossil fuels amid recent high oil prices. The Financial Times (FT) said, “We made a bold bet at a time when the International Energy Agency (IEA) claims that global demand for fossil fuels will peak before 2030,” adding, “It shows long-term optimism about oil prices and demand for crude oil.” reported.
European countries and companies that were leading the carbon neutral (net zero) policy, which aims to achieve net zero greenhouse gas emissions, are also experiencing difficulties in implementing the policy or attempting a ‘U-turn’. It is difficult to make a hasty energy transition as energy prices have risen due to the war in Ukraine. They are faced with a complex dilemma, with protection of their own industries and practical technological issues holding them back.
Britain, which is suffering from an economic slowdown, announced last month that it would postpone the ban on sales of internal combustion engine vehicles from 2030 to 2035. British Home Secretary Suela Braverman said, “We will not save the planet by bankrupting the British people,” and emphasized that carbon neutrality must be reached pragmatically while relieving the burden on households and industry.
Sweden, which declared its carbon neutrality goal for the first time in the world in 2017, announced a plan to adjust the speed of its carbon neutral policy in order to prioritize high inflation. According to the British daily Guardian, the Swedish coalition government recently announced next year’s budget and said it would cut climate and environmental measures funds by 259 million kronor (about 31.8 billion won) and reduce fuel taxes on gasoline and diesel.
There are also technical problems in policy implementation. Danish toy company Lego recently abandoned its plastic elimination policy. The reason given was that new factory equipment was needed to make toy blocks using recycled PET (RPET) bottles, and it was discovered that carbon emissions were further increased in the process. Lego experimented with all kinds of new materials to replace plastic, but could not find an answer, so it said it would focus on the ‘circular economy’.
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Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.