Last week, the 28th annual Conference of the Parties (COP) on climate treaty action kicked off in Dubai, United Arab Emirates, a major oil- and gas-producing country and OPEC member. Continuing the recent trend, representatives from U.S. energy companies are also in attendance as the two-week United Nations-led convention takes stock of the global progress in fighting global warming.
For years now, the oil and gas industry has been arguing for a seat at the table in policy discussions about emissions reduction and energy transition plans. Now that it has gotten its wish, it would do well to remember Groucho Marx’s advice about never joining a club that would have you as a member.
Ever since the U.N.-led climate hysteria was first ratcheted up circa 2007 with the release of the Fourth Assessment Report, U.S. energy companies have opted for conformity over confrontation when it comes to the public debate.
On the Kubler-Ross grief scale, the industry has been stuck in the bargaining stage since the 2000s, with every player trying to position himself as the last man standing in the global transition away from fossil fuels.
When U.S. coal was being put down during the Obama administration, natural gas companies ran ads agreeing that “Coal is Filthy” to highlight their “clean” credentials and smaller carbon footprints.
More recently, domestic energy producers have diversified into renewable natural gas, hydrogen fuels, and carbon capture technology—even though such green indulgences won’t guarantee any of them eternal corporate life.
Such charged anti-industry rhetoric will be on full display at COP28, where all the energy company representatives will once again be derided as “lobbyists.”
Rather than haggling over the net-zero execution details, the U.S. energy sector should be working toward a permanent stay of execution for fossil fuels. If oil and gas companies want more support from politicians and the American public, then they need to start defending themselves more forcefully.
Besides being more vocal about the many societal benefits of energy-dense traditional fuels and the desperate need to both invest in and drill for oil and gas, the industry needs to publicly challenge the entire logic of a global energy transition—a process that’s being driven by politics rather than economics or market demand and which can’t be completed as dialed based on currently available technology.
Rather than wasting precious capital on scaling green energy activities and de-risking clean technology, energy CEOs should be pointing out how inefficient wind, solar, and biofuels are as distributed sources of power and energy—to say nothing of the recklessness of electrifying every segment of the U.S. economy while simultaneously making regional electricity grids more dependent on intermittent generation capacity from wind and solar power.
It goes without saying that oil and gas companies lining up for their fair share of green government handouts is a decidedly bad look for one of America’s most self-reliant industries.
And then there’s the two-tiered approach to transitioning the global energy mix, with private sector companies operating in the developed world expected to shoulder the decarbonizing burden while national oil companies and emerging market countries are held to a different, go-slow standard. No amount of climate justice spin can obscure the fact that the current energy transition is a wealth transfer exercise aimed at deindustrializing the West.
Since 2005, the United States has unilaterally shut down one-third of its coal-fired generation capacity even as China has quadrupled its installed coal capacity to 1,074 gigawatts in 2022, more than five times larger than the current U.S. coal fleet. For every gigawatt of coal generation capacity shut down in North America and Europe since the signing of the Paris Agreement in 2015, more than two gigawatts have been added in China, India, and other third-world countries.
Energy CEOs need to acknowledge that the transitioning game is rigged and start standing up for their companies and workers. Most importantly, they need to challenge the public perception that the U.S. oil and gas industry’s days are numbered, since this will make it that much harder to raise capital from investors and attract and retain employee talent over the coming years. Descriptive terms such as “stranded assets,” “secular decline,” and “run-off mode” make for a tough pitchbook.
Lastly, more than a decade after the 2010 Supreme Court ruling in Citizens United v. Federal Election Commission, U.S. energy leaders should start exercising their corporate right of free speech by publicly educating government officials in Washington on the importance of energy security and supply reliability and the ongoing need for pipeline development, permit approvals, public lease sales, and increased liquified natural gas exports to keep the domestic industry growing.
Hopefully, when U.S. energy companies take their seats at the table at COP28, they'll finally realize that they’re the ones on the menu and start speaking up.
