By Peter Montague, SEHN Fellow

Big Oil, led by ExxonMobil, is engaged in a life-or-death struggle for survival. Numerous authoritative studies have concluded that any new oil or gas projects will heat the planet beyond the so-called “safe” limit established by the Paris Agreement in 2015. But new drilling projects are the lifeblood of the oil industry; as oil fields age, they peter out, so new sources of oil are essential for the industry’s survival. A new study has just revealed that 96 percent of oil companies worldwide have “frightening” plans to expand.

Risking the future is what oil executives do. As Scientific American has reported, Exxon executives knew 45 years ago that fossil fuels would heat the entire Earth, disrupting the global distribution of water (which has now happened). In a series of talks to corporate executives during 1977-1978, Exxon’s senior science advisor, James Black, told Exxon’s top brass that “there is general scientific agreement that the most likely manner in which mankind is influencing the global climate is through carbon dioxide release from the burning of fossil fuels." Black told Exxon decision-makers, “Some countries would benefit but others would have their agricultural output reduced or destroyed,” according to a written summary of his talks that Black prepared.

In response to Black’s revelations, Exxon devoted a decade to serious scientific research on carbon dioxide (CO2) and climate change. During those years Exxon scientists published more than 50 peer-reviewed papers on climate science.

Then, as Bill McKibben sums it up, “ExxonMobil, the world’s largest and most powerful oil company, knew everything there was to know about climate change by the mid-1980s, and then spent the next few decades systematically funding climate denial and lying about the state of the science.”

Today, to assure their continued profits, the oil corporations spend lavishly to influence U.S. (and global) climate policy. For example, according to Open Secrets, in 2020, the U.S. oil and gas industries donated $12.0 million to members of the U.S. Senate (84 percent to Republicans, 16 percent to Democrats) and $17.1 million to members of the House of Representatives (80 percent to Republicans and 20 percent to Democrats). They also spent an additional $55.6 million hiring 634 lobbyists—more than one lobbyist for each of the 535 members of Congress. In sum, the oil and gas industry spent $82.8 million to influence Congress in 2020 (that’s an average of $154,000 for each of the 535 members of Congress in 2020 alone).

Perhaps this explains why Congress in August of this year enacted a new law intended to expand the oil industry at enormous public expense. The “Inflation Reduction Act of 2022” (IRA) solidifies a Big Oil agenda that has been unfolding for several decades, largely out of public view.

Big Oil’s Plan A is to open up new oil fields, but if that should fail, there’s also Plan B. Plan B envisions extracting additional oil out of existing depleted oil fields, using CO2 as a solvent to free up more oil. This is called “enhanced oil recovery,” or CO2-EOR for short.

Plan B was mapped out by Princeton University in 2020, paid for by oil majors. Although we desperately need mandatory rapid elimination of fossil fuels, a feat comparable in scale to the nation’s massive mobilization for WWII, Big Oil is dead set on unleashing carbon bombs for several more decades.

Plan B requires billions of tons of carbon dioxide. To get this CO2, the oil barons and their friends in government envision building expensive filters onto more than 1,000 U.S. industrial smokestacks to capture CO2 gas, compress it into a supercritical (“dense-phase”) fluid, send it through 66,000 miles of new high-pressure (and therefore dangerous) pipeline built for that purpose — and then do what with the CO2? There are two choices: (1) pump it deep in the ground, hoping it will stay there forever (this is called “carbon capture and storage,” CCS) or (2) pump it into depleted oil fields to flush out more oil, leaving some of the CO2 stored “permanently” below ground. (“Permanence” can never be demonstrated, of course, because a leak could always develop shortly after “permanence” is certified.) This is CO2-EOR.

What the oil industry wants, the oil industry has plenty of money to buy, including extracting generous public subsidies from taxpayers. Since 1985, our federal government has spent $9 billion of public money trying to get carbon capture working, but every large-scale project has either collapsed or failed to meet its carbon-capture goals. (Five decades of CCS failure are documented in a September 2022 report from the Institute for Energy Economics and Financial Analysis.)

Despite what the Wall Street Journal calls a “dismal record,” Big Oil insists success is just around the corner—if government will just pick up the tab. To spur carbon capture, in 2008 Congress modified section 45Q of the federal tax code to provide incentives—a $20 per ton tax credit for CCS and $10 per ton for CO2-EOR. A tax credit is money deducted directly from taxes owed. It’s cash in the bank.

