As they gathered in Paris for the World Gas Conference, the CEOs of Royal Dutch Shell, its UK buyout target BG Group, French super-major Total, Italy’s Eni and Norway’s Statoil set out their position in a joint letter to the UN Framework Convention on Climate Change executive secretary and the president of the Conference of Parties (COP21).
The European majors timed their announcement as world leaders gather in Bonn, Germany for a climate change meeting, where Australian climate targets and policies will also be reviewed.
The announcement from European Big Oil is basically a plan to look good on climate change to distinguish them from coal at a time when the tide of activism against fossil fuel exploration or extraction of any type – oil, gas or coal – is actually impacting on projects.
The announcement also puts Europe’s majors at odds with their US counterparts.
ExxonMobil and Chevron have just rejected shareholder measures on climate change again, with Exxon CEO Rex Tillerson saying he would not “fake it” on the issue, and that the super-major wasn’t getting into renewables as they don’t make money without subsidies.
Remarking on the different tones set by Europe’s major oilers compared to their US counterparts, Sister Pat Daly, who was at Exxon's meeting representing the Catholic Sisters of St Dominic of Caldwell, New Jersey, said: “How startling that the industry has taken a split on this”
Daly’s group co-sponsored a proposal asking Exxon to set companywide goals for reducing greenhouse gas emissions for the ninth straight year. The measure failed, drawing support from less than 10% of the vote.
“For natural gas, the case is simple: when burned to make electricity, it typically generates around half the carbon emissions of coal,” the European CEOs said in their letter, signed by BG’s Helge Lund, BP’s Bob Dudley, Eni’s Claudio Descalzi, Shell’s Ben van Beurden, Statoil’s Eldar Saetre and Total’s Patrick Pouyanne.
“In addition, gas can provide the electricity base load that is required and can be a flexible partner to renewable as efforts continue to improve the storage of electricity produced by intermittent solar or wind. This benefit is enhanced when natural gas emissions all along the value chain are controlled and reduced, a matter we are actively addressing with peers.”
They were adamant, however, that their request to policy-makers as they prepare for the UN talks was not to ask for special treatment for any resource, including natural gas, or “any single route to a lower-carbon future”; rather to ensure that the outcome of the talks leads to widespread carbon pricing in all countries.
“Carbon pricing policies in every country will stimulate all forms of low-carbon technologies,” they said.
“It will drive energy efficiency as rapid urbanisation increases demand from our cities.
“It will benefit all sectors including power, mobility, heating and energy-intensive industries along with renewable energy and natural gas, the cleanest-burning fossil fuel.
“Market forces will operate to favour the least expensive and most efficient ways of reducing carbon in each country or region.
“Pricing carbon obviously adds a cost to our production and our products – but a stable, long-term, global carbon pricing framework would provide our businesses and their many stakeholders with a clear roadmap for future investments, and a clear role in securing a more sustainable future.”
They said their motivation was to be “part of the solution” – which is exactly what the World Coal Association is saying with its drive for the increasing use of supercritical and ultra-supercritical plants which could cut 2gigatonnes of carbon dioxide emissions now.
“We want to be a part of the solution and deliver energy to society sustainably for many decades to come,” the European CEOs said of their motivation for the climate change letter.
“Like our counterparts in other industry sectors, we will play a key role in implementing the measures and deploying the technologies that will lead to a lower carbon future.
“Low carbon business models and solutions are fragile until they reach critical size, but with linked carbon pricing systems worldwide, uncertainty would be reduced and such solutions will start to create value for business more rapidly.”
They acknowledged that pricing carbon would obviously add a cost to their production and products – but were prepared to go through with it as carbon pricing policy frameworks would contribute to provide their businesses and 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”
“We acknowledge the long-term challenge and appreciate that this will be transformative across the energy sector,” they said.
“Over many decades, our industry has been innovative and has been at the forefront of change. We are confident that we can build on our trajectory of innovation to meet the challenges of the future.”
Each of the European CEOs said they would copy the letter personally to key contacts among investors, governments, civil society and staff.
“Our industry faces a challenge: we need to meet greater energy demand with less carbon dioxide,” they said.
“We are ready to meet that challenge and we are prepared to play our part. We firmly believe that carbon pricing will discourage high carbon options and reduce uncertainty that will help stimulate investments in the right low carbon technologies and the right resources at the right pace.
“We now need governments around the world to provide us with this framework and we believe our presence at the table will be helpful in designing an approach that will be both practical and deliverable.”
