A Majority of Big Oil Wants to Act on Climate Change
By George Harvey
Among oil companies, there are five that stand out, traditionally called “Big Oil,” and “the super-majors.” Though there are other large companies, these five stand out for reasons of both history and economics.
Three of the five super-majors, together with three more huge oil companies that are not part of that group, sent out two letters on climate change at the end of May. One of these went to the Financial Times, and it makes the interesting statement, “We owe it to future generations to seek realistic, workable solutions to the challenge of providing more energy while tackling climate change.”
While that seems rather stunning, the other letter, which went to the United Nations, says a good deal more. It begins with an admission that puts everything into unambiguous focus. “Climate change is a critical challenge for our world.”
Unsurprisingly, the oil companies sing their own praises in various places in the letters. Nevertheless, they bring some important issues to the table, with the express hope of entering into a dialog with the UN and “willing” governments.
“We believe that a price on carbon should be a key element of these frameworks,” the oil companies say. With that, they are asking that charges for putting carbon into the atmosphere be made, raising the prices of the products they sell. Unsurprisingly, they ask that natural gas, which they sell, be used to replace coal, which they do not sell. And unsurprisingly, they advocate carbon capture and storage. But they also advocate increased use of efficiency, renewable energy, smart buildings and grids, and clean vehicles. One other thing they notably advocate is new behaviors.
The three super-major oil companies that signed the letter are Shell, BP, and Total, a French company. They were joined by Italy’s Eni, Norway’s Statoil, and one US company, BG Group. The two super-majors that did not sign the letter are Chevron and ExxonMobil.
The significance of this development would be hard to overstate. The oil companies have gone beyond admitting that climate change is a real, serious, man-made problem. They have even gone beyond pointing out that it is important that they make a contribution to the solution. They have asked the nations of the Earth to be allowed to enter into a dialog, in which they can offer their knowledge and expertise, and they can get guidance on how to deal with the issue.
The progress toward a legally binding deal at the UN climate summit in Paris next December has been described as hopeful. Christiana Figueres has described it as being ahead of schedule. The marketplace cast a vote on the side of renewable energy when Tesla pre-sold over $800 million worth of batteries in the first week after its line of batteries was announced. In the first third of 2015, less than 16% of all new electric capacity put on the grid in the United States was powered by fossil fuels. Efficiency is cutting into the fossil fuel market. Electric vehicle sales are increasing. Oil prices are down because Saudi Arabia is pumping it as fast as they can, and they are doing that because they want to sell the oil before the world turns to other energy sources, according to a recently retired manager in the Saudi Oil Ministry.
At a moment when things might look pretty bleak for sellers of fossil fuels, three of the five Big Oil companies are calling for action on climate change. By doing so, they may get a place at the table, where they can take part in guiding policy. They are pragmatic, after all.
The letter from the oil companies to the UN can be seen at bit.ly/oil-paying-for-carbon.