Sylvie Willis
Fossil fuel companies are businesses that deal with coal, oil, and natural gas. They are often referred to as energy companies, but this term sugarcoats their primary role as fossil fuel producers. These companies, including ExxonMobil, Shell, Chevron, and TotalEnergies, are among the largest corporations associated with the fossil fuels lobby. They have been criticized for their role in driving climate change, causing environmental disasters, and delaying action to address these issues. Fossil fuel companies have also been accused of deceiving the public about climate change and profiting at the expense of people and the planet. The transition away from fossil fuels is expected to have economic consequences due to the industry's integration into the global economy.
| Characteristics | Values |
|---|---|
| Definition | Companies that do business with coal, oil and gas |
| Other names | Energy companies |
| Examples | ExxonMobil, Shell, Chevron, TotalEnergies, Saudi Aramco, Gazprom, China National Petroleum Corporation, Equinor, ENI |
| Business structure | Many are structured as Master Limited Partnerships (MLPs) |
| Revenue sources | Exploration and exploitation of fossil fuel deposits, gas extraction, fossil fuel product refinement, petrochemical refinement and production, gas, renewables and power, marketing and services |
| Industry segments | Upstream, midstream, downstream |
| Industry associations | American Petroleum Institute |
| Environmental impact | Burning of fossil fuels is the main source of greenhouse gas emissions causing global warming and ocean acidification |
| Social impact | Most air pollution deaths are due to fossil fuel particulates and noxious gases |
| Economic impact | Fossil fuel divestment can exert social, political, and economic pressure for institutional divestment of assets including stocks, bonds, and other financial instruments |
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What You'll Learn
Fossil fuel divestment
There are several reasons for divesting from fossil fuels. Firstly, it is a way to align investments with ethical values and combat the fossil fuel industry's influence. Secondly, it helps protect portfolios from climate-related financial risks, as the fossil fuel industry faces long-term structural risks. Financial research suggests that fossil fuel divestment has positively impacted investors' long-term returns. Additionally, the moral argument for divestment is based on the belief that profiting from damaging the planet is wrong, especially when the impacts disproportionately affect those who have benefited the least from fossil fuel use. Philosopher and climate justice campaigner Alex Lenferna presents three interlocking moral arguments in favor of fossil fuel divestment: investing in fossil fuels contributes to harm and injustice, divesting helps promote climate action, and investing morally tarnishes individuals by making them complicit in the fossil fuel industry's injustices.
The Toronto Principle, coined by Benjamin A. Franta, is a fossil fuel divestment strategy that aligns with the goals of the Paris Agreement. It involves moving investments away from coal companies, coal-fired power plants, and companies seeking aggressive fossil fuel development or distorting public policies. Despite initial resistance, the University of Toronto eventually announced plans to divest by 2030 following continued pressure.
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Fossil fuel lobbyists
The fossil fuel lobby is known for its significant influence in democratic countries with intensive fossil fuel economies, such as the United States, Canada, Australia, and European nations. Large oil and gas companies, often referred to as "Big Oil," play a significant role in lobbying activities. Notable examples include ExxonMobil, Chevron, Shell, BP, and TotalEnergies. These companies have substantial financial resources and employ hundreds of lobbyists to promote their agenda.
One of the primary objectives of fossil fuel lobbyists is to obstruct and delay government action on addressing climate change. They often promote "sustainability principles" while simultaneously funding disinformation campaigns to create doubt about the reality and impacts of climate change. This tactic aims to forestall meaningful governmental efforts to mitigate climate change and promote renewable energy sources.
The influence of fossil fuel lobbyists has had significant consequences. They have scored key political appointments, such as within the administrations of former U.S. Presidents George W. Bush and Donald Trump. Additionally, the fossil fuel industry's lobbying efforts have resulted in the delay or weakening of climate change legislation, such as the Inflation Reduction Act's methane tax provisions and the switch to electric vehicles.
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Fossil fuel extraction
Fossil fuel companies are those that extract, refine, and sell fossil fuels, which are carbon-containing materials formed from the buried remains of prehistoric organisms. These fuels are used to provide energy for human activities, such as transportation, electricity generation, and industrial processes. Fossil fuel companies have been widely recognised as major contributors to climate change and environmental degradation due to the emissions released during the burning of these fuels.
The extraction of fossil fuels, such as coal, petroleum (crude oil), and natural gas, involves a range of processes, each with its own environmental and social impacts. Here is an overview of the key methods and considerations:
Drilling and Mining
Drilling is a common method used to access fossil fuels located deep underground. Oil and natural gas deposits are often found trapped beneath layers of rock, requiring the use of drill rigs to reach them. This process is carefully planned and monitored to ensure safety and compliance with local regulations. However, drilling can have negative consequences, including the risk of spills and leaks, which can contaminate water sources and harm ecosystems.
Fracking
Hydraulic fracturing, or fracking, is a technique used to extract unconventional gas and oil from shale rock formations. It involves injecting fluid and proppants into the rock at high pressure to create fractures, allowing the gas or oil to flow out. While fracking has contributed to increased gas production in countries like the United States, it has also been criticised for its environmental impacts. The process requires large volumes of water and has been linked to the contamination of drinking water sources and the generation of wastewater containing harmful pollutants.
