Shell puts CAPP on notice on climate, carbon taxes

Shell quitting American oil association, and reviewing others for “misalignment’

'In cases of material misalignment, we should also be prepared to walk away' – Shell CEO Ben van Beurden.

Royal Dutch Shell is severing ties with the American Fuel and Petroleum Manufacturers over “misalignment” on Paris Agreement commitments on climate change, and putting associations, including the Canadian Association of Petroleum Producers (CAPP), on notice.

As part of its own commitments to climate change policies, Shell undertook a review of the 19 associations around the world to which it belongs in an effort to determine if their policies on climate change align with Shell’s.

Shell has committed to do its part, as an industry, to try to meet the Paris Agreement commitment of limiting global warming to 2 degrees Celsius.

The company has shifted its business in recent years away from oil and more towards natural gas, has invested in renewable energy and supports carbon pricing.

Shell is the largest shareholder in the LNG Canada consortium.

In its review, Shell found nine of the 19 associations to which it belongs, including CAPP, to be somewhat misaligned in its views on climate change policies, but not enough to warrant quitting.

But in the case of the American Fuel and Petroleum Manufacturers (AFPM), Shell found irreconcilable differences, and as a result plans to quit the association in 2020.

“We must be prepared to openly voice our concerns where we find misalignment with an industry association on climate-related policy,” Shell CEO Ben van Beurden, says in the Shell association review. “In cases of material misalignment, we should also be prepared to walk away.”

Determining whether associations reflect Shell’s own policies include whether the associations support the Paris Agreement targets, and policies that help meet those targets, like carbon taxes.

In the case of Western States Petroleum Association (WSPA), the association’s campaign against a carbon tax proposal in Washington States last year appears not to be enough of misalignment for Shell to quit the association.

Shell also disagreed with Washington’s referendum on a carbon tax last year, but not because it doesn’t support carbon taxes in general. But the one proposed in Washington State would have applied to the oil and gas industry, but not a coal-fired power plant.

Although Shell did not support the Washington state carbon tax proposal, it did participate in the campaign that the WSPA launched against it, and did not dedicate funds to it.

As for CAPP, Shell plans to continue belonging to the association, and continue to work with the association on those areas where it believes it is misaligned.

CAPP has not taken a position on the Paris Agreement and has not publicly supported either federal or provincial carbon taxes, Shell says. But CAPP is generally aligned with Shell in support of Canada’s own climate change targets and policies that promote technological innovation that addresses emissions.

“We will continue to engage with the association and closely monitor our alignment on climate-related topics,” Shell says in its report.

In response to Shell's review, CAPP CEO Tim McMillan said in a written statement: "CAPP supports climate policies that are effective and efficient in managing greenhouse gas emissions while maintaining a vibrant and competitive oil and natural gas sector.”