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Shell’s stand on climate change meets skepticism from critics and the industry

by Josh Siegel: April 04, 2019 12:00 AM

Shell’s move to leave a trade group because of its climate change position is being met with skepticism from fossil fuel critics and energy producers alike, because Shell remains in other groups that oppose policies to address climate change.

Sen. Sheldon Whitehouse, D-R.I., perhaps the harshest critic of the oil and gas industry, said that Shell’s decision to leave American Fuel & Petrochemical Manufacturers “begs the question as to how Shell justifies continued membership in the much larger lobbying behemoths that spend millions opposing the climate action Shell claims to support.”

“If Shell is truly serious about supporting climate action, then it will give those groups an ultimatum: Stop opposing policies to reduce carbon pollution, or we walk,” Whitehouse told the Washington Examiner.

Prompted by activist shareholders, Shell, the British-Dutch oil and gas giant, announced Tuesday it will leave AFPM in 2020 because its membership conflicts with living up to the goals of the Paris international climate change agreement. In particular, AFPM opposes carbon pricing, supports the Trump administration’s weakening of Obama-era fuel-efficiency standards for vehicles, and opposes regulating methane emissions from natural gas.

Shell also put nine other groups on notice, saying it has some “misalignment” with them and could leave, including the American Petroleum Institute — the oil and gas industry’s largest trade group, the U.S. Chamber of Commerce, and the National Association of Manufacturers.

Environmentalists are optimistic that Shell’s moves could inspire similar shareholder resolutions calling for other companies to reevaluate their membership in trade groups.

“Companies that want to be seen as part of the climate solution are finding it unhelpful to be tied to the regressive agendas of their trade associations,” said Fred Krupp, president of the Environmental Defense Fund, a group that works with oil and gas companies to contain methane emissions.

But some industry officials dismissed Shell’s action as self-serving, noting the company remains in the more powerful API and Chamber, despite the fact those groups are similarly skeptical of government policy to combat climate change.

“This was a politically convenient choice for them, and I don’t think anyone is too surprised,” a refining industry official told the Washington Examiner, insisting on anonymity to speak candidly. “They picked to leave the group where they are the least effective, and it allows them to give the activist investors fodder to push the narrative, ‘We will start leaving all associations over climate change,’ without having to make changes that affect their advocacy strategy or their business.”

The refining source noted Shell has been moving away from refining, AFPM’s main focus, and emphasizing investments in oil and gas drilling and renewables.

Most of AFPM’s nearly 300 members are independent refiners who have no other energy sources to sell. Diversified international oil majors like Shell, however, could benefit from policies such as carbon pricing that would increase demand for gas and renewables by phasing out the use of coal.

“They don’t get much out of AFPM because their interests at odds with much of membership,” the refining industry official said of Shell.

Shell, along with other oil and gas majors like Exxon Mobil, BP, and ConocoPhillips, has endorsed a carbon tax plan proposed by the Climate Leadership Council, a group led by two former Republican secretaries of state, James Baker III and George Shultz. Shell also recently called on the the EPA to keep Obama-era regulations targeting methane leaks from oil and gas drillers and fracking operations, instead of weakening them as planned.

Critics of the oil and gas industries, though, say that companies have not spent significant money lobbying for carbon pricing proposals, and in some cases, try to block policy, usually through trade groups.

A political action committee formed by the Western States Petroleum Association, which represents companies such as BP, Chevron, Shell, and Exxon Mobil, spent millions to help defeat a carbon pricing ballot initiative in Washington state this past November. Shell did not provide funding to that campaign, although it did not endorse the measure either, faulting the design of the policy.

Large trade groups such as API, Chamber of Commerce, and NAM have refused to endorse carbon pricing, even as member companies like Shell support the general concept.

API CEO Mike Sommers told the Washington Examiner last month it’s premature to endorse carbon pricing because the policy isn’t being actively considered in Congress.

Carbon tax supporters, however, say Shell’s stand against trade groups could start to make an impact on policy.

“Over the course of the last several years, there has been an unquestionable shift among corporate America in supporting a carbon fee as the primary way to lower emissions,” said Greg Bertelsen, the senior vice president of the Climate Leadership Council. “Things will continue to move in that direction as we see that commitment bubble up to trade associations that represent their positions.”

Rep. Francis Rooney, R-Fla., who has introduced carbon tax legislation, told the Washington Examiner Shell’s action “could be a positive sign that Shell isn’t going to be two-faced like other majors.”

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