Oil, gas companies have the capability to be climate leaders
Energy firms are used to thinking big — and can put those ideas into action
On Friday, CEOs of 10 leading oil companies came together to commit to tackle climate change, ahead of the Paris COP21 summit later this year. But can big oil really become a part of the climate solution?
Some skepticism is understandable. Of the three pillars of a successful energy system — security, affordability and sustainability — the industry has been more adept at responding to consumer demands for security and affordability than addressing concerns over sustainability. Some may wonder if big oil is trying to secure a seat merely to slow the process down.
I believe we should listen and examine how these CEOs plan to address the issue. As a former employee, I know that oil companies are used to thinking big and acting big — bigger than most companies in most sectors, and often bigger than many states. Energy companies have top-class engineers and scientists; they have innovated for decades to find oil and gas in the most difficult conditions; and if they fully commit their ingenuity and drive the search for technological solutions to climate change, transformational changes are possible.
Oil- and gas-related products are at the heart of many of our individual and industrial activities. For decades, oil companies and their millions of workers across the value chain have done what we, as society, have demanded of them: deliver products to improve the ways we feed, clothe and move ourselves around. In the process, these companies have contributed to improving standards of living, furthering global economic development and generating resources for states to sustain the social contract.
As has become clear, these activities involve externalities that are not adequately embedded in the cost of products. Some oil companies have resisted this realization for longer than others. Some have perceived a competitive advantage in talking up their environmental concerns, others in playing them down.
The significance of this week’s announcement is that such climate positioning is no longer seen as a way of differentiating company strategy. Rather, it has become part of pre-competitive conversations and actions. It shows that companies in the industry from most parts of the world now realize the importance of limiting global temperature increases to 2 degrees. Companies in very different stages of their approach to climate are joining forces, in some cases turning the page from denial to collaboration,