Oil Industry’s New Climate Position. That Looks Painful.

September 8, 2014


Global oil markets are as lubricated with supply as ever. That, however, hasn’t stopped major oil companies from testing an unusual energy production strategy—protecting the environment from carbon emissions.

With varying degrees of success over the years, Big Oil has tried—but mostly failed—to bolster its green credentials even as it pumps more fossil fuels. Royal Dutch Shell is the latest example of how oil majors are trying to strike an environmentally friendly pose.

In a speech at Columbia University in New York last week, CEO Ben van Beurden added his voice to the growing chorus of those who think the U.S. ought to export its burgeoning oil bounty.

Yet van Beurden devoted a surprising amount of time to addressing what he termed “the real and current threat of climate change,” and he promoted Shell’s own initiatives to reduce carbon emissions. The CEO implied that oil companies and conservationists could find common ground in a “skewed global debate” about the environment and oil production.

“Global companies like Shell have a responsibility to speak up,” about what van Beurden called “the potentially devastating effects of climate change.” He backed growth in renewables, even as he acknowledged they were not yet sufficient to satisfy all the globe’s energy demands.

To be certain, Shell remains devoted to pumping oil: the company has been embroiled in a regulatory tussle over its $4.5 billion effort to drill in the Alaskan Arctic. Simultaneously, Shell has taken a bath on efforts to tapthe U.S. shale boom.

Yet by giving such prominence to environmental concerns, Shell’s efforts could be seen as either a sincere move to diversify away from oil—or a public relations campaign to neutralize opponents. In a sign of its commitment to curbing carbon dioxide after jettisoning its owninvestments in the solar sector, Shell is now building a carbon capture and storage plant in Scotland.

So can Big Oil really go from black to green? Recent history has been less than encouraging, and the environmental movement certainly has its share of doubts.

“These are not companies we would trust to bring us into a renewable energies future,” Travis Nichols, a national spokesman for Greenpeace, told CNBC.


In April, Royal Dutch Shell (RDS.A) headlined a group of 70 companies that called on world governments to cap greenhouse gas emissions at a level that will contain global warming. The “Trillion Tonne Communique,” named for the amount of heat-trapping gases that scientists believe can be added to the atmosphere while keeping warming within 2 degrees Celsius of pre-industrial levels, was described as a “global call to arms from businesses who take the science of climate change seriously and are demanding a proactive policy response.”

For all its vaunted language, Shell continues to fund and support several groups pursuing the opposite aim: to stymie climate policies sprouting up around the globe that the Trillion Tonne Communique applauds.

Take, for instance, the escalating climate-policy battle in California. The state’s global-warming policy, enacted in 2006, already regulates emissions from power plants and large industrial facilities. On Jan. 1, the policy will expand to include transportation fuels, which account for 36 percent of the state’s heat-trapping emissions.

The policy’s objective is to reduce California’s emissions to 1990 levels by the year 2020. By the Trillion Tonne Communique’s standards, it’s an extremely modest step. The state would need to trim emissions five times faster to approach the pace that the communique calls for, according to the California Air Resources Board.

Yet California’s climate rules are coming under withering attack from oil-backed groups, who say including oil under the climate rules amounts to a “hidden gas tax” that will hit California’s working families the hardest, Bloomberg Businessweek reported last week.

The most active group, the two-month-old California Drivers Alliance, calls itself a “movement of motorists, small businesses, fuel providers and consumers” who want to stop the regulations from expanding into transportation fuels on Jan. 1. The group has been running online ads, radio spots, and near-full-page newspaper ads across the state, including the Los Angeles Times, urging readers in bold letters to “Stop the Hidden Gas Tax,” which, it says, will “increase the cost of gas between 16 cents and 76 cents per gallon.”

(Outside experts call these estimates wildly exaggerated. An analysis by Severin Borenstein, a professor at University of California at Berkeley’s Haas School of Business, shows the price increase will most likely come to 9¢ to 10¢ per gallon.)

California Drivers Alliance has received all its funding, so far, from the Western States Petroleum Association (WSPA), according to Alliance spokesman Jerry Azevedo. WSPA’s list of 27 members includes three businesses owned or co-owned by Shell. Jonathan French, a spokesman for Shell, declined to comment. WSPA spokesman Tupper Hull did not reply to several requests seeking comment.




12 Responses to “Oil Industry’s New Climate Position. That Looks Painful.”

  1. […] CNBC: Global oil markets are as lubricated with supply as ever. That, however, hasn't stopped major oil companies from testing an unusual energy production strategy—protecting the environment from …  […]

  2. dumboldguy Says:

    This is all just propaganda BS from the oil industry—-Shell speaks with a forked tongue out of both sides of its corporate mouth. Any company that is so hell-bent on drilling in the arctic cannot be trusted, and the unworkable and uneconomical CCS strategy is just more “smoke and mirrors”. The oil industry will continue to assume “painful positions” and play the delaying game until they have drilled, fracked, and dug every last penny out of fossil fuels.

  3. Gingerbaker Says:

    Exactly how do we significantly “cap greenhouse gas emissions at a level that will contain global warming” if we keep burning fossil fuel, since the ideal combustion product of burning fossil fuels is CO2 and water??

    The only way to significantly reduce greenhouse gas emissions is to build the renewable energy infrastructure we all agreed (years ago) that we need anyway.

    In the meantime, spending a dime on new fossil fuel infrastructure or fossil fuel tax subsidies is money and time completely wasted.

