Wednesday, January 26, 2022
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Why Big Oil wants Trump to stay in UN climate deal – Restrictions on emissions favor natural gas

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by Matt Egan

Excerpt:

A BP (BP) spokesman told CNNMoney that it “welcomed the Paris agreement when it was signed, and we continue to support it…

“We believe it’s possible to provide the energy the world needs while also addressing the climate challenge,” BP said.

Chevron (CVX) told CNNMoney it “supports continuing with” the Paris deal because it “offers a first step towards a global framework.”

Exxon (XOM), the biggest US oil company that Tillerson used to lead, sent a letter to the White House last month hailing the Paris agreement as an “effective framework for addressing the risks of climate change.”

A Shell (RDSA) spokesman confirmed that the energy giant remains “strongly in favor” of the Paris deal.

At first glance, it might seem surprising to hear that Big Oil isn’t seizing on the shifting political environment to poke holes in a deal that undermines fossil fuels like crude oil.

After all, Trump himself has called climate change a “hoax” and blasted COP21 as a “bad deal” for the U.S. (Trump later told The New York Times he has an “open mind” about the agreement).

But these traditional energy companies have a vested financial interest in the Paris deal. That’s because COP21’s crack down on carbon emissions favors natural gas, which emits much less pollution than coal.

While Exxon, BP and Shell are primarily identified as oil companies, they are actually diversified energy firms that rely heavily on natural gas to make money.

For instance, 42% of Exxon’s total daily production last quarter was actually in natural gas, according to FactSet. BP and Shell also lean on natural gas for a large chunk of their output.

“These companies view natural gas as a key growth area going forward for them. It just makes sense for them to be at the table,” said Brian Youngberg, senior energy analyst at Edward Jones.

Natural gas production has soared over the past decade, thanks to the abundance of shale gas in North America.

And now there’s the added benefit that governments are cracking down on carbon emissions.

BP’s statement mentioned its commitment to “reducing emissions in the power sector by producing and marketing natural gas.”

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