Meeting global energy and environmental challenges through innovation

In a February speech at Stanford University, ExxonMobil Chairman and CEO Rex W. Tillerson described the critical role of technology in meeting the challenge of delivering more energy while reducing greenhouse gas emissions.

Chairman Tillerson began his speech by saluting six years of promising energy research at the Stanford-based Global Climate and Energy Project (GCEP), founded in 2002 with ExxonMobil as lead sponsor. He noted that GCEP’s network of scientists, engineers, researchers and students involves 20 research institutions on four continents, with Stanford at the hub. “GCEP’s work is ultimately about laying the scientific foundations for practical problem-solving that will help advance broad-based commercial solutions,” he said.

Technology, said Tillerson, is the single, most vital element that should unite all efforts to attain our energy and environmental goals. He said ExxonMobil has invested more than $6 billion in technology in just the past six years, and maintains several company research centers in the United States and elsewhere. “Our 14,000 scientists and engineers are part of the broader technical and scientific community dedicated to energy and environmental problem-solving through technology innovation.”

Oil, natural gas continue as prime energy sources
While the current global economic downturn has reduced energy demand and prices, Tillerson said the world economy will recover, and so too will energy demand.

Growing populations in developing countries will drive increased energy demand, which is expected to be 35 percent higher in 2030 than in 2005. Meeting this demand requires that we develop all economic and environmentally sound sources of energy, including oil and natural gas, which Tillerson described as “abundant, available, versatile and affordable.”

Tillerson noted that huge investments over many decades have enabled oil and gas to meet nearly 60 percent of world energy needs today, and that these same fuels will meet the majority of world energy demand through at least 2030. Alternatives such as solar, wind, nuclear and biofuels will make a significant and growing contribution, but no single energy source solves the dual challenge of meeting growing energy needs while reducing emissions. “For now and the foreseeable future, an integrated set of solutions is required,” he said.

Turning to environmental challenges, Tillerson explained that thanks to greater energy efficiency and growing use of cleaner fuels such as natural gas, greenhouse gas emissions are expected to decline in some developed economies. U.S. energy-related carbon-dioxide emissions are approaching a plateau and will decrease over the next two decades, he said. “These trends are set to continue and potentially accelerate, not only in the United States but in other developed economies as well.”

Greenhouse gas emissions to rise in developing nations
But the challenge of reducing greenhouse gas emissions is more daunting for developing economies, said Tillerson. “By 2030 China’s carbon-dioxide emissions will be comparable to those of the United States and Europe combined,” he said. “Even with dramatic gains in efficiency, rising demand for energy will continue to push related carbon-dioxide emissions higher through 2030, an increase of 28 percent from 2005.”

Tillerson noted that any new technology — however promising — faces practical barriers in bringing it to the energy marketplace. These barriers include performance, cost, safety, environmental impacts and consumer acceptance.

He said ExxonMobil’s integrated approach to increasing supplies and reducing emissions is exemplified by the company’s Global Energy Management System. The system involves daily tracking of more than 12,000 energy variables throughout the company’s refining, marketing and chemical operations. “Since 2000, we have identified $1.5 billion in potential efficiency savings, and approximately 60 percent of those savings have been captured to date,” he added.

New technologies in transportation
Tillerson mentioned several ExxonMobil technologies that are improving energy efficiency in the transportation sector. These include tire liners that keep tires inflated longer, advanced fuel economy engine oil and lightweight automobile plastics.

ExxonMobil’s internal research, said Tillerson, has produced breakthrough technology involving separator film made from advanced polymers. This film can significantly enhance the power, safety and reliability of lithium-ion batteries used to power hybrid and electric vehicles.

Hydrogen fuel-cell technology is another area pioneered by ExxonMobil and its research partners, said Tillerson. This technology converts traditional hydrocarbon fuels into hydrogen directly onboard the vehicle, eliminating the need for separate infrastructure to produce and distribute hydrogen. “Measured on a well-to-wheel basis, this on-vehicle fuel system could provide up to 80 percent better fuel economy and emit 45 percent less carbon dioxide than today’s vehicles,” he noted.

One of the most promising areas of ExxonMobil’s research, said Tillerson, involves advanced biofuels, including production of liquid fuels from algae and biomass conversion. He said these technologies could reduce greenhouse gas and land use impacts as compared to first-generation biofuels such as ethanol.

Sound government policies needed
Tillerson stressed that the complexities of new technologies and the enormous scale of the global energy market mean that technological transformation takes time. That’s why government policies must allow for long-term planning and disciplined investments that lead to technological advances. Tillerson called for governments to provide investment stability by implementing simple, transparent and predictable policies to mitigate greenhouse gas emissions.

 “Consistent with that view, we believe a carbon tax would be a more effective policy option to reduce greenhouse gas emissions than alternatives such as cap-and-trade,” said Tillerson. “A carbon tax should be offset by tax reductions in other areas to become revenue-neutral for government.”