Royal Dutch Shell, one of the most aggressive global oil and gas producers on clean-energy and climate change, faces big tests on how serious it is with its pursuit.
Why it matters: The burning of fossil fuels sold by Shell and other producers 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.
Driving the news: Shell is set to complete a review of its membership in trade associations in April to determine if they contradict the company’s positions supporting action on climate change.
- Major trade groups, such as the American Petroleum Institute, have fought climate policies in the past but more recently have sought to be more agnostic on the matter.
The big picture: Shell, the world’s second-largest publicly traded oil company after ExxonMobil, has over the past year ramped up enough investments and commitments in this area to surpass any other producer similar in size.
In response to investor pressure, the Netherlands-based company announced plans in December to set short-term targets linked to executive pay to reduce greenhouse gas emissions from the products it sells, not just from its operations.
- BP recently resisted calls from its investors to take a similar step. This move may seem like a subtle distinction, but its potential repercussions are huge.
“Shell is the only company in the industry that has been willing to cross that philosophical divide and actually set a goal for reducing emissions that it doesn't directly control. Product emissions are typically eight to 10 times the size of operational emissions at an integrated oil and gas company.” — Andrew Logan, oil and gas program director, Ceres
Reality check: The company’s shift has not been matched by lobbying dollars in Washington, D.C. , raising doubts about how serious the company is about its clean-energy pursuits.
- Shell has not yet decided whether it will fund an advocacy campaign for carbon tax policy on Capitol Hill, according to spokesperson Curtis Smith. This puts the company behind American producers ExxonMobil and ConocoPhillips, which have.
- This positioning is also at odds with what Shell has indicated it wants to do, which is profit off of the world’s energy transition while remaining a good investment for shareholders in the meantime.
“If you don’t have government policies that are enabling the transition to happen it’s probably very hard to deliver on the world-class investment case.”— Mark Gainsborough, executive vice president, Shell
Go deeper: Read the whole column here.