Despite the 2008 tax incentives, carbon capture languished, so in 2018 Congress increased the tax-credit incentive to $50 per ton of CO2 for CCS and $35 per ton for CO2-EOR. Still, carbon capture fizzled. To capture their carbon, oil barons demanded a bigger subsidy. (Exxon wants $100 per ton.)

As early as 1972, the oil industry had started pumping supercritical CO2 into depleted oil fields to flush out more oil, and it worked. Nevertheless, today CO2-EOR produces only about 1.4 percent of U.S. oil, mainly because supercritical CO2 and CO2 pipelines are both in short supply. As the International Energy Agency (IEA) has said (pg. 35) “limited access to suitable supplies of CO2 presents a substantial barrier to further CO2-EOR.”

The IRA, which President Biden signed into law in August 2022, subsidizes both of Big Oil’s plans, A and B. The IRA allows oil exploration on federal land in Alaska and beneath the Gulf of Mexico, feeding Plan A. However, in case this gift of public land doesn’t fully satisfy Big Oil’s lust for climate-killing expansion, the IRA satisfies Plan B too. The IRA provides $85 per ton of CO2 used for CCS and $60 per ton for CO2-EOR. As attorney Paul Blackburn with the Bold Alliance was first to point out, Big Oil’s surest bet is Plan B—using CO2-EOR to recover oil that’s sitting in depleted oilfields that Big Oil already owns, where the subsurface geology has been explored.

Plan B is attractive for another reason: Because tax credits are based on tax returns, and tax returns are not public documents, all CO2-EOR tax credits remain secret, perhaps saving Big Oil considerable embarrassment as they take record profits while feeding at the public hog trough.

Pumping oil out of a typical oil field retrieves only one-third to one-half of the original oil, leaving half to two-thirds in the ground. In the U.S. there are about 400 billion barrels of oil sitting in depleted oil fields with 85 billion barrels considered recoverable by CO2-EOR. During 2021, the U.S. used about 7.2 billion barrels of oil, so 85 billion barrels would satisfy total U.S. oil demand for 11 years. (Worldwide, 1.3 trillion barrels of oil are considered recoverable by CO2-EOR; annual global oil demand hovers around 36.5 billion barrels, so 1.3 trillion barrels would supply the world’s oil demand for 35 years.)

As the IEA has said (pg. 11), expanding CO2-EOR depends on three things: plentiful cheap CO2, an extensive high-pressure CO2 pipeline system, and “fiscal support,” meaning public subsidies. The IRA’s fiscal support of $60 per ton for CO2-EOR can provide Big Oil with abundant CO2 at low or no cost.

Captured CO2 piped to CCS (not EOR) projects will earn $85 per ton of CO2; CO2-EOR projects pay only $60 per ton. Still, CO2-EOR is far more profitable than CCS. Here’s the math: According to the U.S. National Academy of Sciences (pg. 330), storing one ton of CO2 for EOR typically recovers three barrels of oil. The annual average closing price for a barrel of oil for the last 10 years has been $66.53. So, one ton of CO2 used for EOR will bring, on average, three times $66.53, plus the $60 subsidy, for a total of $260 per ton of CO2, which is three times the $85 per ton that CCS will bring for the same ton of CO2. The economics of carbon capture strongly favor EOR over CCS.

Will EOR reduce global heating? It is true that CO2-EOR leaves some CO2 in the ground. But that’s not the whole story. According to the IEA (pgs. 29-31) recovering one barrel of oil via EOR releases somewhere between 200 and 364 pounds of CO2, for an average of 282 pounds CO2 released per barrel of recovered oil. Burning that barrel of oil will release another 1,036 pounds of CO2 for a total of 1,318 pounds of CO2 released into the atmosphere by each barrel of oil recovered via EOR. If an average of 3 barrels of oil are recovered by one ton of CO2 “stored” in the ground via EOR, then 1.97 tons of CO2 are released into the atmosphere by each ton of CO2 used for EOR. EOR makes global heating worse, not better.

In sum, both of Big Oil’s plans—whether A or B—guarantee a hellish life for all young people everywhere. That is why youth are getting organized in a big way to defend their future. We elders have a choice: we can step aside, or we can pitch in to help with renewed vigor, deferring to youth to choose the path and lead the way.

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Big Oil vs. The Future of Young People