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- Withdrawal from Paris agreement increases regulatory ambiguity, risks
- US energy firms planning long-term investments in technologies aimed at fighting climate change
- US oil industry prefers engagement in global climate talks
WASHINGTON, Jan 22 (Reuters) – U.S. oil and gas producers are thrilled that President Donald Trump wants to encourage domestic energy development but say his decision to withdraw the United States from international climate cooperation will not help their investment plans in the global transition to cleaner energy.
The position reflects a rare note of discord between Trump and Big Oil, one of his most important constituencies and long considered the top villain behind climate change for pumping and selling the fossil fuels driving planetary warming.
Removing the United States from the Paris climate deal for the second time was among a flurry of first-day moves by Trump aimed at pumping up already record high domestic energy production, sending a signal to the rest of the world the U.S. will no longer engage in multilateral efforts to combat climate change.
He called the decade-old pact to limit global warming a “rip off” that puts the U.S. at a competitive disadvantage to China.
Big U.S. oil companies, however, believe the withdrawal only limits Washington’s ability to influence an ongoing global energy transition and exposes them to an uneven regulatory environment, according to Reuters interviews with industry representatives.
Marty Durbin, president of the U.S. Chamber of Commerce’s Global Energy Institute representing U.S. energy companies, said its members would have preferred Trump keep the U.S. involved in the pact.
“While we prefer that the U.S. government remain engaged in the UN climate process, the private sector is committed to developing the solutions necessary to meet the energy needs of a growing global economy while addressing the climate challenge,” he said.
Bethany Williams, a spokesperson for the American Petroleum Institute – whose members include Exxon Mobil (XOM.N) and Chevron (CVX.N) – said the group has “long supported the ambitions of the Paris Agreement.”
Exxon’s CEO Darren Woods had made an early plea to the newly-elected president at the COP29 climate summit in Azerbaijan in November to keep the U.S. in the Paris pact, saying the cycle of exiting and re-entering the agreement would create long-term policy uncertainty for companies.
Exxon and other big oil companies are planning long-term investments in technologies intended to fight climate change, including green hydrogen and carbon capture, while also navigating decisions about new oil and gas exploration.
Exxon and Occidental did not respond to requests for comment. Chevron and ConocoPhillips declined to comment.
Asked about the Paris withdrawal order, the president of the American Exploration and Production Council (AXPC), representing U.S. independent drillers, said it was important for U.S. industry to be part of the global climate discussion.
“It’s critical that any conversation about addressing climate change must be global in nature, and also recognize that America is the world leader in both energy production and emissions reductions,” said AXPC CEO Anne Bradbury.
A shift in the U.S. power industry away from coal has contributed to a roughly 17% decline in U.S. carbon dioxide emissions since 2007, according to government data.
Climate liability risk specialist Wynne Lawrence of insurance law firm Clyde & Co said policy volatility around international climate participation puts U.S. companies at risk.
“The U.S. withdrawal from the Paris Climate Agreement will increase regulatory ambiguity, creating increased complexity and, potentially, lead to legal disputes as companies deal with the resulting uncertainty around transition strategies across multinational groups and supply chains,” said Lawrence.
In recent years, oil majors had begun sending executives to annual UN climate conferences, where they touted investments in clean energy projects and cuts in the operating emissions.
Frank Maisano, senior principal at law firm Bracewell, which represents energy industry clients, said it “makes little sense to give up a seat at the table.”
“U.S. industries in all sectors continue to invest in new technologies and innovations that are driving the global energy transition in a way that reduces emissions and protects our economy,” he said. “We should be shouting that success story from every rooftop and in every venue.”
Reporting by Valerie Volcovici in Washington and Sheila Dang in Houston Editing by Marguerita Choy
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