    To me, the only interesting question is… are we going to wait around for free enterprise to address the solution as expensively as is possible and almost certainly too late, or are we going to use public projects to address the solution as cost-effectively as possible and on an intelligent schedule?

    • dumboldguy Says:

      Yep, yep, yep, and yep. I would add the question “How many humans would be left alive after “free enterprise” addresses the problem “almost certainly too late”? I predict 500 million to one billion at best.

      • David Minor Says:

        I’m curious (and horrified) as to how well established this “carrying capacity of one billion following 4 degrees of warming” figure is. I think the whole “4 degrees by the end of the century” thing is fairly firm isn’t it, but can anyone link me to the research indicating the planet will only support a billion people?

        • dumboldguy Says:

          And “horrified” you should be. It may take a few more generations for the S to really HTF, but the future of the human race looks quite grim right now. It is a very difficult thing to face for anyone who has more moral sense than a brick—-the fact that life has existed on the planet for so long and we are destroying it over just a few centuries in the name of profit and greed. I only cited those numbers to be “bright-sided” and hopeful that some humans will survive. IMO, if we don’t get moving very soon on AGW, nearly ALL life on Earth is doomed.

          You ask to be linked to “research indicating that the planet can support only a billion people”. We are actually in the process of doing the “research” right now on what the human carrying capacity of the planet may be. I’ve been studying the question of sustainability for 45+ years now. There are none of the “quick internet answers” (peer-reviewed and accurate, of course) that are so favored by certain Crockers. You will need to google, read whole books, and spend some real time if you hope to understand. There’s a lot out there on human overpopulation, population dynamics in general, and sustainability. Start with Wikipedia. The Habitable Planet goes into all facets.

          Population projections range from 2 billion to 40 billion, the first being what might be sustained if everyone lived like Americans, and the last being if everyone lived like the world’s poorest people. Most (optimistic) figures are in the 10-11 billion to 18-20 billion range, and they are constantly being revised downward as things keep looking worse. If all of modern civilization collapses, it is estimated that the earth could support 100 million people living as hunter-gatherers.

          My figure of 500 million to 1 billion is based on the fact that there were ~1 billion humans on the planet in 1800 at the beginning of the fossil fuel-industrial age, and that (with any luck) when the SHTF and the ravages of climate change and unsustainability hit us hard and we have to abandon fossil fuels, we will drop below that level and hopefully begin a comeback. When you look into population dynamics, look up “overshoot” and “collapse”.

          I’m curious (and horrified) as to how well established this “carrying capacity of one billion following 4 degrees of warming” figure is. I think the whole “4 degrees by the end of the century” thing is fairly firm isn’t it, but can anyone link me to the research indicating the planet will only support a billion people?

          • David Minor Says:

            I’d say if you ignore climate change altogether, it seems reasonable to believe that there’d be an alternative to fossil fuels available by the end of the century. I took an organic solar cells course online where they estimated there was about 1000 terawatts of solar power available for harvesting, whereas human civilization uses 11 terawatts at the moment (I think they were claiming that at theoretical maximum capacity wind would just about be able to cover 11tw too, or maybe it falls a bit short). So as far as I know, good PV technology will be able to cover our energy needs when it arrives. There’s tons of room for improvement too – current commercial units have an efficiency of about 15-20%, but multi junction quantum dot cells have the potential to be nearly 70% efficient (only single junction cells have a 33% theoretical limit), and a lot cheaper when we figure out how to make them.

            It looks like this population estimate comes from things like reduced agricultural capacity though, and there’s a significant chance that things could get close to 4 degrees by the middle of the century, ie while I’m still alive. I’m not too happy about that. I’ll just have to hope we manage to start making solar cells as cheap as sticky tape within the next decade I suppose?

          • dumboldguy Says:

            The various population estimates take many things into account besides reduced agricultural capacity. Take a look at “blog2009: The Graph: A picture of the present and the future” to see all the unsustainable “hockey sticks”. Google it if the link doesn’t work.


  4. cmaxracer Says:

    Exxon needs to Start the Transition to Solar, with solar now at 5 cent per kWh in the US Southwest. Exxon could spend 20 Billion a Year, to join the real world.

    Exxon should fire Tillerson, the CEO who seems to be managing Exxon with a POLITICAL Agenda, divorced from reality, unable to Innovate in today’s world. This isn’t 1899.

    Give Elon Musk a chance to direct Exxon into the future, and watch the PROFITS Roll In.

    • dumboldguy Says:

      Agree with all of that, especially getting rid of Tillerson. We need to be somewhat wary of Elon Musk, though. He wants us to go to Mars.

      • Gingerbaker Says:

        We need to be wary of Elon Musk because he is starting a propaganda campaign that leasing your solar panels from him (forever?), so that he makes most of the profit (forever?) is a progressive, forward-thinking blow against the system and against the ‘evils’ of centralized energy distribution.

        In other words, converting the mostly public sphere of electric utilities into a corporate eternal renewable-profit scheme and calling it responsible stewardship.

        • dumboldguy Says:

          “…..a corporate eternal renewable-profit scheme and calling it responsible stewardship”.

          I like that. Not that Musk doesn’t do some good things and is likely to be better for the planet than 1000 Tillersons, but I think his involvement in the whole space exploration thing fits that phrase. It may be just hubris and the “pie in the sky” thinking of someone with an overcharged self-image, but I can’t help but think he just wants to pile up the billions like so many other free-marketers, capitalists, and “investors”. He can’t be serious about establishing an 80,000 person colony on Mars and flying folks there for $500,000.

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