Royal Dutch Shell vowed last September to reach net-zero carbon pollution in its business by 2050. The goal was vague but notable, and seemed to become more realistic when the corporation announced earlier this month that its crude oil production had peaked in 2019 and would likely never increase again.
Yet while Shell abandons the outright climate obstructionism it once espoused, the oil giant has continued to fund a network of lobbying groups that fight policies to curb planet-heating emissions and rein in new drilling.
That includes a group that lobbied in favor of a controversial federal rule on fossil fuel financing that the Trump administration introduced in its final days, according to documents reviewed by the investigative journalism outfit SourceMaterial and HuffPost.
The rule, finalized during President Donald Trump’s last week in office, would require banks to be “objective” and “impartial” in choosing which companies they finance. The proposal was widely seen as a bid to undercut policies that major banks have instituted to end lending to companies drilling for oil in the Arctic or mining coal.
President Joe Biden halted the rule, along with all other Trump-era regulations that had not yet been published in the Federal Register, with an executive order on his first day in office. Its future now depends on whomever the new president appoints to run 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, lobbied for the rule.
In its December comments, the IPAA claimed that banks have caved to “political pressure to limit capital to an essential energy industry.” The group argued that environmental groups have “distorted” the damage to the environment caused by methane emissions, “trying to suggest it poses an unreasonable threat.”
Shell calls methane “a potent greenhouse gas” on its website, adding: “When it is released into the atmosphere it has a much higher global warming impact than CO2.”
A spokesperson for Shell said the company does not have a position on the bank financing rule and did not “directly consult with IPAA on its correspondence to the comptroller.”
Asked about the clash between Shell’s public statements on methane and the IPAA’s downplaying of the threat, the spokesperson said the company has “no expectations [trade associations] will be monolithic in their platforms or advocacy approach,” but insisted that Shell expresses its position on methane within 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 an “obvious disconnect between fossil fuel companies’ actions and their words.”
He added, “That’s why these trade associations and these coalitions exist, is to be the sort of back-channel voice for all these entities.”
Since 2019, Shell has published an annual review of trade groups in which it’s a member. In the most recent report, it claimed, “We have continued to work to ensure our memberships of industry associations support the Paris Agreement” (the climate change treaty that Trump pulled the U.S. out of and that Biden quickly reentered).
But Shell’s April 2020 review was limited to 18 groups, not including the IPAA. The company said in September that it would assess more in its next review.
While 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 that lobby against climate action has drawn criticism. Earlier this month, the British think tank InfluenceMap, which tracks corporate lobbying on climate policy, said the company’s funding for groups such as the American Petroleum Institute, the United States’ largest oil and gas lobby, was “at odds with the stated ambitions of Shell.”
“If Shell is serious about its climate change commitments, it should consider why its competitor Total withdrew from the American Petroleum Institute,” Edward Collins, director of corporate climate lobbying at InfluenceMap, said in a Feb. 12 statement. “Until this misalignment is addressed, there will continue to be pressure on Shell over its climate lobbying links.”
That’s why these trade associations and these coalitions exist, is to be the sort of back-channel voice for all these entities.
Graham Steele, director of the Stanford Graduate School of Business
The bank financing rule has also proved extremely controversial, with major banks, consumer groups, environmentalists and Democratic lawmakers uniting against it.
“When you see proposals that have condemnation among a number of stakeholders that don’t usually get along, that says something about the proposal,” said John Geiringer, a former bank regulator who is now a partner at the Chicago-based law firm Barack Ferrazzano.
He added that the rule “came as a bit of a surprise” because it took regulations intended to ensure that people with low incomes get access to banking services and applied them to “controversial industries.”
Also lobbying in favor of the rule was a conservative think tank called the Pacific Research Institute. According to publicly available tax records, the PRI’s donors include Koch Industries and Exxon Mobil Corp.
Its comments to the OCC criticized the application of environmental, social and governance (ESG) requirements to banks’ activities. The PRI suggested that “ESG activists” were forcing banks to follow “the political trends of the day.”
But Steele said that’s not why banks are pulling back from funding the fossil fuel industry.
“Fundamentally, the banks are doing this because the economics just don’t make sense,” Steele said. “Frankly, the industry’s response, and the fact the OCC even did this rule, is a testament to what a powerful role the banking industry plays in supporting and propping up the fossil fuel industry and climate change.”
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