Why are US energy giants refusing to join forces with European companies? Shale natural gas is the natural replacement for coal
The European super-major energy companies are finally waking up to the threat climate change poses to their businesses, but their American counterparts are still snoozing, seemingly oblivious.
A report by Bloomberg says the Euro giants are banding together to create a joint strategy on climate change policy, worried they’ve lost the initiative to environmental groups and activist legislators.
“In the past we thought it was better to keep a low profile on the issue,” Ben Van Beurden, Royal Dutch Shell CEO, said in February. “It’s not a good tactic. We have to make sure that our voice is heard by members of government, by civil society and the general public.”
Thus far, Exxon Mobil and Chevron have declined to participate. This is a mistake.
In the past, energy companies only needed to talk to investors, governments, regulators, and perhaps key stakeholders, like local land owners. Those days are long gone. Hydrocarbon opponents are well organized, well funded, and very well plugged into the digital universe from which they draw so much support.
Industry lurches along, looking for all the world like King Kong swatting bi-planes from atop the Empire State building. And we all know how the big ape fared in that story.
“We risk becoming an industry that neither gets access nor acceptance — and that’s not a good thing,” says Statoil CEO Eldar Saetre.
That, dear readers, is a telling statement. Most oil companies rely on governments to grant them access to land and mineral rights. Access can be withdrawn or denied, as environmental and local groups have increasingly demonstrated over the past five or 10 years.
Oil and gas companies need to protect that access at all costs. Participating in the climate change debate is good business.
The European group will make its debut this summer, but already members are talking about what they think is the most important thing countries can do to combat climate change: Swap out coal for natural gas.
Let’s face it, coal is the Great Satan of the climate discussion. It has twice the greenhouse gas emissions of natgas, plenty of NOX and SOX and particulate. Haven’t we all gasped at the shocking photos of Chinese cities clouded with smog that kills 670,000 people every year? That’s what happens when you burn 1.3 billion tonnes of coal a year.
And if we think China is bad, India is right behind it. The country of 900 million is expected to add 124 gigawatts of electricity capacity by 2020, which will see its coal consumption jump by 300 million tonnes.
And let’s not forget that America is no slouch in the coal department, producing 1 billion short tons in 2014.
If the leading global coal consumers did nothing but ditch coal – never mind solar, wind, hydro, or geothermal – for natural gas over the next decade or two it would be a huge win for the Earth’s ecosystem.
And potentially a huge business win for American natural gas producers.
Which is why American companies need to strap on their helmets, get off the bench and into the game. Sitting on the sidelines is a too risky.