The decision by Chevron and ExxonMobil to lend their considerable collective weight to the industry’s Oil and Gas Climate Initiative (OGCI) has raised a lot of eyebrows. It has certainly triggered no shortage of discussion. Widely perceived as bulwarks of ‘old-school’ oil and gas – and the polar opposite of repositioned, rebranded and (in some cases) renamed giants such as Ørsted, Equinor and Total – the smart money perhaps wouldn’t have been on these US supermajors signing up to a global initiative that has delivery of the Paris Climate Accord targets at its heart.
Factor-in, too, the well-known aversion of the Trump administration to the Paris Accord, plus the fact that (thanks to shale) the US is now the world-leader in crude oil production for the first time since 1973, and you might wonder whether hell hasn’t frozen over! Moreover, as recently as June, we reported in Monday Night Mail that the two companies had, in flagship corporate publications issued this year, reaffirmed their broad strategy of consolidating around their core business in oil and gas production.
But as that earlier piece in MNM indicated, there was more nuance in the positions of ExxonMobil and Chevron than the stereotypical view of their stances might have led us to believe. While falling well short of the radical shift away from fossil fuels and towards wind, solar and electric vehicles embarked on by some of its European competitors, Chevron has been able to point to its billion-dollar investment in carbon capture and storage (CCS) projects, and its $100 million Future Energy Fund with its remit to invest in breakthrough technologies. Meanwhile, ExxonMobil has reportedly invested $9 billion in lower-carbon technologies since the turn of the century and, during the last decade, has pushed forward research into algae-based biofuels.
Looking at the overall picture, then, the decision to sit round the table as part of OGCI should perhaps be viewed as the next incremental step in a steady if unspectacular process, rather than as a single event signifying an abrupt change of direction or a ‘road to Damascus’ conversion. From OGCI’s perspective, it constitutes a significant success and the fruition of concerted efforts to bring big US companies on board. The net result is that OGCI now represents an impressive 30% of global oil and gas production.
It’s hard not to see the US supermajors’ recruitment to OGCI as constituting something substantially less than a green-energy U-turn, especially in view of their ongoing commitment to the North American shale-energy revolution. On the other hand, it’s undeniable that the companies are putting real money where their mouth is, with clear scope to take additional green steps further down the line. Indeed, in the wake of the publication of the UN Intergovernmental Panel on Climate Change’s new headline-grabbing special report, (see our other thought-piece in this MNM) investor and wider stakeholder pressure on the oil and gas sector to do much more is almost certain to ratchet up in the weeks and months ahead. We’ll only really be able to discern the true significance of the supermajors’ latest green move when we see exactly what they do next. Watch this space.