777 million US dollars – that’s how much money the UAE, the Bill and Melinda Gates Foundation and other donors pledged at COP28 on Sunday for the fight against tropical diseases. Diseases such as river blindness and sleeping sickness are becoming a growing threat due to climate change. The somewhat odd number draws attention. And attention is undoubtedly also a goal of the donor countries.
After all, climate conferences are always a game of big numbers. Hundreds of millions are pledged here, tens of billions are promised there. Often, the highest sums hide the hope for the participation of the private sector. Bernhard Pötter presents some of these initiatives.
Forest conservation also involves a lot of money. Brazil has presented new plans to preserve its tropical forests. What’s making it so special: If the forest is destroyed, the owners must pay a fine. But many things remain vague, reports Alexandra Endres.
The number of visitors to this COP is also gigantic. It almost cracked the mark of 100,000 delegates. One of the visitors is Darren Woods. The Exxon CEO plans to be “the last survivor” in the oil and gas business, analysts say. Find out more about Woods and his fossil fuel plans in today’s Profile.
In the never-ending search for financial resources for international climate policy, COP28 is breaking new ground. While the debate on climate financing has so far mainly revolved around government funding, the focus now turns to private capital for the global energy transition. Companies, governments, foundations and the financial sector are presenting extensive packages to promote global climate action with a focus on emerging and developing countries. However, criticism of these plans is also growing louder.
On Sunday, US climate envoy John Kerry officially presented the Energy Transition Accelerator (ETA) in the US pavilion on the COP premises. The ETA is an initiative of the US State Department, the Rockefeller Foundation and the Bezos Earth Foundation. It brings together industry partners and countries to raise capital for the “transition off of dirty power and accelerate the clean energy future” via carbon credits in emerging and developing countries, as Kerry said.
The idea is for companies such as Amazon, Bank of America, BCG, Morgan Stanley, PepsiCo and McDonald’s to buy credits from participating countries. So far, Chile, the Dominican Republic, Nigeria and the Philippines have expressed interest. The companies use these carbon credits to participate in the voluntary carbon market. In turn, the countries receive capital for developing renewables, power lines and decommissioning coal-fired power plants, for instance. The projects “will be guided by high-integrity methodologies and just transition safeguards.” Five percent of the revenue will be used for “adaptation and resilience in vulnerable countries.”
“These countries need around 1.9 trillion dollars in investment per year,” says Andrew Steer, who is advancing the project at the Bezos Earth Fund. “That’s seven times as much as is available today.” In 2035, the credits could mobilize between 72 and 207 billion dollars, it is said. This alone would be roughly on a par with the 100 billion dollars annually developed countries pledged to poor countries as climate financing from 2020 to 2025.
The US government’s ETA was already presented at COP27 and is now set to be officially launched next spring. There was already criticism back then because it contradicted the UN body’s recommendations against greenwashing in the financial sector. Erika Lennon from the development organization CIEL has now declared that the initiative is a “lie and deception” intended to divert attention from the USA’s poor climate finance record. She said the idea relied on carbon markets, which had proven that they did not work, even with high standards. And the ETA is a “dangerous distraction” from the fact that the US is the world’s largest oil and gas producer.
The COP hosts, the United Arab Emirates, are also pushing ahead with restructuring global financial flows. With a promise of a billion-dollar green investment initiative, a new “catalytic climate finance vehicle” investment fund called Alterra is to “steer private markets towards climate investments and focus on transforming emerging markets and developing economies,” according to a statement from the COP presidency.
The plan is to establish special public-sector cooperation in a country whose oil company Adnoc is a state-owned enterprise. Its CEO and current COP President Sultan Al Jaber is to oversee Alterra as chair of the supervisory board. Majid Al Suwaidi, Director General of COP28, will lead the company as CEO. He brings together a team of “climate finance specialists” for emerging and developing countries. The company will be based in Abu Dhabi.
The fund is intended to raise 30 billion dollars for this purpose, which will trigger 250 billion dollars in low-carbon investments worldwide. Alterra will be the “world’s largest private investment vehicle for climate change action.” Its goal is to “drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South.”
The investment funds BlackRock, Brookfield and TPG are on board as private partners. Together, Alterra committed USD 6.5 billion to “climate-focused funds for global investments, including the Global South,” according to official information. Additional capital will also be raised “from other institutional investors and global organizations.” The structure will be “a transformative solution to attract private capital,” said Sultan Al Jaber.
