Exxon's Boss Is Cool on Green Policies

Rex Tillerson has been portrayed as a kinder, gentler CEO. But he shares his predecessor's doubts on the viability of alternative energy

by Christopher Palmeri

President Bush says the nation is addicted to oil. Detroit is rolling out hybrid vehicles. Across the Midwest, farmers are tilling soil to build ethanol plants. But the head of the world's largest energy company isn't jumping on the green bandwagon. "I'm not an expert on biofuels," says Rex Tillerson, the chairman and chief executive of Exxon Mobil (XOM). "I'm not an expert in biofuels. I'm not an expert in farming. I don't have much technology to add to moonshine."

Tillerson's comments on Feb. 13 came as part of the opening address at CERAWeek, the annual energy conference sponsored by Cambridge Energy Research Associates, a division of consulting firm IHS (IHS). Since the demise of a conference sponsored by the now-defunct accounting firm Arthur Andersen seven years ago, CERAWeek has become the leading confab for energy industry movers and shakers. A record 2,000 attendees packed conference rooms at Houston's Westin Galleria Hotel, turning the city into a kind of Davos on the bayou. The event, which runs through Feb. 15, also features speeches by Energy Secretary Samuel Bodman and Toyota Motor (TM) North America chief Jim Press.

A Skeptical CEO

It's Tillerson's remarks that are likely to fuel the most attention. Tillerson, a tall Texan with a baritone voice just this side of John Wayne's, is a long time Exxon exec who took over from the legendary Lee Raymond a little more than a year ago. While Raymond's prickly demeanor and critical comments about global warming studies made Exxon unpopular with many activists, Tillerson has been portrayed as a kinder, gentler CEO. Yet Tillerson made it clear that he shares his predecessor's skepticism about the contribution of fossil fuels to global warming and the opportunity that lies in alternative energy technologies. "We need to remain realistic about the role they can play," he said. "We're not just going to grow crops and solve our energy problems."

At a press conference after his address, Tillerson was asked about the report released two weeks ago in Paris by the United Nations Intergovernmental Panel on Climate Change, a consortium of scientists that concluded burning fossil fuels was causing global warming. He said he hadn't read the report, but as he understood it, there is still plenty of uncertainty about what the best course of action is. "There's clearly a change in the climate," Tillerson said. "It's getting warmer. How that all interrelates with industrial activity is not 100% clear."

Tillerson indicated that he thinks it's best to avoid piecemeal policies such as caps on carbon emissions or windfall profits taxes that could harm the economy or impede oil production down the road. "It may make people feel better, feel like they're doing something," he said.

Supply Concerns

In his address at the conference, he said, "Many policymakers think in increments of two, four, or six years, based on election cycles. In contrast, those of us in the energy industry think in increments of two, four, or six decades, based on timelines to gain access to new acreage, explore for, discover, and bring to production the next sources of supply. This is an important point, because acting impulsively in setting energy policy with the expectation of immediate results will likely have negative consequences that will be felt for decades to come. We must therefore inform the public and policymakers about the long time-frames that define our industry" (see BusinessWeek.com, 2/14/07, "Rex Tillerson: CERAWeek Opening Address").

To prove his point, Tillerson gave the example of Sakhalin-1, a massive oil and natural gas development in Russia that he helped develop as he climbed the corporate ladder. The fields, he noted, were first discovered in the 1970s.