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Illustration: Sarah Grillo/Axios

A nascent organization funded by global oil companies to address climate change may seem ironic but it's a credible effort that could actually have a real impact.

Why it matters: Under pressure from investors and lawsuits, oil companies are starting to acknowledge climate change and slowly shift their business models in response.

The intrigue: Last week at the first-ever U.S. meeting of the group, called the Oil and Gas Climate Initiative, a rare and surprisingly candid discussion took place between CEOs of the world’s biggest oil producers and leaders in climate-change action.

  • At the invite-only event at the Intercontinental Barclay hotel in Manhattan, roughly 150 people asked questions of 11 oil-company CEOs, including from Saudi Aramco, European producers BP and Shell and Houston-based Occidental Petroleum.
  • The guest list was strict and security officers were everywhere. Leaders of several environmental groups were invited, and as the two-hour discussion wore on, the dialogue got increasingly pointed.

Nigel Topping, CEO of a nonprofit coalition called We Mean Business, noted (accurately) that the companies were still overwhelmingly investing in finding new oil and gas over cleaner energy resources — “lest you suggest you’re really betting the farm on the future.”

The other side:

  • Josu Jon Imaz, CEO of Spanish producer Repsol, responded by saying he and other CEOs must balance transitioning to cleaner sources of energy over decades with returning short-term profits for shareholders. “The real dilemma and difficulty of all these jobs is to combine both things,” Imaz said.
  • Patrick Pouyanné, CEO of French producer Total, said cutting oil production too drastically would hurt the economy. “I don’t want to be accused in 10 years — because I would have diminished my amount of oil — for hiking the price of oil because the world will continue to need more.”

The big picture: The burning of fossil fuels oil and gas companies produce is a big reason Earth’s temperature is rising, yet their products are also foundations of the global economy. Whether you love or hate them, the role these companies play is inherent to addressing climate change, particularly in the absence of U.S. presidential leadership on the issue.

The Oil and Gas Climate Initiative was officially founded four years ago, but it’s just starting to do things worthy of attention.

  • The first U.S. member companies — ExxonMobil, Chevron and Occidental Petroleum — joined last week. That brings the total to 13 companies, accounting for roughly a third of the world’s oil and gas production.
  • The companies also pledged last week to cut by one-fifth their emissions of methane, the main ingredient in natural gas that’s also a potent greenhouse gas.

Each member contributes $100 million to Climate Investments, a $1.3 billion investment fund the group launched in November 2016. That effort has also had a slow start.

  • Its CEO, Pratima Rangarajan, joined in June 2017, having previously worked on wind, solar and battery storage technologies.
  • This time last year, the fund had made three investments. Today, it’s at eight, with more to come, particularly on energy efficiency, according to Rhea Hamilton, who leads investment decisions.
  • The fund’s primary goal is to make the use of oil and natural gas as clean as possible, and also to capture carbon dioxide emitted from facilities like cement manufacturers and fossil-fuel plants.

Some environmentalists argue that the fund is just maintaining the status quo rather than transitioning to new sources of energy. To Rangarajan, its goals reflect a focus on the emissions that need to be reduced.

“I came into this job from the renewable sector,” Rangarajan said at last week’s event. “When I decided I was going to work on climate, I actually came to this side.”

The initiative has limitations, driven by its makeup and mission.

  • Its 13 member companies are a mix of publicly and government-owned companies that are natural competitors of each other. The group employs a lawyer to ensure they abide by antitrust laws.
  • The group’s stated mission excludes advocating for (or against) government policies like carbon prices.

Absent an overarching goal, some environmentalists say the initiative will, by design, fall far short. Fred Krupp, president of the Environmental Defense Fund, who attended last week’s event, had cautious praise.

“I think each step has to be evaluated on its own merit. The first thing they started tackling when they were formed four years ago was methane, and they’ve taken that issue very seriously. We think they are doing good things with the billion-dollar fund. We will keep watching. We will keep encouraging.”
— Fred Krupp, Environmental Defense Fund President

Go deeper

Updated 2 hours ago - Energy & Environment

Thousands without power as "hazardous" winter storm lashes East Coast

Satellite imagery of the Northeastern U.S. taken by NOAA on Jan. 17. Photo: NOAA

A major winter storm lashed much of the East Coast Sunday and Monday, causing widespread power outages and disrupting travel over the holiday weekend.

The latest: Authorities in North Carolina confirmed that two people died in a car crash and that they responded 600 vehicle accidents during the storm on Sunday, per the Washington Post.

4 hours ago - Health

CDC director says COVID-19 messaging should have been clearer

Rochelle Walensky. Photo: Stefani Reynolds-Pool/Getty Images

Rochelle Walensky, director of the Centers for Disease Control and Prevention, said in an interview with the Wall Street Journal that the messaging around the COVID-19 pandemic and changing guidance should have been clearer.

State of play: Walensky is being coached by media experts and is planning to have more press briefings by herself in order to ensure that CDC is seen as an independent, scientific entity, rather than as a political one, the Journal reports.

5 hours ago - World

UAE asks U.S. to reinstate Houthi terrorist designation after attack

Secretary of State Tony Blinken (left) listens to United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed al-Nahyan during a joint news conference at the State Department iin October. Photo: Andrew Harnik/Pool/AFP via Getty Images

Emirati Foreign Minister Abdullah Bin Zayed asked Secretary of State Tony Blinken in a phone call Monday to re-designate the Houthi rebels in Yemen as a terrorist organization, a senior Emirati official told Axios.

Why it matters: Less than a month after he assumed office, President Biden rolled back the Trump administration’s decision to make the designation. He said it hampered humanitarian assistance to the Yemeni people. Since then, the Houthis have escalated their attacks against Saudi Arabia and other countries in the region — including an attack Monday in Abu Dhabi.