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Exxon studies climate policies and sees 'little risk' to bottom line

In one sign of the pressures that companies face to understand the business risks of stricter climate-change policies, one of the world’s biggest energy companies on Friday offered its thoughts on how it would fare in a low-carbon world.

Those policies include the goal of the Paris climate agreement to prevent global temperatures from rising more than 2 degrees Celsius above preindustrial levels.

Exxon’s conclusion: Even aggressive climate policies pose “little risk” to its investments. The company also played down the impact of electric vehicles on its business prospects.

But even as those words sought to reassure shareholders, the report underscored how the company was grappling with the transition to stricter policies to curb greenhouse gas emissions.

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A paper published in Nature in 2015 estimated that, for the world to have a 50-50 shot at staying below 2 degrees Celsius of warming, the world would have to avoid burning most of its coal reserves, half the natural gas and about one-third of the oil.

Exxon laid out a more optimistic view. Oil and natural gas will “continue to play a critical role in meeting the world’s energy demand,” the company said in its report.

Less than 5 percent of Exxon’s reserves would be affected under a 2-degree scenario, the company estimated. Under that scenario, Exxon sees the world’s oil consumption dropping slowly in the next two decades or so and sees demand for natural gas rising slightly.

In examining whether the rise of electric vehicles could threaten demand for oil, Exxon said it expected there to be 160 million electric cars on the road worldwide by 2040, up from a few million today. However, other analysts have suggested that electric cars could catch on more quickly as battery prices drop and as countries like China push more aggressively for adoption of electric vehicles.

Also Friday, Exxon reported lackluster quarterly earnings as disappointing refinery and chemical results weighed on its bottom line. Its stock fell 5 percent amid a broader market sell-off.

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This article originally appeared in The New York Times.

BRAD PLUMER and HIROKO TABUCHI © 2018 The New York Times

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