By Sarah Kent and Inti Landauro
PARIS--Europe's largest oil companies on Tuesday came out
forcefully against coal, taking aim at a competing fossil fuel as
they push cleaner-burning natural gas ahead of climate-change
talks.
Executives from Royal Dutch Shell PLC, BP PLC, Total SA and
others told industry officials at a conference that their increased
production of gas could help reduce carbon emissions and lessen the
world's reliance on coal for heating homes and creating
electricity. Coal, they said, was a pollutant that set back
environmental efforts.
"Together with renewable energies it is important to promote the
use of gas to replace coal," Total CEO Patrick Pouyanné said. "It
would contribute at a low cost to meet carbon emissions
targets."
The message was delivered at the World Gas Conference in Paris
six months before United Nations climate-change talks that could
result in an agreement to curb carbon emissions and limit global
warning.
Shell, BP and other big European oil companies sent a joint
letter to the U.N. this week calling for measures to push up the
cost of burning coal, which remains fairly cheap. The companies
suggest governments could either tax carbon emissions directly or
reduce the supply of carbon emission credits, required to offset
emissions, to make those credits pricier on the secondary
market.
The lobbying effort comes as gas grows into a bigger revenue
source for the world's top oil companies.
For instance Shell now produces more gas than crude oil and the
Anglo-Dutch company is set to solidify its position on top of the
liquefied natural gas market with its $70 billion deal to buy U.K.
gas giant BG Group PLC, which is expected to close next year.
Around half of BP's production is natural gas and this could rise
to 60% by the end of the decade, according to CEO Bob Dudley.
The coal industry has defended the fossil fuel's role in the
energy mix, with backers noting that natural gas also emits
greenhouse gases and that advanced technologies can sharply reduce
carbon emissions from coal-fired power plants.
"It's flawed to think that you'll reach a solution to climate
change without talking about low-emission technology for coal,"
Mick Buffier, chairman of the World Coal Association and Glencore
PLC's head of coal, said in an interview in London on Tuesday. Mr.
Buffier said new technology for coal-fired power plants and reduce
carbon emissions by more than 30%.
He said China and India, which consume most of the world's coal,
will continue to rely on it for power generation for decades. "The
reality is that coal will continue to be used, particularly in
developing countries, " he said. He recommends that governments and
development banks help fund low-emission technology for coal-fired
power plants and the installation of the plants in developing
countries.
Long the world's dominant source of energy, coal will likely
play a role for the foreseeable future. According to BP's World
Energy Outlook, coal and gas are forecast in 2035 to each provide
roughly the same amount of the world's energy--just over 25%.
Renewables will increase but still be less than 10% by 2035,
according to BP's annual tome of energy industry forecasts.
Natural gas is still a fossil fuel, and burning it produces
greenhouse gases blamed for climate change--though much less of it,
according to the U.S. Environmental Protection Agency.
The attack on coal comes as oil companies are stepping up their
involvement in the climate change debate before the U.N. summit
later this year. The international gathering is intended to seal a
deal that would ensure man-made global warming is limited to two
degrees Celsius above preindustrial levels, but governments remain
far apart on how to achieve this.
Environmental groups increasingly question whether all the
resources that have been discovered can be burned if the world is
to meet its climate change goals. In response, the oil industry has
begun acknowledging the issues presented by climate change, while
also saying investment in fossil fuels must be made to meet the
world's growing energy needs.
Shell Chief Executive Ben van Beurden is pushing for the
industry to speak out clearly and with a common voice on the
measures it believes are necessary to encourage a shift to
lower-carbon energy sources. The coalition of European energy
companies on carbon pricing is one aspect. Mr. van Beurden also
wants a broader coalition that includes utilities, academics,
technology companies and others, acknowledging that the oil
industry has a credibility issue.
"We have quite often retreated from the debate believing that
whatever we say, there's only going to be a reputational downside,"
Shell's Mr. van Beurden said in an interview. "I think with the
benefit of hindsight that has been wrong, because as a result the
whole societal debate has not moved in the right direction and
meaningful policy action has been delayed."
However, not everyone in the oil industry has embraced this new
stance. European oil executives said that U.S. oil companies
invited to join their collective action have so far refused.
Speaking at the Paris conference, the heads of both Exxon and
Chevron stressed the role natural gas will play in the energy mix
in the coming years, but focused more on the need for continued
investment amid mounting global demand.
For instance, Exxon Chief Executive Rex Tillerson called on
Europe to be more open to hydraulic fracturing. France has a ban on
fracking, despite potentially large shale reserves, while Germany
has a moratorium.
Scott Patterson contributed to this article.
Write to Sarah Kent at sarah.kent@wsj.com and Inti Landauro at
inti.landauro@wsj.com
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