Alterra will be divided into two areas. “Alterra Acceleration” will channel 25 billion US dollars of capital into large-scale climate investments with the best chance of accelerating the transition to net zero and a green economy. The unit will be an “anchor investor,” investing directly and channeling its money into partnerships in developed and emerging economies.
“Alterra Transformation,” the second and significantly smaller part of the company with five billion in capital, is intended to raise “risk mitigation capital” to stimulate investment flows to the Global South and circumvent existing obstacles to such investments. The unit also wants to “create opportunities to leverage concessional finance to further attract climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).”
The climate group 350.org has raised some questions about this project. “While in principle a step in the right direction, we would need to check that the claims by the presidency are not overblown,” says Andreas Sieber from 350.org. The majority of the announced 30 billion will be allocated at market conditions, and there are no guarantees that this will not lead to further debt in the recipient countries or flow into CCS technologies, for example.
German Development Minister Svenja Schulze also recognizes the need to “shift the trillions” required for the global energy transition, which cannot be achieved from national budgets alone. “Effective climate action needs private capital above all,” the minister told Table.Media. “We can’t just finance this publicly. We need much more capital for the global climate and poverty reduction tasks. This makes it all the more important to get private money on board with the right framework conditions where there are business models. This can relieve the pressure on tight public budgets.”
Brazil also proposes international financing for forest conservation and sustainable development. Unlike the Amazon Fund, which countries such as Norway and Germany already use to fund measures to counter deforestation, the new “Tropical Forests Forever” is supposed to ensure the preservation of forests. International donors, primarily sovereign wealth funds, would invest capital via a financial institution as an intermediary, with the returns generated being used to finance forest conservation in Brazil and other countries (See our second analysis for details).
The global energy transition partnerships JETP also mobilize international capital for emerging countries. This money consists of public funds from developed countries and loans from private financial institutions at favorable rates. Following partnerships with South Africa, Indonesia and Senegal, Vietnam has now also announced its financing needs at COP28. Accordingly, 15.8 billion dollars are to flow into the energy transition, of which the international partners, above all, the EU, will provide over eight billion. The negotiations took roughly a year.
Four months ago, twelve countries home to tropical forests agreed at the Amazon Summit in Belém, Brazil, to “develop innovative mechanisms” to harmonize rainforest conservation with social and economic concerns. These included key rainforest countries such as Brazil, the Democratic Republic of the Congo and Indonesia. Brazil has now presented its first “innovative mechanism” at COP28.
The plan is to finance rainforest conservation via a “Tropical Forests Forever” fund. Brazil hopes to initially “mobilize” at least 250 billion US dollars. It is not yet clear where the money is supposed to come from. Various ideas have been floated at the conference. One proposal aims to encourage sovereign wealth funds to invest.
So far, the resources available for global forest conservation have been limited. Deforestation is usually more profitable than preserving the ecosystem: Land is cleared for livestock and soya cultivation, for example, and nature is destroyed for oil drilling and gold mining. The new fund aims to change this by offering economic incentives to preserve ecosystems.
The money will primarily go to the people and communities that protect and preserve the forest. According to the Brazilian government, around 80 countries could benefit from the fund. They would receive a fixed amount every year from a mechanism designed to be as simple as possible and therefore quick to implement – for every hectare of forest that is preserved or restored. For every hectare cut down, forest owners would have to pay a hundred times as much in fines.
Fines could be the decisive factor in a forest owner’s economic considerations. According to Tasso Azevedo, the inventor of the Brazilian Amazon Fund, growing soya promises a significantly higher yield per hectare than conserving the forest, even with the money from the fund. However, a penalty that would cancel out payments of one hundred protected hectares is a powerful incentive to preserve the forest. In a recent article, Azevedo wrote that nature conservation must be guaranteed to yield tangible returns.
The initiative was presented at the COP28 by high-profile figures, including Environment Minister Marina Silva and Finance Minister Fernando Haddad. Brazil is now inviting “partners” to develop the fund’s operational details, said Silva. The new fund is expected to be operational by COP30.
However, to what extent other tropical countries will support the initiative remains unclear. Garo Batmanian told Table.Media that dialogue is ongoing with some of them. Batmanian is the General Director of the Brazilian Forestry Service at the Ministry of Environment and Climate Change of the Government of Brazil. However, he did not mention any specific names. His delegation said the initial goal was to initiate a dialogue about the new idea.
