Shell Dumping a Lobbyist Shows a Changing Climate: Liam Denning

Royal Dutch Shell Plc just fired a shot across the bow of oil lobbyists. More of a slingshot than a cannon, but significant nonetheless.

The Anglo-Dutch oil major released a report Tuesday summarizing its relationship with 19 industry associations on the subject of climate-change goals. The company says it has some “misalignment” with nine of them and “material misalignment” with one, American Fuel & Petrochemical Manufacturers. As a result, Shell intends to let its membership of AFPM lapse in 2020.

This is an important step. While most oil majors now acknowledge climate change and the role of their products in causing it to some degree, that sits at odds with their membership of trade groups campaigning in the opposite direction. Calling for, say, carbon pricing while funding operatives who try to ensure that doesn’t happen is plain hypocrisy. The report summarizes Shell’s position vis-a-vis each of the 19 groups with regards to four broad climate-related topics and, in doing so, exposes the rifts. Just by publishing it, Shell also sets a precedent, and shareholder resolutions calling for similar reports from its competitors are all but certain.

The break with AFPM is clearly designed to show the report has teeth. As sacrificial lambs go, the AFPM is an obvious choice. For one thing, it’s American; ditching an international group wouldn’t have nearly the same political significance. For another, the AFPM is on record opposing a carbon tax and, in another break with Shell, supports the White House’s proposal to relax the previous administration’s planned fuel-economy standards (see above on hypocrisy).

At the same time, the report tries to walk a fine line with respect to other trade groups, acknowledging they don’t necessarily align with Shell’s stated goals but not to a “material” extent. The subjectivity of that is awkward; for example, while it’s pretty easy for any of these groups to support (or not oppose) efforts to encourage use of natural gas, the rubber really hits the road when it comes to positions on such things as the Paris Agreement or carbon pricing.

Shell writes, for example, that the Canadian Association of Petroleum Producers and the Western States Petroleum Association either don’t comment or have a position on the goals of the Paris Agreement. Yet that agreement encompasses the entire issue of the greenhouse-gas emissions generated by oil and gas. An energy group not having a public stance on Paris in 2019 is like Cookie Monster not having an official position on crumbs (he actually does, apparently favoring some sort of crumb capture, utilization and storage approach).

As the past three decades or so have demonstrated, the incumbency of fossil fuels in our energy mix means merely delaying change can be an effective lobbying strategy. You don’t have to be rabidly anti-renewable energy to keep things as they are; merely say you are open to a discussion, debate, ideas or whatever but withhold active support or lobby against related measures.

I wrote recently about the American Petroleum Institute decrying state subsidies for electric-vehicle charging infrastructure (something Shell is buying its way into) as handouts to high-earners. I think such subsidies do raise some thorny issues, especially where they intersect with local monopoly utilities. Yet the API doesn’t acknowledge that its members, rather high earners themselves, enjoy far bigger subsidies every day via their fuels not having to internalize the cost of one of their chief waste products: carbon. On that front, Shell’s report refers to an API statement saying it will evaluate and respond to specific proposals on carbon pricing, rather than “broad policy outlines.”

So Shell’s report, the first of its kind, is a work in progress; one that could conceivably help shift positions held by others and at least exposes the chasm between professing support for solutions and actually doing something about it. Above all, its very existence in the first place speaks to one important development. Despite having helped to stymie action on climate change for years, the industry is recognizing that very success now risks a backlash of millennial proportions.