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2004 Imperial Oil Shareholder Proposal on Renewable Energy
2. The Congrégation des Soeurs de Sainte-Anne has submitted one shareholder proposal that is reproduced below. Proposal No. 3 • Renewables are the fastest growing segment of the global energy market. In 2002, renewable energy use grew 11% in the U.S. From 1998 to 2002, world wind energy installed generating capacity increasing by an average 32% annually. (American Wind Energy Association) • Several U.S. states including California (20%), New York (25%), and Maine (30%) have renewables requirements for electricity production. The U.K. adopted a 20% requirement for renewables by 2020. The European Union has a goal of 22% renewables by 2010; and six European and Middle Eastern countries have goals ranging from 3% to 100%. The World Energy Council reports that the global market for renewable energy is likely to be in the range of $234 to $625 billion by 2010 and $1,900 billion by 2020. • Twelve companies (Alcoa, Cargill Dow, Delphi Corporation,
Dow, DuPont, General Motors, IBM, • In its 2002 Climate Change Voluntary Challenge & Registry, Imperial Oil declares "that the risk of climate change and its potential impacts on society and the ecosystem may prove to be significant." • To date, Imperial Oil has focused only on the development
of fuel cell vehicles. Although its • Direct competitors have significantly increased their development
of renewables. In 2002, Suncor Energy launched Sunbridge, a wind
power project in Saskatchewan. Early in 2003, Suncor announced plans
to partner in the development of a 30 MW wind power project in southern
Alberta. These two projects are expected to account for nearly 15%
of Canada's installed wind power by the end of 2004. Another company,
BP, stated in a March 11, 2002 media release that "BP would
continue to expand its solar business which is set to grow by 40% The directors recommend that you vote against this proposal for the following reasons. Imperial Oil Limited is an energy company. Understanding and projecting energy supply, demand and technology trends are important elements of our strategic business plan. We are open to considering investments in renewable energy which meet sound investment criteria and can compete favourably with other energy opportunities. However, at this time, renewable technologies do not offer near term promise for profitable investment relative to attractive opportunities in our core business. In 2002, renewables, particularly hydroelectricity, but also including use of biomass in the forest products industry provided about 15% of total Canadian primary energy. Imperial however has no real opportunities to participate in these businesses. In contrast, emerging renewables such as wind and solar represent less than one tenth of 1% of Canadian energy supply. Renewables such as wind and solar power, even while they may experience strong growth, do so from a relatively small starting point, and are not likely to achieve material market penetration for some time. This is confirmed by projections of independent, credible outside
parties. For example, the The World Energy Council (WEC) (a source cited by the resolution)
has projected that by 2020, while renewables in total will provide
about 21% of world energy supply, this is dominated by hydroelectricity
and traditional fuels such as firewood. Other sources such as wind,
solar and geothermal will supply less than one percent of total
energy in this outlook. Oil That economic dependence of renewables such as wind on government subsidy is demonstrated by the pattern of development - with wind power growing principally in jurisdictions with the most generous government support. Imperial does not view dependence on government support as a strong basis for an economically sustainable business opportunity. Imperial is making a greater and more economic contribution to
efficient, low-emitting electricity generation through its installation
of co-generation at Sarnia and Cold Lake. Once construction at Sarnia
is completed this year, these two projects alone will Imperial participates along with other affiliates in the Global Climate and Energy Project (GCEP) at Stanford University sponsored by Exxon Mobil Corporation and other leading companies. This project is helping to advance research to accelerate the development of commercially viable energy technologies that can substantially reduce greenhouse gas emissions. This includes, among other topics, research into renewable energy technologies. [this text of the proposal, its supporting statement, and management response has been excerpted from the 2004 Imperial Oil Management Proxy Circular]
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