Big Oil Warns of Backlash as It Makes Vow on Climate Change

(Bloomberg) -- The world’s biggest oil and gas companies made an unprecedented vow to cut their contributions to global warming, even as they warned of a potential backlash from pushing change too quickly.

A collection of 13 energy luminaries, including the heads of BP Plc and Royal Dutch Shell Plc, gathered in New York Monday to acknowledge the need to reduce the planet’s reliance on fossil fuels. But they said a long road lies ahead that’s filled with political and technological challenges, and insisted petroleum will remain a key source of fuel for a growing population.

“The product portfolio will have to evolve, and I think we have a role in making that evolution," Shell Chief Executive Officer Ben van Beurden said at the forum. But, he added, “all these things we cannot do by forcing it down people’s throats. In the end it is the consumer that has to decide."

The meeting, organized by the industry-led Oil and Gas Climate Initiative, brought together top executives from firms representing one-third of the world’s oil and gas production, including European majors and national oil companies from China, Brazil, Mexico and Saudi Arabia. They gathered as the industry increasingly comes under pressure from governments and activists, while more investors are vowing to pull money from fossil-fuel producers.

Startup Funding

The OGCI was founded in 2014. After years of negotiations, American oil majors Exxon, Chevron Corp. and Occidental Petroleum Corp. agreed to join last week, even as U.S. President Donald Trump ramps up efforts to relax rules covering greenhouse-gas emissions.

The companies present on Monday announced a collective pledge to cut the rate of heat-trapping methane pollution from their operations by one-fifth by 2025, a move that would reduce overall emissions by 350,000 tons per year, according to a statement. The 13 businesses have also created a $1.3 billion investment fund to seed startups that are aiming to cut emissions from vehicles, oil wells, concrete production and other top sources of greenhouse gases.

The invitation-only forum in a Manhattan hotel ballroom could have been mistaken for a environmentalist convention at some points. But Big Oil’s executives made it clear their goal was survival in a carbon-constrained world, not forced retirement.

"If we do not provide the energy that is required, you will see an impact on the global economy," said Amin Nasser, CEO of Saudi Arabian Oil Co., better known as Saudi Aramco.

‘No Substitute’

The energy sector produced about 68 percent of global greenhouse-gas pollution, with oil and gas accounting for just over half of the sector’s emissions, according to a report last year by the International Energy Agency in Paris.

The OGCI’s methane pledge sets a “good, strong goal" -- if the companies follow through, Fred Krupp, president of the nonprofit Environmental Defense Fund, said in an statement. The danger, he said, is that “laggards" in the industry hide behind the OGCI’s proposal without addressing their own emissions.

“What we’ve learned through hard experience in the U.S. is that voluntary efforts of leaders are no substitute for government policies that level the playing field for all," Krupp said.

Still, some climate activists remain skeptical of the OGCI. The initiative has very little to do with addressing climate change and everything with oil and gas companies trying to delay their "inevitable" demise, Patrick McCully, climate and energy program director at the Rainforest Action Network in San Francisco, said in an email.

"The math is clear," he said. To avoid “catastrophic climate change we need to stop expanding fossil fuel use and start the managed decline of the sector."

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editors responsible for this story: Simon Casey at scasey4@bloomberg.net, Christine Buurma

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