Royal Dutch Shell pledged last September to achieve net zero carbon pollution in its business by 2050. The target was vague but noticeable, and seemed to become more realistic when the company announced earlier this month that its crude oil production had peaked in 2019 and would likely never increase again.
Yet as Shell abandons the outright climate obstructionism it once espoused, the oil giant has continued to fund a network of pressure groups that are fighting policies to reduce global warming emissions and curb new boreholes.
This includes a group that lobbied for a controversial federal rule on fossil fuel financing that the Trump administration introduced in its dying days, according to documents reviewed by investigative journalism group SourceMaterial and HuffPost.
The rule, finalized during President Donald Trump’s last week in power, would require banks to be “objective” and “impartial” in choosing which companies to finance. The proposal was widely seen as an attempt to undermine the policies that the big banks instituted to end lending to Arctic oil drilling or coal mining companies.
President Joe Biden ended the rule, along with all other Trump-era regulations that had not yet been published in the Federal Register, with an executive order on the first day of his tenure. Its future now depends on who the new president appoints to head the Office of the Comptroller of the Currency.
Comments on the rule submitted to the OCC show that the Independent Petroleum Association of America, of which Shell is a member, has been pushing for the rule.
In its December comments, the IPAA asserted that the banks had bowed to “political pressure to limit capital to a vital energy industry.” The group argued that environmental groups have “distorted” the damage to the environment from methane emissions, “trying to suggest that it poses an unreasonable threat.”
Shell calls methane a “potent greenhouse gas” on its website, adding: “When released into the atmosphere, it has a much greater impact on global warming than CO2.”
A Shell spokesperson said the company had no position on the bank financing rule and had not “consulted the IPAA directly on its correspondence with the monitor.”
Asked about the clash between Shell’s public methane statements and IPAA threat minimization, the spokesperson said the company had “no expectations [trade associations] will be monolithic in their platforms or their advocacy approach, ”but insisted that Shell is expressing its position on methane within the trade associations to which it belongs.
But Graham Steele, director of the Stanford Graduate School of Business, said the IPAA’s comments were evidence of a “clear disconnect between the actions of fossil fuel companies and their words.”
He added, “That’s why these professional associations and coalitions exist, is to be the kind of indirect voice for all of these entities. ”
Since 2019, Shell has published an annual review of the trade associations of which it is a member. In the most recent report, he said, “We have continued to work to ensure that our members of industry associations support the Paris Agreement” (the climate change treaty from which Trump has withdrawn the United States and which Biden quickly reinstated).
But Shell’s April 2020 review was limited to 18 groups, not counting the IPAA. The company said in September that it would rate more in its next review.
Although the IPAA does not publish a list of its members, a partial list obtained by the nonprofit Western Values Project in 2018 shows that Shell and other major U.S. oil and gas companies – including Chesapeake Energy , QEP Resources, Ovintiv and SM Energy are all members.
Shell’s continued membership in groups lobbying against climate action has drawn criticism. Earlier this month, UK think tank InfluenceMap, which tracks corporate lobbying on climate policy, said corporate funding for groups such as the American Petroleum Institute, the world’s largest oil lobby and gas company of the United States, was “at odds with Coquille’s stated ambitions.”
“If Shell takes its climate change commitments seriously, it should ask itself why competitor Total has pulled out of the American Petroleum Institute,” said Edward Collins, director of corporate climate lobbying at InfluenceMap, in a statement. February 12 press release. “Until this misalignment is corrected, Shell will continue to exert pressure on its climate lobbying links.”
“That’s why these professional associations and coalitions exist, is to be the kind of indirect voice for all of these entities. “
– Graham Steele, director of the Stanford Graduate School of Business
The bank financing rule has also proven to be extremely controversial, with big banks, consumer groups, environmentalists and Democratic lawmakers uniting against it.
“When you see proposals that have been condemned by a number of stakeholders who generally do not agree, that says a lot about the proposal,” said John Geiringer, a former banking regulator who is now a partner at the firm of Chicago-based Barack lawyers. Ferrazzano.
He added that the rule “was a bit surprising” because it required regulations to ensure low-income people have access to banking services and applied them to “controversial industries”.
A conservative think tank called the Pacific Research Institute also lobbied for the rule. According to publicly available tax records, PRI donors include Koch Industries and Exxon Mobil Corp.
His comments to the OCC criticized the application of environmental, social and governance (ESG) requirements to the activities of banks. The PRI suggested that “ESG activists” were forcing banks to follow “the political trends of the day”.
But Steele said that was not the reason the banks were pulling back from funding the fossil fuel industry.
“Basically the banks are doing this because the economy just doesn’t make sense,” Steele said. Frankly, the industry’s response, and the fact that the OCC even enforced this rule, is a testament to the powerful role the banking sector plays in supporting and sustaining the fossil fuel industry and climate change. ”