A spokesperson for the Coalition for Rainforest Nations, which, according to its own information, includes more than 50 countries, did not comment specifically on Brazil’s initiative: “We support the Brazilian government under Lula in principle,” he merely stated, “and believe in the REDD+ mechanism of the UNFCCC.”
REDD+ is an established concept that focuses on paying money for emissions avoided through forest conservation. It primarily sees the ecosystem as a carbon sink. Brazil’s initiative could be seen as competition. In fact, the Brazilian delegation claims that its own idea is much easier to implement than REDD+ and could, therefore, generate significant funds more quickly.
The idea is to no longer tie payments to the amount of carbon stored in a forest, but to the area preserved, thus considering that a forest also fulfills ecological and social functions. For example, a payment of 25 or 30 US dollars could be made per hectare – for every hectare of cut forest, the sum for one hundred hectares would be deducted.
Batmanian explained that the fund is to be as simple as possible. The requirements should not be too detailed, partly to allow as many countries as possible to participate: “We all have forests. But we are at different stages of development and there are socio-economic and cultural differences between us. A one-size-fits-all approach would not do this justice.”
However, all participating countries should fulfill some fundamental criteria:
By winning sovereign wealth funds as investors, the hope is to raise adequate funds for the new mechanism. According to Batmanian, sovereign wealth funds manage combined global assets of twelve trillion dollars. They have clear investment rules: A large share of the money must be invested in safe AAA-rated bonds. Batmanian’s idea: A financial institution – the World Bank, for instance – issues such AAA bonds to investors at a standard market interest rate. The funds raised are then invested in the financial market. This is how it makes a profit. This could then flow into the conservation of tropical forests.
It remains unclear how market fluctuations will be handled – and whether sovereign wealth funds can even make significant investments in the bonds Brazil’s fund wants to issue. They generally have to adhere to very strict conditions.
Personally, Tasso Azevedo prefers a different source of finance: Oil producers could pay one dollar into the fund for every barrel produced – and Brazil could make a start. “What if we then asked the USA to also give a dollar? Or Saudi Arabia?” Private oil companies should also contribute, “only four or five years until we have achieved implementation.” He believes that the required sums would be raised quickly this way.
Darren Woods is the first ExxonMobil CEO to attend a climate conference. At COP28, the business model of fossil fuel giants is also being negotiated indirectly: a phase-out or phasing down of oil and gas production. Woods wants to prevent this because his course for Exxon is clear: The company plans to be the “last man standing” in the oil and gas business, as one observer puts it.
The company did join a new initiative of 50 oil and gas companies at COP28. Their aim is to reduce carbon emissions from fossil fuel production to zero by 2050 and significantly reduce methane emissions by 2030. But critics see this as just a fig leaf. Unlike some other oil and gas companies, Exxon hardly invests in renewables. Quite the opposite.
57-year-old Woods has been CEO of Exxon since January 2017. During his time in office, Exxon has invested tens of billions of US dollars in a shale oil company and in CCS infrastructure. The company also invests heavily in its own production off the coast of Guyana. Woods is convinced that the energy transition will take “many decades.” According to Exxon, oil and gas will still account for more than half of energy demand in 2050.
Like COP President Al Jaber, Woods wants to “address the emissions associated with the combustion of oil and gas.” and “find the technology to do that.” Fossil fuels offer “a level of convenience, reliability, and affordability that is hard to replace,” said the Exxon CEO in an interview with consulting firm McKinsey. There is too much talk about the end of fossil fuels at COP28, Woods told the Financial Times.
Born in the industrial city of Wichita, Kansas, Woods strongly supports CCS technology. He studied electrical engineering and has a Master of Business Administration (MBA). He is married and has three children. “By training, I’m an engineer, which in many ways is how I still see myself – as someone who solves problems,” says Woods about himself. “I’m a father and grandfather – who cares about his family, their quality of life, and their futures.”
And he boasts that Exxon has “captured more CO2 than any other company.” However, most CCS applications are used to expand oil and gas production. Exxon sees new business opportunities here. In the summer of 2023, the oil multinational acquired Denbury Inc. for USD 4.9 billion, giving it the largest network of CO2 pipelines in the United States. The deal is part of Exxon’s promise to invest over 17 billion US dollars in “low-carbon solutions” by 2027, as the company calls its investments in CCS, hydrogen and biofuels.
