Tag Archives: Eni

Why U.S. oil companies clash with EU peers on global warming

Repost from The San Francisco Chronicle

Why U.S. oil companies clash with EU peers on global warming

By David R. Baker, Sunday, June 7, 2015 11:37 am
John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images
John Watson, CEO of the Chevron Corporation, speaks during an energy summit in Washington, D.C., in 2011. Photo: Saul Loeb, AFP/Getty Images

The fight against climate change has opened a trans-Atlantic rift in an industry often seen as a monolith — Big Oil.

Unwilling to sit on the sidelines of climate negotiations, Europe’s largest oil companies last month issued a joint statement calling for a worldwide price on the greenhouse gas emissions that come from burning their products. Such a price, they said, would help the global economy transition to cleaner sources of energy.

The CEOs of BP, Eni, Royal Dutch Shell, Statoil and Total all signed the statement.

None of their American counterparts did.

Chevron Corp. CEO John Watson argued that his European colleagues are pushing a policy that consumers would never embrace. Focus instead on developing nuclear plants and natural gas reserves to fight global warming, he said.

“It’s not a policy that is going to be effective, because customers want affordable energy,” Watson said last week, at an OPEC seminar in Vienna. “They want low energy prices, not high energy prices.”

The split, analysts say, reflects the stark divide between climate politics in Europe and the United States.

Europe already has a cap-and-trade system for setting a price on greenhouse gas emissions. Public debate over global warming revolves around how best to fight it, not whether it exists.

In the United States, many conservatives still insist that warming is either a natural phenomenon or an outright hoax perpetrated by scientists, environmentalists and their political allies. Pricing carbon is a nonstarter for most Republicans in Washington, who are trying to block President Obama’s climate regulations. An effort to create a nationwide cap-and-trade system died in 2010, in part due to opposition from oil- and coal-producing states.

“The domestic politics for the U.S. companies is different from what it is for the Europeans,” said Raymond Kopp, a senior fellow with the Resources for the Future think tank. “Right now, this is a difficult conversation for them to have domestically.”

And that’s assuming they want to have it all.

Exxon CEO Rex Tillerson has expressed support for a tax on greenhouse gas emissions but hasn’t pushed for it. The company formerly supported groups that questioned the scientific consensus on warming. Billionaires Charles and David Koch, whose wealth comes largely from oil and gas, have poured money into the campaigns of political candidates who oppose action on climate change. The Koch brothers have announced plans to spend $889 million during the 2016 election cycle.

California policies

And while Chevron’s home base lies in the only U.S. state with a full-scale cap-and-trade program — California — the company has often criticized the state’s climate-change policies, warning they could push energy prices higher.

Last month’s statement from the European oil CEOs, in contrast, brands climate change “a critical challenge for our world” that must be tackled immediately. The executives urge governments that haven’t already done so to start putting a price on carbon.

The statement, issued as an open letter to two top international climate negotiators, is notably silent on whether the companies prefer a tax on greenhouse gas emissions or a cap-and-trade system. Such systems — including California’s, which began in 2012 — force businesses to buy credits for each ton of carbon dioxide they emit.

The CEOs make clear, however, that they eventually want a worldwide price.

“Pricing carbon obviously adds a cost to our production and our products,” they write. “But carbon pricing policy frameworks will contribute to provide our businesses and their many stakeholders with a clear roadmap for future investment, a level playing field for all energy sources across geographies and a clear role in securing a more sustainable future.”

Natural gas strategy

The CEOs also hint at how their companies could thrive in such a future, by producing more natural gas and investing in renewable technology. Indeed, the companies already have extensive natural gas holdings, analysts noted.

“If you’re on the board of directors of an oil company, you have to be asking yourself, ‘What’s our future in a low-carbon world?’ And with this letter, I think you see these companies trying to figure it out,” said Ralph Cavanagh, energy program co-director for the Natural Resources Defense Council environmental group.

Chevron and Exxon have also invested heavily in natural gas, which when burned in power plants produces roughly half the greenhouse gas emissions of coal. Regulations limiting emissions, including the Obama administration’s effort to cut emissions from power plants, could help them.

“I can’t imagine that Exxon or Chevron, which are companies that would benefit from a shift to natural gas, would be privately opposed to the Clean Power Plan,” said Amy Myers Jaffe, director of the energy and sustainability program at UC Davis.

