Why Oil Companies Are Fighting for the Paris Climate Deal

In a rare split with political conservatives, the industry sees the agreement as good for business and believes it will shape the climate agenda for years to come.

AP Photo/John Seewer
April 18, 2017, 8 p.m.

In contrast to the kind of lock-step agreement that usually defines energy-policy discussions among conservatives, usually sympathetic corporate interests are pulling in an opposite direction as the White House debates its stance on the Paris climate-change agreement.

On one side, political conservatives—including White House adviser Stephen Bannon—want President Trump to follow through on his campaign promise to take the U.S. out of the United Nations deal. They say that would free the country from any emissions-reduction obligations that could put the U.S. at a competitive disadvantage.

But those voices are facing increasing headwinds from major oil and gas companies, which have urged the White House not to rock the boat by leaving the pact. Oil giants Shell, Exxon, and BP are among those who have publicly backed the deal. Exxon wrote that it would be “prudent” for the U.S. to remain to “ensure a level playing field so that global energy markets remain as free and competitive as possible.”

Trump administration officials—including Environmental Protection Agency Administrator Scott Pruitt, Energy Secretary Rick Perry, Secretary of State Rex Tillerson, Bannon, and adviser Jared Kushner—were scheduled to meet Tuesday to discuss the Paris deal, but the session was postponed because officials accompanied Trump to Wisconsin where he ordered a review of H-1B visas for high-skilled foreign workers.

White House spokeswoman Sarah Huckabee Sanders told reporters the meeting would be rescheduled in a couple of weeks. The White House has said it would announce its decision on Paris before the G7 summit that begins May 26.

Trump promised during the campaign to “cancel” the agreement, although the U.S. can’t upend the deal on its own. Instead, the U.S. could trigger a four-year process to remove itself from the convention, or take the more drastic, but faster, step of withdrawing from the underlying U.N. Framework Convention on Climate Change.

With growing support for sticking with the agreement, analysts say it appears more likely the Trump White House would stay in, but possibly with a lower commitment than the country pledged under President Obama. The current U.S. pledge is to reduce emissions by 26 to 28 percent below 2005 levels by 2025, but that goal would be difficult to meet as the administration undoes existing emissions regulations.

Paul Bledsoe, who served as an energy aide to President Clinton, said the White House would have to weigh the diplomatic costs of scrapping years of work among major allies to reach the deal. “Trump’s climate cynicism already sticks out like a sore thumb,” Bledsoe said. “There’s no point in sticking that thumb in the eye of the rest of the world.”

That’s especially true with private companies making their opinions public.

“If a bunch of major companies were out against it, it would certainly be easier politically to oppose it. But being to the right of Peabody Coal is probably not a comfortable position on this,” Bledsoe said.

Oil and gas companies have long fought federal climate regulations, but they have taken a different attitude towards the Paris agreement. Even without the U.S. involved, the agreement will outlast the Trump administration and will define the world’s climate agenda for years to come, so international companies will have to deal with it no matter what.

Plus, it’s good for business: Countries looking for a cleaner solution to burning coal are embracing natural gas.

In a letter to the White House, gas giant Cheniere said the Paris agreement “is a useful instrument for fostering demand for America’s energy resources and supporting the continued growth of American industry.” Even some mining firms—including Cloud Peak Energy—have said the deal could accelerate technology that helps coal burn more cleanly.

To be sure, the whole industry is not on board. The American Petroleum Institute, the industry’s trade group, has no position on the deal. One oil-industry source said individual companies’ statements represented “crony capitalism at its best, with all the major natural-gas exporters extolling the virtues of Paris so they can sell more product abroad.

“Always good to see Exxon, Shell, and BP bellying up to the trough in the name of climate change,” the source said.

Nick Loris, a fellow at the Heritage Foundation, said companies backing the deal saw benefits for their own greenhouse-gas-reduction technology. “In some respect, they’re putting their money where their mouth is. I would just rather have them put their own money there rather than the taxpayers’.”

Heritage is one of many conservative think tanks that have backed a full exit from the deal. The Competitive Enterprise Institute is running online ads urging Trump not to “listen to the swamp” and get rid of the agreement, which the group says could make Trump’s regulatory rollback vulnerable to legal challenges.

And even as environmentalists are crossing their fingers that the landmark climate agreement remains in place, a growing number of analysts believe that companies, not Washington, will take the lead. It’s an argument that former New York City Mayor Michael Bloomberg made in a new book cowritten with former Sierra Club executive director Carl Pope, and articulated in Bloomberg’s New York Times editorial last month.

“How terrible it would be if a misunderstanding of American climate leadership—which is not based in Washington and never has been—led to an unraveling of the Paris agreement,” Bloomberg wrote. “Thanks to forces beyond the Washington Beltway that have reached a critical mass, we should be more optimistic than ever about our ability to lead—and win—the fight against climate change.”

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