Six major oil companies each contributed tens of millions of dollars to a grant fund meant to help state-owned rivals cull the release of super-warming methane emissions, but Chevron and Exxon Mobil did not join in.
At issue is a Global Flaring and Methane Reduction Partnership that will be run by the World Bank with initially US$255 million ($341.21 million) earmarked to help developing countries and their oil companies stifle leaks of that potent greenhouse gas.
The programme, unveiled at the COP28 climate summit in Dubai, is a recognition that while large oil companies in the US have spent years working to pare methane releases from wells, pipelines and processing equipment, many national oil companies are only getting started.
The initiative secured US$25 million each from six oil companies: BP Plc, Eni SpA, Equinor ASA, Occidental Petroleum Corp., Shell Plc and TotalEnergies SE.
Some countries also ponied up, with the United Arab Emirates that is hosting COP28 providing US$100 million; the US, US$2 million; Germany, US$1.5 million; and Norway, US$1 million.
Supporters of the initiative had hoped to raise a much higher sum by convincing large oil producers — after years plugging methane leaks — that unless national oil companies do the same, both the planet’s health and the industry’s reputation are imperiled, people familiar with the matter said.
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Yet some oil giants were reluctant to underwrite a fund seen as effectively providing cash donations to global competitors, one of the people said.
Chevron supports the aims of the initiative but is currently “focused on funding methane reductions in our own portfolio as part of our $2 billion in funding of lower-carbon abatement projects,” the company said in a statement.
The California-based producer also was a notable absence from a 50-member Oil and Gas Decarbonization Charter announced Dec 2, with enrolled companies pledging to cut methane emissions to near zero and halt flaring of natural gas by the end of the decade.
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“We don’t take joining global initiatives like this lightly and require more clarity on the framework and path forward,” Chevron said in a statement.
Exxon joined that pledge but so far has not provided money to the World Bank grant fund. However, it could provide technical support and methane-abatement training as part of the initiative.
“We support the goal of the Global Methane Reduction Fund and are in negotiations to provide our technical skills, scale and years of methane detection and mitigation experience to reduce emissions,” the company said in an emailed statement.
To access funding from the program, companies will need to commit to cutting methane intensity by below 0.2%, halting routine flaring of natural gas by 2030 and measuring and reporting emissions.
Exxon CEO makes his debut at COP
Exxon Mobil CEO Darren Woods is the first Exxon chief executive to ever attend a COP since the summits began in the early 1990s. But at this year’s meeting, he’s not alone. Other oil bosses, including Shell’s Wael Sawan, turned up to sign a pact among 50 oil companies to reduce emissions from their own operations.
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“The complexity of the challenge of transitioning the energy system is coming more into focus,” with “a much more diverse group of people recognising this is a hard problem to solve” and “we need big companies to help with that,” Woods said in an interview at the UN conference.
There is a greater recognition that the energy transition will require a breadth of technologies, including hydrogen production and carbon capture, Woods said. “That opens the door for us.”
Exxon’s balance sheet and technical know-how means the oil giant can contribute to the UN climate talks and a global energy transition that must involve a range of solutions, Woods said.
“We have to continue to meet the needs of society and reduce emissions — and frankly, we have the skills, the capabilities to actually do that, the balance sheet to actually fund it,” Woods said. “There’s an opportunity and a willingness now for people to engage in those discussions.”
Sultan Al-Jaber, the president of COP28, has argued that even as the world develops more carbon-free power, oil and gas will remain part of the energy system for decades to come — and making them as clean as possible is essential to avert warming.
‘Oil executives have no business at a climate conference’
Many environmentalists strenuously disagree. Months before the conference opened, activists called for Al-Jaber’s ouster as president and said having oil executives at the summit was tantamount to welcoming foxes inside the henhouse.
Days before the conference opened, there were reports Al-Jaber sought to advance oil and gas deals during meetings with foreign governments ahead of COP28 based on leaked memos released by the BBC in collaboration with the Center for Climate Reporting. Al-Jaber has denied the allegations.
Oil executives have no business at a climate conference, said Collin Rees, US program co-manager at Oil Change International.
“Treating them as legitimate partners in the energy transition is dangerous,” especially given the industry’s “long history of nothing but delay and doubling down on their core business model of expanding fossil fuels,” he said.
Even so, their presence is “a sign of how the conversation has progressed,” and “now they are being forced to defend themselves in public”.
For Exxon, joining the Oil and Gas Decarbonization Charter is consistent with work the company is already doing to pare methane emissions, Woods said. But the venture — which brings in 29 national oil companies — is seen as important to driving broad progress, even among firms that don’t face the same regulatory and investor pressure to clean up.
“It’s important that we get as much of the industry committed to raising the bar,” Woods said.
Exxon is pursuing an array of ventures that stand to benefit from the Inflation Reduction Act, the sweeping climate law enacted in the US last year, including a Gulf Coast hydrogen-production project that has secured as much as US$1.2 billion in government support.
And though President Joe Biden has had sharp words for oil producers, Woods said he sees signs of a balanced approach. “There’s a genuine effort by the Biden administration to strike the right balance, to focus and drive emission reductions and improve greenhouse gas emissions, but, at the same time, a recognition of the important role oil and gas plays.”
Follow The Edge Singapore’s coverage of COP28 here.
Photos: Bloomberg