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    Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

    Repost from ClimateProgress

    Why You Should Be Skeptical Of Big Oil Companies Asking For A Price On Carbon

    By Emily Atkin, June 3, 2015 at 4:19 pm

    Shell, Statoil, Total, and BP were four of six companies to request a price on carbon be included in international policy frameworks. Six large European oil and gas companies are asking governments across the world to charge them for the carbon dioxide they emit.

    In a letter released Monday, Shell, BP, Total, Statoil, Eni, and the BG Group told the chief of the United Nations Framework Convention on Climate Change that a price on carbon “should be a key element” of an international agreement to address global climate change. The letter came while U.N. negotiators met in Bonn, Germany to work towards that agreement.

    For those who want to fight climate change, this is good news. But it’s not totally unprecedented. Other high-emitting companies, including Shell, have expressed support for a carbon price before. And big oil companies have been expecting some sort of carbon price for a long time — the biggest ones have already incorporated it into their business plans. Exxon Mobil, ConocoPhillips, Chevron, BP, Shell; they’re all financially prepared for a carbon price if and when it comes their way.

    That more and more oil companies are now actively calling for a carbon price, though, is good for the climate fight. Total, BP, Statoil, and Royal Dutch Shell are all among the 90 companies causing the vast majority of global warming via their exorbitant carbon emissions. Now, they’re acknowledging they want to at least pay for some of those emissions, and that seems like a positive development.

    At the same time, it’s not like any of those six companies are halting their plans to drill. They haven’t recognized the science that says two-thirds of all proven fossil fuel reserves will have to be left in the ground to avoid catastrophic warming. Shell is still planning to explore for oil in the Arctic; BP just recently expanded its operations in the Gulf of Mexico.

    More importantly, though — at least in terms of getting a carbon price in the final U.N. climate deal — the European companies that signed the letter wield little power within the U.S. Congress compared to other big oil companies. This matters because the terms of that deal will almost certainly have to be approved by Congress if it is to include an enforceable price on carbon. Under U.S. law, any international agreement that binds or prohibits the United States from actions not otherwise mandated by law must be ratified by Congress.

    BP, Statoil, and Total might be actively calling for a carbon tax, but the three biggest U.S. oil companies — ExxonMobil, Chevron, and ConocoPhillips — aren’t. (ExxonMobil says they would prefer a carbon tax to a cap-and-trade system, but they don’t outright support it). And those U.S. companies are spending much more to influence Congress than the letter-writing companies on campaign donations and lobbying.

    Contributions include donations from company employees, PACs, and soft money contributions.
    Contributions include donations from company employees, PACs, and soft money contributions. CREDIT: Patrick Smith

    To be fair, European companies have more restrictions on how much they can give than U.S.-based companies do. But not only are the biggest U.S. companies spending far more to influence U.S. politics, their money is going to politicians who are actively fighting efforts to price carbon in the United States.

    During the 2014 election, for example, the biggest receiver of funds from ExxonMobil, Chevron, and ConocoPhillips was former Sen. Mary Landrieu (D-LA). Landrieu marketed herself, among other things, as the “key vote” that made sure a carbon pricing system wasn’t implemented by Congress in 2010. Other candidates supported by those three companies were John Boehner, Mitch McConnell, Mark Begich, John Cornyn — all have said they oppose a price on carbon.

    In fact, the Republican party as a whole in the United States is opposed to policies that price carbon. Though it says nothing about a carbon tax, the last official Republican party platform touts opposition to “any and all cap-and-trade legislation.” Unsurprisingly, the vast majority of all oil company campaign contributions is going to Republicans.

    oillobby (1)
    Oil Lobby CREDIT: Patrick Smith

    There are other reasons to be skeptical of any big oil company fighting for a price on carbon. For one, some companies have said they would support a carbon tax, but only if they can avoid other climate-related regulations. As David Roberts pointed out for Grist back in 2012, “the fossil fuel lobby would never give a carbon tax their OK unless EPA regulations on carbon (and possibly other pollution regs) were scrapped.” It’s also reasonable to assume that oil companies see profits increasing in the markets for low-carbon natural gas while the high-emitting coal industry tanks, and realize that coal would be hurt far worse by the policy.

    In other words, it is great that some of the world’s biggest contributors to climate change want to be charged for the carbon they emit. But we still have a long way to go before big oil actually joins the fight.

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