Shell ponders Australia trade body exit over climate 'misalignment'

  • Apr 08, 2021
  • Business Green

Shell has detailed disagreements on climate policy with several trade bodies it is a member of worldwide, as it gears up to take a final decision on whether to ditch one association altogether - the Queensland Resources Council (QRC) in Australia - over green advocacy "misalignment".

The oil and gas giant yesterday unveiled its latest industry association climate review, which found "material misalignment" with only the QRC, which has frequently faced criticism for its support for coal power and lobbying against renewables.

The company said it would announce its final decision on whether to remain a member of the QRC in October, meanwhile, as it urged the association to explicitly stop advocating for new coal power, and outwardly support the Paris Agreement, carbon pricing, and policies to encourage fuel switching to lower carbon power generation.

It follows Shells decision in 2019 to leave the American Fuel & Petrochemical Association due to "material misalignment" on climate policy.

"We encourage QRC to state support for the direct regulation of methane emissions and reductions in methane emissions throughout the natural gas supply chain, as well as framing its support for carbon capture and storage in the context of support for the goal of the Paris Agreement and net-zero emissions," Shell said.

The report - which analyses the climate policies of Shell's 36 membership bodies, including 18 it has already previously reviewed - also reveals "some misalignment" on green policy positions with seven other associations. These include hugely influential US lobby groups the American Petroleum Institute (API), the National Association of Manufacturers (NAM) and the US Chamber of Commerce, all of which Shell said it had "decided to remain members of at the current time".

"This is because there is evidence that their positions are changing, and we believe we can have a greater positive impact within the associations than outside them", Shell argued, while also highlighting their broader value for sharing industry best practice and health and safety issues.

The report also lists the Chamber of Minerals and Energy of Western Australia, the Electrical Power Supply Association, the Texas Oil and Gas Association, and WindEurope as having "some misalignment" on climate policy with Shell.

The company said was aligned with most of its climate related policy positions with WindEurope, but that it disagreed with the wind power trade body's statements that the net zero transition should not be based on strong assumptions about the role of carbon sinks "which Shell considers crucial to balance emissions in hard to abate sectors".

Shell is a major advocate of so-called nature-based solutions, and has a growing business interest in natural carbon offset projects to help companies deliver on net zero commitments, although some green groups harbour concerns that growing this market may serve to hinder emissions reduction efforts.

The industry association review was published alongside Shell's annual sustainability report yesterday, which confirmed the net carbon footprint of all the oil, gas, LNG, biofuels and electricity products sold last year amounted to an estimated 1.38 billion tonnes of CO2 equivalent in 2020.

That marks a significant drop from the previous year's total 1.65 billion tonnes carbon footprint, with demand for oil and gas having fallen sharply in 2020 due to the coronavirus pandemic.

"In 2020, the Covid-19 pandemic changed the world and people's lives in ways we could never have imagined," said Shell CEO Ben van Beurden. "It was a tough year for everyone. It was a tough year for Shell, but also a year when we set a clear path for our future."

It follows the publication of Shell's accelerated green roadmap earlier this year, which set out its plan to develop science-based climate targets and ramp up its investment in hydrogen, nature-based solutions, carbon capture, its growing utility business and electric vehicle infrastructure, as it charts the path to net zero by 2050. However, the firm continues to face criticism from green groups, with its annual investments in renewables and green technologies paling in comparison to the amount it spends on fossil fuels and chemicals.

But Van Beurden said the refreshed climate plan "lays out how we believe Shell can and must play a role as the world accelerates towards a future of zero- and lower-carbon energy".