Big oil may be softening its stance on climate-change regulation

A spectre hangs over Baku, the capital of Azerbaijan, where diplomats, scientists and activists are gathered for the UN’s annual climate-change summit. Last time he was in office Donald Trump, a fossil-fuel booster and climate-science denier, yanked America out of the UN’s Paris climate agreement (it later rejoined). The president-elect has vowed to do so again on his first day back in office.

To add to climate warriors’ gloom, Shell, a British oil giant, won an important legal victory this week. In 2021 a Dutch court had ordered the company to cut its emissions of greenhouse gases by 45% by 2030, in line with the Paris agreement. On November 12th the Hague Court of Appeal overturned the ruling.

Yet those championing climate action also received a boost from an unexpected quarter this week. “We will continue to advocate for the world to address greenhouse-gas emissions and the world needs to do this on a collective basis,” declared Darren Woods (pictured), the boss of ExxonMobil, America’s biggest oil-and-gas company, at the event in Baku. He added, for good measure, “I’m not sure how ‘drill, baby, drill’ [a frequent Trump campaign chant] translates into policy.”

Although the Dutch judgment and Mr Woods’s remarks send seemingly conflicting signals on the outlook for climate action, two threads connect them. One is a growing recognition that government regulation, which oilmen reflexively criticise, matters in a world worried about the climate. The appeal court made it clear that responsibility for responding to climate change lies mainly with governments, not companies. It did not let firms off the hook; Shell, it said, had a duty to “limit its carbon-dioxide emissions”. But it found insufficient scientific basis for a court to impose emissions targets on firms.

Mr Woods, too, appears to be converted to the need for government intervention on the climate—or at least some policy continuity. In an interview with The Economist, he cautions Mr Trump against scrapping America’s Inflation Reduction Act, a law passed in 2022 that offers generous subsidies and tax incentives for clean technologies like hydrogen and carbon capture in which ExxonMobil is now investing. He also warns Mr Trump against leaving the Paris agreement: “It doesn’t benefit our country going in and out, in and out.”

The second connecting thread is the need for better measurement of emissions. Although the Dutch court acknowledged Shell’s efforts at reducing emissions from its own operations, it noted the difficulty of measuring and attributing those generated by the fuels it sells. For its part, ExxonMobil wants a global effort to lower the carbon intensity of products, based on standardised metrics, which are currently lacking. “Let’s establish a global accounting system for carbon,” Mr Woods says. Such words would have been unthinkable from an Exxon boss a generation ago. ■

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