By Bill Spindle And Francis X. Rocca
Oil companies are ratcheting up their involvement in the debate
over climate change as governments, activists, churches and some
big investors gear up for a global summit on the issue at the end
of the year in Paris.
The stated goal of the summit is to keep man-made warming
limited to two degrees Celsius above preindustrial levels, but
governments remain far apart on how to achieve it.
Meeting such a goal will require far-reaching changes in
energy-consumption patterns and likely efforts to put a cost on
carbon use, many experts believe. Activists have long focused much
of their effort on trying to rein in the use of these resource
companies' bread and butter: carbon-emitting fossil fuels.
Pope Francis is also planning to weigh in on the environment in
an encyclical--a letter intended to develop and explain Catholic
teaching--due within the next few weeks, which has made Rome one of
the focal points in the global-warming debate. Exxon Mobil Corp.
recently dispatched one of its senior lobbyists and a planning
executive to Rome in an attempt to brief the Vatican on its outlook
for energy markets.
For years, a number of shareholder activists have urged
companies to curb emissions. More recently, some big investors are
taking global warming into consideration in their portfolio
building. The Church of England and Norway's sovereign-wealth fund,
one of the world's biggest institutional investors, have sold off
shares in pure-play coal companies.
At the same time, some of these companies' own shareholders are
pushing them to scale back their dependence on carbon-based fuels,
worried about the future financial impact of heightened
global-warming regulation. The companies are also anticipating
rules to limit emissions that would make oil and natural gas more
expensive, potentially reducing demand for the fuels.
This led to a change in behavior. Where in the past executives
could be dismissive of the climate-change debate or leap to defend
their companies, industry officials are now raising the issue
themselves and proposing remedies such as the imposition of a
carbon tax.
"We have to stop being defensive," Total SA Chief Executive
Patrick Pouyanné told a major industry conference in Houston last
month. "In the end, it won't be solved by diplomacy only, but by
private players, economic players like us."
Total, Saudi Aramco, Eni SpA, BG PLC, Royal Dutch Shell PLC and
others have formed an industry group specifically to add their
collective voice to the climate debate, and they are trying to
bring other leading international oil and gas companies into the
group.
"Business is engaged in a way I've never seen before," said
Rachel Kyte, head of the climate-change division of the World
Bank.
Similarly, the mining industry's "approach to sustainable
development has evolved," said Gary Goldberg, chief executive of
Newmont Mining Corp., one of the world's biggest gold-mining
companies. "It still needs to be addressed globally, and you still
need to come up with a global solution."
In February, Shell Chief Executive Ben van Beurden told a group
of executives decked out in tuxedos and formal gowns at an oil and
gas conference in London that they could no longer keep a "low
profile on the issue" of climate change ahead of United
Nations-sponsored talks in Paris this year that could result in new
global carbon-emissions limits.
"We have to make sure that our voice is heard by members of
government, by civil society and the general public," he said.
The Vatican is another important constituency. In an unusually
explicit mix of the political and pastoral, Pope Francis has said
he wants his encyclical about the environment to come out before
the Paris climate meeting, so that it can "make a contribution" to
deliberations there.
"The minute the word got out that the pope was working on this,
we had a lot of people contributing," said Cardinal Peter Turkson
of Ghana, who heads the Vatican office tasked with drafting the
encyclical. "We listened to everybody who had something to say:
physicians, academicians, students; people in all walks of life,
including people from the oil industry."
The Exxon briefing took place over a small private lunch at the
home of a U.S. diplomat in the U.S. embassy to the Holy See. A
second Exxon lobbyist who is based in Italy attended the meeting,
Exxon said.
The meeting was also attended by Curtis McKenzie, a Canadian
national with experience in finance and the oil-and-gas industry.
Mr. McKenzie has had several duties in Cardinal Turkson's office,
including administrative and research duties and media relations,
all on a voluntary basis. Such arrangements happen occasionally in
Vatican offices, some of which serve much like mini think
tanks.
Vatican officials weren't present, Mr. McKenzie said. He said he
isn't directly involved in work related to the encyclical. A lay
member of the Franciscan religious order and a university professor
also attended the meeting, but neither has connections to the
Vatican, he said.
The encyclical pointedly wasn't discussed at the meeting, Exxon
and Mr. McKenzie said. The Exxon planning official gave a 16-slide
PowerPoint presentation covering the company's broad outlook for
the global industry and energy use--a talk Exxon spokesman Alan
Jeffers said its executives have delivered hundreds of times this
year, including to another group, of legislators and government
officials, on the same trip to Rome.
Exxon said that interacting with the Vatican isn't unusual for
the company. "Exxon Mobil has a long-standing relationship with the
Vatican and our people have had numerous interactions with Vatican
officials over the years," Mr. Jeffers said in an emailed
comment.
Exxon and others are increasingly engaged with shareholders
voicing concerns about the impact of carbon regulations on the
value of their assets. Their argument: If governments rein in
carbon emissions, companies may not be able to extract all the oil
or metal they claim as reserves.
In response, Exxon published two reports a year ago arguing that
governments are unlikely to impose restrictions that will slow
economic growth. That virtually assures that fossil fuels will
remain valuable, Exxon says.
Rex Tillerson, Exxon's chairman and chief executive, told
thousands of executives and industry officials at a recent industry
conference that "everyone agrees" that even three decades from now
about 80% of the world's energy supply will come from fossil
fuels.
"We think we're in a business the world needs," he said. "What
we have to do is deliver in a way that is acceptable to the
public."
Daniel Gilbert and John W. Miller contributed to this
article.
Write to Bill Spindle at bill.spindle@wsj.com
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