The leaders of the world’s largest and most powerful energy companies are talking about the fight to mitigate human-caused climate change.
Some are even putting their money where their mouths are.
While some conservative political leaders still deny that the Earth is heating up due to humans burning fossil fuels and releasing greenhouse gases, the people who produce those fuels and chemicals have recognized the imperative to limit global warming to a rise of 2 degrees Celsius.
Many of these companies are recommending a carbon tax, and others are calling on governments to keep predictable environmental regulations. The pleas for reason coming from corporate boardrooms contrast sharply with the sloganeering coming from Republican politicians.
Sara Ortwein, the president of Exxon Mobil subsidiary XTO Energy, last week called for “sound policies and regulations” for methane emissions.
She recommended requiring oil companies to capture methane when completing a well, banning pneumatic devices that bleed methane, encouraging leak detection programs and mandating that drillers report emissions data.
That sounds very similar to the Obama-era regulations that the Trump administration has promised to repeal.
“We’ve made a lot of progress so far in minimizing methane emissions from industry operations,” she wrote in a blog post. “I am confident we can achieve even more.”
Exxon Mobil, which has already embraced a carbon tax, is spending billions on developing non-fossil fuels. In a shareholder-mandated report released Feb. 2, the company predicted global demand for oil could drop 25 percent by 2040 due to efforts to limit climate change, creating enormous demand for low-carbon alternatives.
Exxon Mobil’s competitors are taking even bigger steps to prepare for what the industry calls “the energy transition.”
Royal Dutch Shell believes peak oil demand could come as soon as the 2020s and is focusing more on natural gas. France’s Total wants 20 percent of the energy it produces to be low-carbon by 2035, and Norway’s Statoil plans to invest 20 percent of its capital in low-carbon energy sources by 2030, such as offshore wind power.
BP CEO Bob Dudley told the Oil and Money conference in October that his company learned a lot from its failed “Beyond Petroleum” campaign, but that doesn’t mean it’s giving up.
“We anticipated governments would adopt policies that would make low-carbon energy more competitive. Unfortunately, policy changes didn’t happen at the pace we expected,” he explained. “This time the global commitment to action feels different, and the national pledges are a good start. But frankly we need even stronger and clearer signals to create the confidence to invest in and grow low-carbon businesses at scale.”
The world’s biggest oil companies are practically begging for a carbon tax. The electric power industry is sounding a similar theme.
American Electric Power, one of the largest generators in the nation, pledged last week to reduce carbon dioxide emissions from generating facilities by 60 percent from 2000 levels by 2030, and then cut 80 percent from 2000 levels by 2050.
“Our position on climate change has always been that it should be addressed at the federal level in the United States and that it must be economywide. We also have always expressed the need for an international approach,” the company said in its annual report. “The U.S. Environmental Protection Agency’s action to repeal the Clean Power Plan creates uncertainty for near-term regulatory action on climate change.”
Xcel Energy, which provides power across eight states, plans to generate half of its electricity from renewable sources by the mid-2020s.
NRG Energy, which has a headquarters in Houston, was once a leader in developing cleaner energy. But after some poor strategic decisions, and under the influence of activist investors, the electricity generator is selling off it’s renewable energy portfolio and focusing on fossil fuels.
That decision may have saved NRG from bankruptcy, but it’s at best a short-term gain. Coal-fired and natural gas plants will only become more expensive to operate, and CEO Mauricio Gutierrez will need to pivot back into lower-cost renewables or get out of the power generation business altogether and focus on retail alone.
Environmentalists complain that many of these steps and pledges do not go far enough. But let’s give credit where it is due. These businesses have trillions of dollars in assets, millions of employees and are attempting a dramatic pivot in business plans.
Successful corporations embrace smart policies and regulations that enable them to provide excellent products at reasonable prices. The energy industry recognizes the need to fight climate change. Now it needs a fair and predictable environment to do its part.
This article first appeared on the Houston Chronicle – an Energy Voice content partner. For more from the Houston Chronicle click here.