But Wood’s biggest takeover targets a shale oil producer. Exxon plans to acquire Pioneer Natural Resources and its production licenses in the Permian Basin in Texas and New Mexico for USD 60 billion – and still awaits the green light from the Biden administration. The company describes the takeover as a “win for the environment” and claims it can extract the oil with fewer emissions than Pioneer. In late 2020, Exxon’s carbon footprint attracted a lot of criticism, culminating in a campaign by activist investor Engine No. 1. However, the three board members of Engine No. 1 accepted the acquisition of Pioneer. Woods hopes to double the revenue from the shale oil deposits through technical improvements in fracking.
Under Woods, Exxon also continues to play a significant political role. When it comes to shaping the energy transition, Exxon can”play a role in bringing expertise and our understanding of today’s energy system to bear,” Woods told McKinsey. In day-to-day political business, however, this is sometimes done somewhat more aggressively. In the summer of 2021, Exxon’s chief lobbyist, Keith McCoy, described Biden’s climate plans as “insane.” Exxon only agreed to a carbon tax because it was unlikely, McCoy said in a video secretly recorded by activists. The Exxon lobbyist admitted that Exxon was pressuring senators and supporting shadow groups that cast the government’s climate policy in a bad light. Woods called the statements “disturbing and inaccurate.”
Exxon currently lobbies the US government on hydrogen subsidies. The company wants to ensure that hydrogen from gas (“blue hydrogen”) is also considered green and that producers like Exxon should receive high subsidies. The aim is to capture and store the CO2 generated during production.
Woods, who joined the company in 1992, is well-off thanks to the fossil fuel course he has charted for Exxon. During the energy crisis 2022, his annual income skyrocketed to almost 36 million US dollars. His basic salary was raised by ten percent to nearly two million US dollars. US President Joe Biden criticized the company at the time, saying it was making “more money than God.” Exxon is taking legal action against the EU tax on windfall profits. If the tax goes through, the company faces payments of at least two billion US dollars. A decision by the European Court of Justice is still pending. Nico Beckert
777 million US dollars – that’s how much money the UAE, the Bill and Melinda Gates Foundation and other donors pledged at COP28 on Sunday for the fight against tropical diseases. Diseases such as river blindness and sleeping sickness are becoming a growing threat due to climate change. The somewhat odd number draws attention. And attention is undoubtedly also a goal of the donor countries.
After all, climate conferences are always a game of big numbers. Hundreds of millions are pledged here, tens of billions are promised there. Often, the highest sums hide the hope for the participation of the private sector. Bernhard Pötter presents some of these initiatives.
Forest conservation also involves a lot of money. Brazil has presented new plans to preserve its tropical forests. What’s making it so special: If the forest is destroyed, the owners must pay a fine. But many things remain vague, reports Alexandra Endres.
The number of visitors to this COP is also gigantic. It almost cracked the mark of 100,000 delegates. One of the visitors is Darren Woods. The Exxon CEO plans to be “the last survivor” in the oil and gas business, analysts say. Find out more about Woods and his fossil fuel plans in today’s Profile.
In the never-ending search for financial resources for international climate policy, COP28 is breaking new ground. While the debate on climate financing has so far mainly revolved around government funding, the focus now turns to private capital for the global energy transition. Companies, governments, foundations and the financial sector are presenting extensive packages to promote global climate action with a focus on emerging and developing countries. However, criticism of these plans is also growing louder.
On Sunday, US climate envoy John Kerry officially presented the Energy Transition Accelerator (ETA) in the US pavilion on the COP premises. The ETA is an initiative of the US State Department, the Rockefeller Foundation and the Bezos Earth Foundation. It brings together industry partners and countries to raise capital for the “transition off of dirty power and accelerate the clean energy future” via carbon credits in emerging and developing countries, as Kerry said.
The idea is for companies such as Amazon, Bank of America, BCG, Morgan Stanley, PepsiCo and McDonald’s to buy credits from participating countries. So far, Chile, the Dominican Republic, Nigeria and the Philippines have expressed interest. The companies use these carbon credits to participate in the voluntary carbon market. In turn, the countries receive capital for developing renewables, power lines and decommissioning coal-fired power plants, for instance. The projects “will be guided by high-integrity methodologies and just transition safeguards.” Five percent of the revenue will be used for “adaptation and resilience in vulnerable countries.”
