IMPERIAL OIL LIMITED (r PROPRIETARY . Detailed Issue Summagy GLOBAL WARMING CLIMATE CHANGE Overview of Issue Canada contributes only about 2% to global C02 911115510115 from energy use bUt critics point to Canada's very energy intensive economy in terms of COz/capita; #6 in terms of 95 of Ll Canada continues to be viewed as a "hawk" on this issue. Federal government made an earlv commitment to stabilize greenhouse gas emissions -- measures to achieve remain incomplete. Canada committed to stabilizing CO2 and other greenhousegas emissions at 1990 levels by the year 2000 at a UN. conference in Bergen, Norway in May, 1990 at recent Council of Car-radian Ministers conference, overall agreement to test achievement of Liberal Platform objective of 20% reduction over 1988 by 2005. :1 Canada signed the Climate Change Convention at the UNCED "Earth Summit" in Rio Delaneiro in June, 1992: - Also reconfirmed target and timetable per the Bergen commitment even though Climate Change Convention less firm (Bergen commitment aimed at stabilizing emissions while Convention aims at stabilizing concentrations in the atmosphere -- a much more serious/difficult objective requiring potentially as high as 60 reductions in CO2 emissions levels over 1990) - Tabled a "Quick Start Agenda" with commitments to quickly ratify the convention by year end 1992 and to prepare a'national report on emissions and reduction measures planned by June, 1993 -- Draft National Report issued in October 1993 identifying significant gaps to close on stabilization. Cl Canada's plans to achieve the stabilization target not yet firm: - Federal government?s "National Action Strategy on Global Warming" of 1990 proposed a phased, progressive approach, with first steps being those that make sense in their own right energy efficiency). - Federal government's projections (1990) show C02 growth rate of year over 1990 to 2000 period in a "Business as Usual" case: - Most recent forecasts in Draft national Report are for 1.0% /year growth to 2000 reconfirming earlier forecasts on potential gaps. GLOBALWMDOC LBS Revised: 11/29/93 . ng STABILIZATION .. "?9352 COMMENTS Busmess as Usual" 461 562 90-100 GDP growth - WTI in 2000 (1989$) "Economic" Energy 461 510 45-50 - Only 50% of gap Efficiency Steps closed apphed - Key recommendations of Draft National Report include: 0 Transportation - transportation demand management practices (32% C02) - alternatives - ride sharing routing efficiencies - driver education 0 Energy Supply - demand-side management (20% C02) - co-generation - nuclear 8 hydro i Res/Comm Use - improved energy e??iciency (15-18% coz) *1 0 Industrial Use - large equipment efficiency ?3 (22-25% 02) voluntary energy conservation (measures very similar to proposed LLS. programs) 7? . - New National process has been struck to address C02 and other? projections, possible reduction measures and macro-econ sq National Air Issues Coordinating Committee Taskgroup on G19 5 (Significant that of all air issues, onl climate change [16 this time) Concern over talk of votentail use of energy tax as replacemen within the Liberal Caucus Potential Impact on Imperial/Exxon CI From a national standpoint, an IOL commissioned .. DRI /McGraw Hill showed that very high levels of tax, a C02 stabilization target: a. A carbon tax building up to $200 tonne of emissions (1/3 reduced economic activity, - Reduces Canada's GDP by $100 billion (rev Translating the DRI carbon tax impacts to 12% reduction in revenue, . second order effect on margins. GLOBALWMDOC LBS Revised: llf29/93 and influence supply mix could iigher carbon content fossil iosition oi increased taxes to dampen demand 1v costs of energy intensive/l lied to natural gas fuel would increase Int} increase the relative supp tuels such as oil sands. The DRI tax app bitumen production costs by about 85/3. Corporate Position It 101. has lobbied for a cautious and flexible response with two major public discussion papers in 1990 and 1991 and extensive discussions with government, thought leaders and the media: Many uncertainties, doesn't warrant drastic steps at this time. - Makes little sense to act unilaterally to respond to a global issue. - l-?ocus should shift to all greenhouse gases, sources and sinks, not just C02 production from energy use. Basic Strategy/Action Plan 3 Continue to press lOL's well developed and broadly communicated position aimed at limiting non market-driven response steps at this time: Stress relative certainty of the debits to Canada?s precarious economy and international competitiveness versus the uncertainty in environmental benefits. Share energy supply/ demand outlooks with Energy Mines and Resources. Participate in voluntary industry initiatives to foster economic energy efficiency steps as a best defensive strategy (support revitalization of Canadian Industrial Program for Energy Conservation which was created after the oil price shocks in the 1970?s - now called Minister's Advisory Council on Energy Efficiency in Industry) Direct participation in Energy Industry Taskforce on Climate Change as input to broader national process -- in partnership with industry associations. . Inter-regional Coordination 1 Continue to co-ordinate outlooks and positions through Exxon's Environment and Safety and Corporate Planning networks. 1" [3 Could benefit from Exxon corporate-wide view on the appropriate emphasis for energy efficiency in business planning and in competition for capital funds. Environment Safety Dept. File: GOV General Issues Overview GLOBALWMDOC LBS Revised: 11/29/93