"Climate Crisis Tide Turns For Big Oil" - a very interesting story by Irina Slav

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Climate Crisis Tide Turns For Big Oil

By Irina Slav - Feb 08, 2023, 7:00 PM CST

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Constant accusations of knowing the effects of their products on the environment and lawsuits have become constant companions of oil companies in the last few years. The successes that activists have had—such as Friends of the Earth’s court win that obliged Shell to cut its emissions by 45 percent—have been celebrated loudly and globally.

Naturally, Big Oil tends to be the target of choice because of its size, but with governments in Europe and much of North America pledging their total support for an energy transition, the whole industry has become a target. And has been quiet about it all, probably on the assumption that trying to defend itself would make things worse. Until recently.

Perhaps the first highly public retaliatory shot came in 2021 when the chief executive of Liberty Energy made a YouTube video attacking North Face for its refusal to sell branded apparel to an oil company because of what it did. In the video, Chris Wright accused North Face of hypocrisy, noting the fact that the synthetic fibers they used in their products were a product of the oil industry.

The video made quite a splash at the time, with North Face’s defense coming down to an admission that associating with an oil company would make it look bad and a promise to make all its products recyclable by 2030.

Related: Has Saudi Arabia’s Relationship With Russia Reached Its Limits?

But Wright didn’t stop there. Just this month, the chief executive of Liberty posted a video on LinkedIn challenging the climate crisis narrative. LinkedIn took the video down. Wright challenged the decision. LinkedIn first said the video violated its misinformation policies but a day later restored it. And the Wall Street Journal wrote a long article about it.

In his disputing the alleged scientific consensus on climate change, Wright is still an exception. Yet Liberty’s bigger sector players are challenging the energy transition in other ways. They may well have had enough of bearing the attacks silently and making emission-reduction pledges in hopes that everyone starts liking them better.

Last year, for instance, the chief executive of Chevron, Mike Wirth, countered accusations by the Biden administration that the oil industry was raking in inordinate profits, saying that from a longer-term perspective, these were in fact modest returns on investments that oil companies made.

Industry insiders have noted, only half-jokingly, that if the federal government wants to tax the excess profits of Big Oil, then it should have provided financial support to the industry when it struggled during the worst of the Covid crisis. Or that it should have also taxed Big Tech, which made billions during the two pandemic years. 

Exxon went further, attacking the windfall tax the European Union recommended to all its members in court. The supermajor said that the windfall tax was counter-productive, it discouraged investments, and the European Union had exceeded its legal authority in imposing the tax on oil companies. It noted the $3 billion it had invested in refineries in Europe in the past 10 years, ensuring the security of fuel supply for the continent, suggesting that such investments would not be forthcoming in a windfall tax environment.

The U.S. company wasn’t the only one. French TotalEnergies was quick to take legal action against none other than one of the icons of the environmental movement: Greenpeace. After the organization issued a report claiming that TotalEnergies was underreporting its emissions, the supermajor acted swiftly and slammed Greenpeace for spreading misinformation, filing a lawsuit against the organization.

“The Greenpeace report follows a methodology that is dubious, to say the least,” TotalEnergies said at the time, adding that “the dissemination by Greenpeace of misleading information in this matter is serious.”

The latest surprise was quite a blow because it came from one of the companies most active in transforming themselves from an oil major to a transition leader. At least that was the plan three years ago when BP’s new chief executive Bernard Looney took the helm. 

Now, after a devastating 2020, a much better 2021, and a stellar 2022, Looney appears to have reconsidered some of BP’s goals. This time last year, BP said it planned to cut oil and gas production by 40 percent from 2019 levels by 2030. This week, the supermajor said the 2030 production cut target would be 25 percent from 2019 levels by 2030. 

What’s more, the Wall Street Journal, citing unnamed sources, reported a week ago that BP’s chief executive had been unhappy with the returns that many BP renewable energy projects were making. As a result, the report said, he planned to dial back the company’s transformation from Big Oil major to Big Energy major.

It could be that record profits have emboldened the oil industry, especially in the context of disappointing performance from renewable energy majors such as Orsted and Siemens Gamesa. Or it could be that the oil industry has had enough and has decided to stop rolling with the punches and instead serve some back.

By Irina Slav for Oilprice.com

https://oilprice.com/Energy/Energy-General/Climate-Crisis-Tide-Turns-For-Big-Oil.html

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