LONDON (Reuters) – France’s Total SE became the first major global energy company on Friday to shut down the main US oil and gas lobby over climate policy disagreements and support for easing drilling regulations.
Total said it would not renew its 2021 membership at the American Petroleum Institute (API) after a review of the lobby’s climate positions, which described it as being only “partially consistent” with its own.
The high-profile exit from the most powerful energy lobby comes ahead of sweeping changes in policy direction in the United States, with incoming President Joe Biden pledging to tackle climate change and bring the country to zero emissions by 2050.
“As part of our climate ambition, which was made public in May 2020, we are committed to ensuring in a transparent manner that the industry associations of which we are members adopt positions and messages consistent with those of the Group in the fight against climate change, ”said Total Chief Executive Patrick Pouyanné.
The pullout points to a growing divide between Europe’s largest energy companies, which over the past year have accelerated plans to cut emissions and build large renewable energy companies, and their US rivals Exxon Mobil Corp and Chevron Corp who have the have largely withstood growing pressure from investors to diversify.
Chevron has no plans to leave the API, said company spokesman Sean Comey. Exxon was not immediately available for comment.
The announcement is pressuring Total’s European rivals, BP and Royal Dutch Shell, to follow suit after opposing the move in recent years.
BP, Shell and Norwegian Equinor said Friday they are reviewing trade association memberships and how they align with climate-related issues. Shell spokesman Curtis Moore said that “API is moving closer to Shell’s own positions” on climate change.
European oil companies have in the past pointed to the role of the API in formulating industrial safety and business standards as their rationale for sticking with the group.
However, in his reasons for leaving the group, Total cited the API’s support for the rollback of US methane emissions regulations last year, its differing views on carbon pricing, and the lack of support for subsidies for electric vehicles.
The API thanked Total for its membership, but noted that it does not support energy subsidies as it disrupts the markets.
“We believe the global energy and environmental challenges are so great that many different approaches are required to solve them, and we benefit from a diversity of insights,” said the API.
The group has defended its reputation for tackling carbon emissions and notes that the industry’s technological advancements have helped reduce carbon dioxide and methane emissions in major oil-producing regions.
Total last year announced plans to reduce its CO2 emissions with the goal of achieving zero net emissions from its operations and its energy products sold to customers in Europe by 2050 or earlier.
Total’s operations in the United States include a number of offshore oil and gas fields in the Gulf of Mexico, a major refining and petrochemical plant in Port Arthur, Texas, and renewable energy companies. The company produced approximately 343,000 barrels of oil equivalent per day in the Americas in the third quarter.
SIGNIFICANT MOVEMENT
Increasing investor pressure has prompted Europe’s largest energy companies to plan to cut emissions and boost renewable energy production.
“There is simply no justification for any partnership with lobby groups that are rolling back emission regulations and undermining urgent climate action,” said Jeanett Bergan, head of responsible investment at KLP, Norway’s largest pension fund, which manages $ 80 billion in assets.
Total, BP and Shell have already withdrawn from the US Fuel & Petrochemical Manufacturers (AFPM), an American oil refining group, also due to differences in climate policy.
The withdrawal from API was more significant, said Andrew Logan, director for oil and gas programs and CERES investor group in clean energy, said the announcement was significant and would put pressure on other European oil companies.
“Given the size and leverage of API, this is a much more important step than previous decisions to exit more niche trading groups such as AFPM. I think we’ll see other companies follow suit, ”said Logan.
Reporting by Ron Bousso, Matthew Green and Shadia Nasralla in London, Nerijus Adomaitis in Oslo, Valerie Volcovici in Washington and Jennifer Hiller in Houston; edited by Jan Harvey, Jason Neely, Jane Merriman, Marguerita Choy and Louise Heavens