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Exxon, Shell join Ivanka Trump to defend Paris climate pact

LiveMint logoLiveMint 18-04-2017 Jennifer A. Dlouhy

Washington: As US President Donald Trump contemplates whether to make good on his campaign promise to yank the US out of the Paris climate accord, an unlikely lobbying force is hoping to talk him out of it—oil and coal producers.

A pro-Paris bloc within the administration has recruited energy companies to lend their support ahead of a high-level White House meeting on the subject taking place as soon as Tuesday, according to two people familiar with the effort who asked not to be identified.

Cheniere Energy, which exports liquefied natural gas, became the latest company to weigh in for the pact to cut greenhouse gas emissions in a letter on Monday solicited by White House energy adviser G. David Banks.

“Domestic energy companies are better positioned to compete globally if the US remains a party to the Paris agreement,” Cheniere wrote. The accord “is a useful instrument for fostering demand for America’s energy resources and supporting the continued growth of American industry”.

Exxon Mobil Corp., previously led by Secretary of State Rex Tillerson, Royal Dutch Shell Plc and BP Plc, also have endorsed the pact.

The industry campaign to stick with the Paris accord comes amid deep divisions in the Trump administration over the carbon-cutting agreement. Both the president’s daughter, Ivanka Trump, and her husband, Jared Kushner, a White House special adviser, have urged the president to stay in the deal, along with Tillerson.

On the other side are senior adviser Stephen Bannon and Environmental Protection Agency Administrator Scott Pruitt, who on Friday said “we need to exit” the pact.

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Gas producers and exporters are highlighting the value of the agreement, which could help prod a worldwide move toward that fossil fuel.

Exxon Mobil argued in a letter last month that US slashed its carbon emissions to 20-year lows because of greater use of natural gas, and “this success can be replicated globally” as part of the accord.

BP spokesman Geoff Morrell said the company continues to support the Paris deal, noting that “it’s possible to provide the energy the world needs while also addressing the climate challenge”. Shell spokesman Curtis Smith said the company remains “strongly in favour” of the agreement.

Coal producers Cloud Peak Energy Inc. and Peabody Energy Corp. also are lobbying in favour of the accord, even though the miners could be disadvantaged by a global shift toward cleaner sources of electricity. Cloud Peak pitches the Paris agreement as a platform for the US to advocate using carbon capture and other high-efficiency, low-emissions technology to generate electricity from coal.

Trump is nearing a decision on whether he will fulfill repeated pledges to withdraw the US from the carbon-cutting pact he previously derided as “bad for US business”. At the White House, senior administration officials, including Pruitt, Tillerson, Kushner and Bannon, are set to meet this week to go over the pros and cons of staying in Paris.

The administration will decide what to do before late next month, when world leaders gather for the Group of Seven summit in Italy, White House press secretary Sean Spicer said.

Not every energy executive is on board. Coal baron Robert E. Murray has been outspoken in criticizing the deal, arguing it’s “just a way for other countries to get American money”.

API’s position

Chevron Corp. chief executive officer John Watson said in a Columbia University Center on Global Energy Policy podcast that more needs to be known about how the Paris accord will translate into policy under Trump.

And some independent oil companies—those without significant gas production that could benefit from greater international demand—have quietly opposed the pact.

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Perhaps for that reason, the leading oil industry trade group, the American Petroleum Institute, has not taken a formal position on the Paris agreement. Instead, API spokesman Michael Tadeo casts the accord as a missed opportunity to talk about US leadership “in reducing carbon emissions which are near 30-year lows in electricity generation due to increased use of natural gas brought by hydraulic fracturing.”

Supporters have argued that remaining in the pact would maintain goodwill with international trading partners, facilitating US energy exports, including expanded sales of liquefied natural gas abroad. The International Renewable Energy Agency predicted that investments in renewable power and efficiency designed to help meet Paris targets will boost the world economy by $19 trillion.

Trump has already moved to dismantle a raft of Obama-era climate policies that would help the U.S. satisfy the commitment it made with more than 190 other nations to slash greenhouse gas emissions. His budget director, Mick Mulvaney, described plans to cut government spending on climate change as stopping a “waste” of taxpayer money. And energy ministers from G7 nations earlier this month took the unusual step of declining to issue a joint statement endorsing the Paris agreement after the US balked.

The Paris agreement itself is really an array of individual, country-specific pledges, such as the US promise to cut greenhouse gas emissions at least 26% from 2005 levels by 2025. It is not legally binding and there are no formal sanctions in place for failure to comply.

White House officials who support Paris highlight the lack of repercussions. A key argument is that the US can stay in the agreement without satisfying its pledge or maintaining regulations designed to help achieve the target, said one administration official.

Remaining in the pact preserves options for the White House—even years down the line, ClearView Energy Partners said in a research note to clients on Monday. There’s no near-term imperative to abandon it, ClearView said, but there may be a political incentive to wait: “The Trump administration might want to keep Paris defection in its pocket, because jettisoning it later could serve as a way to gin up political support closer to the 2020 re-election race.”

Trump can’t pull the US out of the worldwide pact immediately, though he could begin a four-year process of withdrawing. And the president has several possible techniques for formally extricating the US—He can make the change unilaterally or punt the decision to the Senate, by interpreting the accord as a treaty that requires the support of two-thirds of the chamber’s members to be ratified. That’s currently an insurmountable political hurdle.

Trump has effectively defanged the Paris deal by rescinding domestic greenhouse gas regulations, said Richard Reavey, Cloud Peak’s vice-president of government affairs, so there’s little to gain from the US forfeiting its formal status at the UN climate fund after giving $1 billion to it.

“We own the seat, and we’re not going to incur the economic harm that the US pledge would have imposed,” Reavey said by phone. “Why would the US give up the opportunity to stay at the table, even if it’s just to tell everybody they’re wrong?”

Campaign promise

Conservatives alarmed by the corporate advocacy are stepping up their opposition, arguing that the potential international political benefits the US may gain on the world stage by staying in the deal are outmatched by the political fallout Trump would experience at home.

“This is a campaign promise—a specific promise the president made repeatedly,” said Mike McKenna, a Republican energy lobbyist. “He’s not just going to be able to walk away from it.”

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The US has a unique opportunity to disentangle itself from the accord now—while Trump is a new president and the deal itself is in its infancy. Any diplomatic blowback from international allies would be short-lived, argues Chris Horner, a senior legal fellow with the Energy and Environment Legal Institute.

By contrast, he said, remaining in the deal would ensure a constant cycle of international criticism because countries have committed to a new round of carbon-cutting commitments every five years. “The Paris agreement pressure machine will trigger blowback every time the president, Congress or future administrations deviate from Obama’s emission-reduction promises, hesitate to subsidize green-energy ventures abroad” or fail to adopt more stringent targets, Horner said.

Critics of the deal also warn that the US commitment could extend from Paris to the courtroom, seized by environmentalists as evidence the EPA is bound to regulate greenhouse gas emissions. Paris opponents plan a deep analysis on those potential legal risks to bolster their case against staying.

“The Paris agreement is designed to undermine American self government over the long term because the whole point of it is to put the US inside a political pressure cooker” and influence domestic energy policy, said Marlo Lewis, a senior fellow at the Competitive Enterprise Institute. “The coal companies and oil and gas companies that are flirting with the Paris agreement don’t understand the existential threat that they’re buying into.” Bloomberg

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