Has a climate change reckoning come for Big Oil?
“The 360” shows you diverse perspectives on the day’s top stories and debates.
What’s happening
Three of the world’s largest oil companies suffered defeats within a span of less than 24 hours that could force them to make radical changes to reduce their carbon emissions in a series of decisions that activists say could be a “game changer” in the fight against climate change.
On Wednesday, a court in the Netherlands ordered Royal Dutch Shell to cut its carbon dioxide emissions to 45 percent of its 2019 levels by 2030 — a ruling that would dramatically accelerate the company’s self-imposed emission reduction plans. “The court believes that the consequences of severe climate change are more important than Shell’s interests,” a spokeswoman for the court said after the ruling.
A few hours later, a majority of shareholders of Chevron voted to demand the company drastically cut the emissions its products generate. That move was followed by a victory for activist investors at Exxon Mobil, who were able to secure at least two seats on the firm’s board of directors for candidates who have pledged to take climate action.
Why there’s debate
In isolation, any of these individual events would be a significant story in the business world. But climate activists argue that all three happening at once represents a breakthrough in the decades-long fight to rein in one of the world’s most environmentally harmful industries. “Today, fossil fuel companies got a big wake up call!” former Vice President Al Gore tweeted Wednesday. “The time to change is now. Keep up the pressure. It’s working!”
Legal experts say the Dutch court’s decision against Shell could become a precedent that provides a framework for activists to win similar cases against the other oil companies. Industry analysts say the votes at Chevron and Exxon Mobile show how intense the pressure has become from shareholders who want companies to transition away from crude oil — either because of a sincere desire to curb climate change or pessimism about the long-term profitability of fossil fuels.
Skeptics say it’s doubtful this week’s events will prove to be a harbinger of a green revolution in the oil industry. Court rulings and shareholder pressure may force these individual companies to reduce their environmental impact, they argue, but one way they might do that is by selling off their high-emissions assets to other firms that will keep them running — a result that wouldn’t decrease net global emissions at all. Others say progress on green energy sources isn’t moving forward quickly enough to provide a viable alternative to fossil fuels any time in the foreseeable future.
What’s next
Shell intends to appeal the court’s ruling, but the company said it remains committed to reaching net-zero emissions by 2050. Courtrooms appear primed to become one of the most important venues for climate change action in the coming years. By one count, there are currently more than 1,800 active cases related to climate change worldwide.
Perspectives
Optimists
Climate activists now have a winning strategy to challenge Big Oil in the courts
“Obviously not all courts are the same. We have different laws in different countries. But what you see here is a successful strategy and that is worth everything.” — Emily Atkin, MSNBC
The Shell ruling shows climate activism now has the force of the law behind it
“It’s clear that the arguments that many have been making for a decade have sunk in at the highest levels: there is no actual way to evade the inexorable mathematics of climate change. If you want to keep the temperature low enough that civilization will survive, you have to keep coal and oil and gas in the ground. That sounded radical a decade ago. Now it sounds like the law.” — Bill McKibben, New Yorker
The collapse of Big Oil has begun
“All in all, the climate story has taken a decisive turn; Big Oil’s fortress walls, which for decades have been the strongest obstacles to climate action, might finally be crumbling.” — Mark Hertsgaard, the Nation
The growing viability of renewables has made divesting from oil smart business
“This is a watershed moment for the oil and gas industry. Investors are now recognizing that companies need to plan for a very different future. It’s not just environmentalists saying it.” — Environmental Defense Fund president Fred Krupp to Houston Chronicle
Investors have the power to force oil companies to change from the inside
“Shareholders are demanding that all companies, including U.S. fossil fuel companies, take the climate crisis seriously. I think the big takeaway is ‘get real or get out of the way.’” — Matt Egan, CNN
The climate movement has become too strong for even Big Oil to ignore
“It is a time of reckoning. As governments and people begin to play their part to curb climate change, it looks like big corporations are finally having to get on board too.” — Sophie Mellor, Fortune
Skeptics
Activists should hold off celebrating until emissions actually go down
“Don’t get it twisted. Big Oil’s day of reckoning was a pick your superlative historical moment. But it remains to be seen whether the success of climate activism in forcing large oil and gas companies to diversify and move faster off fossil fuels will actually lead to meaningful emissions reductions.” — Josh Siegel and Abby Smith, Washington Examiner
Oil companies can reduce their own impact without reducing global emissions at all
“Divesting certain projects in the Middle East, Nigeria, Malaysia and few other countries would probably be the easiest way to comply with the court ruling if the company chooses or is forced to do so. Even if Shell divests high emission assets, they will just change hands, not be taken off the global energy map.” — Energy industry analyst Artem Abramov to Wall Street Journal
Renewables aren’t nearly where they need to be to meet the world’s energy demands
“For demand to drop quickly enough to ward off the worst effects of climate change would require massive investments in renewable power, widespread adoption of electric vehicles, lifestyle changes to cut energy demand, the political will to make disruptive policy changes and international cooperation among rivals and outright enemies. The world is not currently on track for that kind of transformation.” — Camila Domonoske, NPR
The climate reckoning for Big Oil could be short lived
“This could mark a turn from companies offering broad, vague pronouncements about climate change to establishing concrete timelines, goals, and numbers. But that depends on whether this trend actually catches on—or flames out.” — Nitish Pahwa, Slate
The oil industry is changing, but that may be happening too slowly
“There’s no longer much doubt that public and institutional pressure is fueling momentum for policy change. The question is whether it translates into action fast enough to stem the damage to the planet.” — Karl Maier, Bloomberg
Oil companies will find a way to hang on
“Publicly traded companies in North America and Europe may face a similar stock-market trajectory to another industry, one whose public relations strategies fossil fuel executives borrowed over much of the past three decades in a bid to stave off regulations. Once denying the link between cigarette smoking and cancer no longer worked, tobacco firms largely stopped growing, but kept making money.” — Alexander C. Kaufman, HuffPost
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Photo illustration: Yahoo News; photos: Getty Images