Strip Mining and Tar Sands
Strip mining is employed for extracting fossil fuels found near the Earth's surface, such as in tar sands. This method involves removing layers of soil and rock to expose the fossil fuel deposits. Tar sands mining, for example, unearths bitumen, a heavy, viscous form of crude oil. While this provides access to fossil fuel resources, it can result in significant landscape alterations and ecological damage.
Environmental and Social Impacts
The extraction of fossil fuels has far-reaching consequences for the environment and society. Beyond the immediate impacts on local ecosystems and water sources, the release of greenhouse gas emissions during the burning of fossil fuels contributes to global warming, ocean acidification, and climate change. Additionally, the pursuit of fossil fuel resources has led to land leasing and infrastructure development, affecting communities and natural habitats.
Fossil fuel companies have been criticised for their role in perpetuating this cycle of extraction and combustion, often prioritising profits over the well-being of people and the planet. The transition away from fossil fuels towards cleaner energy sources is essential to mitigate these impacts and ensure a sustainable future.
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Fossil fuel combustion
Fossil fuels are a natural reservoir of flammable carbon compounds or hydrocarbons formed within the Earth's crust from the remains of prehistoric organisms. The burning of fossil fuels releases energy that is used for electricity generation, transportation, and industrial processes.
The process of fossil fuel combustion involves the oxidation of hydrocarbons, resulting in the release of heat energy. The most common fossil fuels used for combustion include coal, petroleum (or crude oil), and natural gas. These fuels are burned in power plants, engines, and industrial facilities to generate electricity and mechanical work.
The combustion of fossil fuels has been a primary driver of climate change. When fossil fuels are burned, they release carbon dioxide (CO2) and other greenhouse gases, such as nitrous oxide (N2O) and methane, into the atmosphere. These gases trap heat, leading to the greenhouse effect and global warming. The net effect of burning fossil fuels is warming, despite the slight cooling impact of airborne particles like soot and sulfate aerosols, which reflect sunlight back into space.
The release of these greenhouse gases has far-reaching consequences for the Earth's ecosystems and human health. The increased atmospheric concentrations of CO2 contribute to the greenhouse effect, altering the planet's climate patterns. Additionally, the combustion of fossil fuels generates sulfuric and nitric acids, which fall as acid rain, impacting natural areas, the built environment, and water bodies.
The environmental impact of fossil fuel combustion extends beyond climate change. Power plants that burn fossil fuels, for example, use large amounts of freshwater for cooling, which can cause thermal pollution and stress for local species when returned to nearby water bodies. The combustion process also releases nitrogen oxides, contributing to smog and acid rain formation. Furthermore, the particulate matter and noxious gases emitted from fossil fuel combustion are major contributors to air pollution, leading to significant health issues and premature deaths worldwide.
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Fossil fuel companies' profits
Fossil fuel companies are businesses that extract, produce, refine, transport, market, and/or distribute fossil fuels. Fossil fuels are carbon-based compounds formed from the remains of dead organisms over millions of years. Examples of fossil fuels include coal, petroleum, and natural gas. Fossil fuel companies are often referred to as "Big Oil" and include well-known corporations such as ExxonMobil, Shell, BP, Chevron Corporation, and Saudi Aramco.
The fossil fuel industry is heavily integrated into the global economy and is associated with significant political lobbying. In 2023, fossil fuels accounted for 77% of global primary energy consumption and over 60% of electricity production. As a result, the industry generates substantial profits, with record income exceeding $2.7 trillion in 2023. However, these profits come at a cost to the environment and society.
The burning of fossil fuels is the primary source of greenhouse gas emissions, contributing to global warming, ocean acidification, and air pollution. The large-scale burning of fossil fuels causes serious environmental damage and has led to a growing activist movement advocating for a transition to renewable and sustainable energy sources. Despite the negative externalities associated with their business, fossil fuel companies have been criticised for prioritising profits over environmental concerns.
In 2022, just five fossil fuel companies (ExxonMobil, Shell, BP, Chevron, and TotalEnergies) reported a total of nearly $200 billion in profits. During the same year, the United States experienced 18 separate climate and weather-related disasters, including droughts, floods, severe storms, and wildfires. These events resulted in billions of dollars in losses and disproportionately impacted marginalised communities. While fossil fuel companies profit, they have also been accused of deceiving the public about climate change, lobbying for their interests, and delaying action to remedy the situation.
The growing field of attribution science helps establish a causal link between fossil fuel emissions and specific climate change impacts. This scientific advancement strengthens the case for holding fossil fuel companies accountable for the damages caused by their products. As a result, there have been increasing calls for a just transition to ensure that workers' rights are protected as economies shift towards sustainable production methods. Additionally, proposals for a global climate damages fund or a COP carbon tax on fossil fuel company profits have gained traction as potential solutions to address the societal burdens created by the industry.
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Frequently asked questions
Fossil fuel companies are businesses that deal with coal, oil, and natural gas. They are often referred to as "energy companies", but critics argue that this term is a euphemism to distract from the reality of their business.
Some of the largest fossil fuel companies include ExxonMobil, Chevron, Shell, TotalEnergies, Saudi Aramco, Gazprom, and BP.
Fossil fuel companies generate profits through the exploration, extraction, and sale of fossil fuel products. They also benefit from various tax breaks and subsidies provided by governments.
Fossil fuel companies have been criticized for their contribution to climate change, environmental damage, and air pollution. They have been accused of lobbying governments, spreading misinformation, and delaying action on climate change.