“These countries need around 1.9 trillion dollars in investment per year,” says Andrew Steer, who is advancing the project at the Bezos Earth Fund. “That’s seven times as much as is available today.” In 2035, the credits could mobilize between 72 and 207 billion dollars, it is said. This alone would be roughly on a par with the 100 billion dollars annually developed countries pledged to poor countries as climate financing from 2020 to 2025.
The US government’s ETA was already presented at COP27 and is now set to be officially launched next spring. There was already criticism back then because it contradicted the UN body’s recommendations against greenwashing in the financial sector. Erika Lennon from the development organization CIEL has now declared that the initiative is a “lie and deception” intended to divert attention from the USA’s poor climate finance record. She said the idea relied on carbon markets, which had proven that they did not work, even with high standards. And the ETA is a “dangerous distraction” from the fact that the US is the world’s largest oil and gas producer.
The COP hosts, the United Arab Emirates, are also pushing ahead with restructuring global financial flows. With a promise of a billion-dollar green investment initiative, a new “catalytic climate finance vehicle” investment fund called Alterra is to “steer private markets towards climate investments and focus on transforming emerging markets and developing economies,” according to a statement from the COP presidency.
The plan is to establish special public-sector cooperation in a country whose oil company Adnoc is a state-owned enterprise. Its CEO and current COP President Sultan Al Jaber is to oversee Alterra as chair of the supervisory board. Majid Al Suwaidi, Director General of COP28, will lead the company as CEO. He brings together a team of “climate finance specialists” for emerging and developing countries. The company will be based in Abu Dhabi.
The fund is intended to raise 30 billion dollars for this purpose, which will trigger 250 billion dollars in low-carbon investments worldwide. Alterra will be the “world’s largest private investment vehicle for climate change action.” Its goal is to “drive forward international efforts to create a fairer climate finance system, with an emphasis on improving access to funding for the Global South.”
The investment funds BlackRock, Brookfield and TPG are on board as private partners. Together, Alterra committed USD 6.5 billion to “climate-focused funds for global investments, including the Global South,” according to official information. Additional capital will also be raised “from other institutional investors and global organizations.” The structure will be “a transformative solution to attract private capital,” said Sultan Al Jaber.
Alterra will be divided into two areas. “Alterra Acceleration” will channel 25 billion US dollars of capital into large-scale climate investments with the best chance of accelerating the transition to net zero and a green economy. The unit will be an “anchor investor,” investing directly and channeling its money into partnerships in developed and emerging economies.
“Alterra Transformation,” the second and significantly smaller part of the company with five billion in capital, is intended to raise “risk mitigation capital” to stimulate investment flows to the Global South and circumvent existing obstacles to such investments. The unit also wants to “create opportunities to leverage concessional finance to further attract climate investment to Least Developed Countries (LDCs) and Small Island Developing States (SIDS).”
The climate group 350.org has raised some questions about this project. “While in principle a step in the right direction, we would need to check that the claims by the presidency are not overblown,” says Andreas Sieber from 350.org. The majority of the announced 30 billion will be allocated at market conditions, and there are no guarantees that this will not lead to further debt in the recipient countries or flow into CCS technologies, for example.
German Development Minister Svenja Schulze also recognizes the need to “shift the trillions” required for the global energy transition, which cannot be achieved from national budgets alone. “Effective climate action needs private capital above all,” the minister told Table.Media. “We can’t just finance this publicly. We need much more capital for the global climate and poverty reduction tasks. This makes it all the more important to get private money on board with the right framework conditions where there are business models. This can relieve the pressure on tight public budgets.”
Brazil also proposes international financing for forest conservation and sustainable development. Unlike the Amazon Fund, which countries such as Norway and Germany already use to fund measures to counter deforestation, the new “Tropical Forests Forever” is supposed to ensure the preservation of forests. International donors, primarily sovereign wealth funds, would invest capital via a financial institution as an intermediary, with the returns generated being used to finance forest conservation in Brazil and other countries (See our second analysis for details).
The global energy transition partnerships JETP also mobilize international capital for emerging countries. This money consists of public funds from developed countries and loans from private financial institutions at favorable rates. Following partnerships with South Africa, Indonesia and Senegal, Vietnam has now also announced its financing needs at COP28. Accordingly, 15.8 billion dollars are to flow into the energy transition, of which the international partners, above all, the EU, will provide over eight billion. The negotiations took roughly a year.
