From: Douglas Grandt answerthecall@icloud.

com
Subject: Determining an effective fee schedule is guesswork
Date: April 19, 2017 at 3:23 PM
To: Darren W. Woods Darren.W.Woods@ExxonMobil.com
Cc: William (Bill) M. Colton William.M.Colton@ExxonMobil.com, Suzanne M. McCarron Suzanne.M.McCarron@ExxonMobil.com,
Max Schulz max.schulz@exxonmobil.com

Dear Darren,
.
On August 25, 2015, IOP Science published Assessing carbon lock-in which, according
to the ABSTRACT, addresses the concept of
.
'carbon lock-in which "refers to the tendency for certain carbon-intensive
technological systems to persist over time, 'locking out' lower-carbon
alternatives, and owing to a combination of linked technical, economic, and
institutional factors. These technologies may be costly to build, but relatively
inexpensive to operate and, over time, they reinforce political, market, and social factors
that make it difficult to move away from, or 'unlock' them. As a result, by investing in
assets prone to lock-in, planners and investors restrict future flexibility and increase
the costs of achieving agreed climate protection goals. Here, we develop a straight-
forward approach to assess the speed, strength, and scale of carbon lock-in for major
energy-consuming assets in the power, buildings, industry, and transport sectors. We pilot
the approach at the global level, finding that carbon lock-in is greatest, globally, for
coal power plants, gas power plants, and oil-based vehicles. The approach can be
readily applied at the national or regional scale, and may be of particular relevance to
policymakers interested in enhancing flexibility in their jurisdictions for deeper emissions
cuts in the future, and therefore in limiting the future costs associated with 'stranded
assets."
.
I have told you several times before that I believe ExxonMobil models and expertise to
determine with reasonable precision, what level of carbon fee is effective for the various
determine with reasonable precision, what level of carbon fee is effective for the various
fuels that you produce to power our passenger cars, light-weight trucks, freight hauling
tractor-trailers, locomotives, aircraft and ocean going vessels similar to this study.
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For reasons known only to ExxonMobil, a carbon fee of $80 is allegedly used in your
economic evaluations of investment projects, as blogged by Ken P. Cohen, Exxons
former VP-Public & Government Affairs on December 2, 2015:
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One key point we make in many of these briefings is that ExxonMobil has included a
proxy price on carbon in our business planning since 2007.
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This enables us to analyze the impact of a price on carbon on various investment
opportunities. This proxy cost, which in some regions may approach $80 per ton,
seeks to reflect all types of actions and policies that governments may take.
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As I have suggested before, you would be well advised as a Corporate Citizen to use
your models and expertise to solve for the appropriate level of tax that would, over time,
bring your business to an end. With that information, policy makers could judge how to
manage the end-game in the Public Interest and in the National Interest.
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Lets take a closer look at Figure 1 of IOP Sciences Assessing carbon lock-in which I
trust you will see dispells ExxonMobils simplistic view of a one-dimentional fee.

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The text the follows Figure 1 reads as follows:
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least widely recognized, is the lock-in associated with conventional ICE vehicles.
This analysis shows that, despite relatively short lifetimes, overinvestment in less
efficient, more carbon-intensive ICE passenger vehicles is significantyielding 14
GtCO2 over-committed emissions due to vehicle purchases over the next 15 years,
and where a carbon price of over $1,000 would be needed to retire them early.
(By contrast, it would be more cost-efficient to purchase highly efficient vehicles in
 (By contrast, it would be more cost-efficient to purchase highly efficient vehicles in
the first place, avoiding the capital cost of the less-efficient technology, and therefore
incurring a lower overall abatement cost.). Continued investment in conventional
ICE vehicles risks further entrenching these technologies at the expense of
fostering alternatives, such as electric vehicles, and the systems that support
them, such as recharging infrastructure.
.
Many climate policy efforts, and low-carbon energy analyses, focus on solutions,
such as renewable power or efficient vehicles, required for a low-carbon future.
Indeed, progress has been made in installing most low-carbon technologies. Yet, the
global trend remains toward much higher emissions than needed to meet ambitious
climate objectives. Accordingly, there is a need not only to advance low-carbon
technologies, but also to slow the rate of installation of technologies that may
close off, or make substantially more difficult, the attainment of these
ambitious climate objectives.
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As energy professionals, your scientists, engineers, economists and managers owe it to
their fellow Americans to do the what if analyses to get a feel for the approximate
range of carbon fee level that will be effective in quickly weening society off of carbon-
based fuels.
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Please take on the challenge. As a Corporate Citizen, it is your obligation.
.
Sincerely yours,
Doug Grandt