Four months ago, twelve countries home to tropical forests agreed at the Amazon Summit in Belém, Brazil, to “develop innovative mechanisms” to harmonize rainforest conservation with social and economic concerns. These included key rainforest countries such as Brazil, the Democratic Republic of the Congo and Indonesia. Brazil has now presented its first “innovative mechanism” at COP28.
The plan is to finance rainforest conservation via a “Tropical Forests Forever” fund. Brazil hopes to initially “mobilize” at least 250 billion US dollars. It is not yet clear where the money is supposed to come from. Various ideas have been floated at the conference. One proposal aims to encourage sovereign wealth funds to invest.
So far, the resources available for global forest conservation have been limited. Deforestation is usually more profitable than preserving the ecosystem: Land is cleared for livestock and soya cultivation, for example, and nature is destroyed for oil drilling and gold mining. The new fund aims to change this by offering economic incentives to preserve ecosystems.
The money will primarily go to the people and communities that protect and preserve the forest. According to the Brazilian government, around 80 countries could benefit from the fund. They would receive a fixed amount every year from a mechanism designed to be as simple as possible and therefore quick to implement – for every hectare of forest that is preserved or restored. For every hectare cut down, forest owners would have to pay a hundred times as much in fines.
Fines could be the decisive factor in a forest owner’s economic considerations. According to Tasso Azevedo, the inventor of the Brazilian Amazon Fund, growing soya promises a significantly higher yield per hectare than conserving the forest, even with the money from the fund. However, a penalty that would cancel out payments of one hundred protected hectares is a powerful incentive to preserve the forest. In a recent article, Azevedo wrote that nature conservation must be guaranteed to yield tangible returns.
The initiative was presented at the COP28 by high-profile figures, including Environment Minister Marina Silva and Finance Minister Fernando Haddad. Brazil is now inviting “partners” to develop the fund’s operational details, said Silva. The new fund is expected to be operational by COP30.
However, to what extent other tropical countries will support the initiative remains unclear. Garo Batmanian told Table.Media that dialogue is ongoing with some of them. Batmanian is the General Director of the Brazilian Forestry Service at the Ministry of Environment and Climate Change of the Government of Brazil. However, he did not mention any specific names. His delegation said the initial goal was to initiate a dialogue about the new idea.
A spokesperson for the Coalition for Rainforest Nations, which, according to its own information, includes more than 50 countries, did not comment specifically on Brazil’s initiative: “We support the Brazilian government under Lula in principle,” he merely stated, “and believe in the REDD+ mechanism of the UNFCCC.”
REDD+ is an established concept that focuses on paying money for emissions avoided through forest conservation. It primarily sees the ecosystem as a carbon sink. Brazil’s initiative could be seen as competition. In fact, the Brazilian delegation claims that its own idea is much easier to implement than REDD+ and could, therefore, generate significant funds more quickly.
The idea is to no longer tie payments to the amount of carbon stored in a forest, but to the area preserved, thus considering that a forest also fulfills ecological and social functions. For example, a payment of 25 or 30 US dollars could be made per hectare – for every hectare of cut forest, the sum for one hundred hectares would be deducted.
Batmanian explained that the fund is to be as simple as possible. The requirements should not be too detailed, partly to allow as many countries as possible to participate: “We all have forests. But we are at different stages of development and there are socio-economic and cultural differences between us. A one-size-fits-all approach would not do this justice.”
However, all participating countries should fulfill some fundamental criteria:
By winning sovereign wealth funds as investors, the hope is to raise adequate funds for the new mechanism. According to Batmanian, sovereign wealth funds manage combined global assets of twelve trillion dollars. They have clear investment rules: A large share of the money must be invested in safe AAA-rated bonds. Batmanian’s idea: A financial institution – the World Bank, for instance – issues such AAA bonds to investors at a standard market interest rate. The funds raised are then invested in the financial market. This is how it makes a profit. This could then flow into the conservation of tropical forests.
It remains unclear how market fluctuations will be handled – and whether sovereign wealth funds can even make significant investments in the bonds Brazil’s fund wants to issue. They generally have to adhere to very strict conditions.
Personally, Tasso Azevedo prefers a different source of finance: Oil producers could pay one dollar into the fund for every barrel produced – and Brazil could make a start. “What if we then asked the USA to also give a dollar? Or Saudi Arabia?” Private oil companies should also contribute, “only four or five years until we have achieved implementation.” He believes that the required sums would be raised quickly this way.
Darren Woods is the first ExxonMobil CEO to attend a climate conference. At COP28, the business model of fossil fuel giants is also being negotiated indirectly: a phase-out or phasing down of oil and gas production. Woods wants to prevent this because his course for Exxon is clear: The company plans to be the “last man standing” in the oil and gas business, as one observer puts it.
The company did join a new initiative of 50 oil and gas companies at COP28. Their aim is to reduce carbon emissions from fossil fuel production to zero by 2050 and significantly reduce methane emissions by 2030. But critics see this as just a fig leaf. Unlike some other oil and gas companies, Exxon hardly invests in renewables. Quite the opposite.
57-year-old Woods has been CEO of Exxon since January 2017. During his time in office, Exxon has invested tens of billions of US dollars in a shale oil company and in CCS infrastructure. The company also invests heavily in its own production off the coast of Guyana. Woods is convinced that the energy transition will take “many decades.” According to Exxon, oil and gas will still account for more than half of energy demand in 2050.
Like COP President Al Jaber, Woods wants to “address the emissions associated with the combustion of oil and gas.” and “find the technology to do that.” Fossil fuels offer “a level of convenience, reliability, and affordability that is hard to replace,” said the Exxon CEO in an interview with consulting firm McKinsey. There is too much talk about the end of fossil fuels at COP28, Woods told the Financial Times.
Born in the industrial city of Wichita, Kansas, Woods strongly supports CCS technology. He studied electrical engineering and has a Master of Business Administration (MBA). He is married and has three children. “By training, I’m an engineer, which in many ways is how I still see myself – as someone who solves problems,” says Woods about himself. “I’m a father and grandfather – who cares about his family, their quality of life, and their futures.”
And he boasts that Exxon has “captured more CO2 than any other company.” However, most CCS applications are used to expand oil and gas production. Exxon sees new business opportunities here. In the summer of 2023, the oil multinational acquired Denbury Inc. for USD 4.9 billion, giving it the largest network of CO2 pipelines in the United States. The deal is part of Exxon’s promise to invest over 17 billion US dollars in “low-carbon solutions” by 2027, as the company calls its investments in CCS, hydrogen and biofuels.
But Wood’s biggest takeover targets a shale oil producer. Exxon plans to acquire Pioneer Natural Resources and its production licenses in the Permian Basin in Texas and New Mexico for USD 60 billion – and still awaits the green light from the Biden administration. The company describes the takeover as a “win for the environment” and claims it can extract the oil with fewer emissions than Pioneer. In late 2020, Exxon’s carbon footprint attracted a lot of criticism, culminating in a campaign by activist investor Engine No. 1. However, the three board members of Engine No. 1 accepted the acquisition of Pioneer. Woods hopes to double the revenue from the shale oil deposits through technical improvements in fracking.
Under Woods, Exxon also continues to play a significant political role. When it comes to shaping the energy transition, Exxon can”play a role in bringing expertise and our understanding of today’s energy system to bear,” Woods told McKinsey. In day-to-day political business, however, this is sometimes done somewhat more aggressively. In the summer of 2021, Exxon’s chief lobbyist, Keith McCoy, described Biden’s climate plans as “insane.” Exxon only agreed to a carbon tax because it was unlikely, McCoy said in a video secretly recorded by activists. The Exxon lobbyist admitted that Exxon was pressuring senators and supporting shadow groups that cast the government’s climate policy in a bad light. Woods called the statements “disturbing and inaccurate.”
Exxon currently lobbies the US government on hydrogen subsidies. The company wants to ensure that hydrogen from gas (“blue hydrogen”) is also considered green and that producers like Exxon should receive high subsidies. The aim is to capture and store the CO2 generated during production.
Woods, who joined the company in 1992, is well-off thanks to the fossil fuel course he has charted for Exxon. During the energy crisis 2022, his annual income skyrocketed to almost 36 million US dollars. His basic salary was raised by ten percent to nearly two million US dollars. US President Joe Biden criticized the company at the time, saying it was making “more money than God.” Exxon is taking legal action against the EU tax on windfall profits. If the tax goes through, the company faces payments of at least two billion US dollars. A decision by the European Court of Justice is still pending. Nico Beckert
