Total stops lobbying against its own future

Honestly, it hasn’t been a great month for Franco-American energy relations. First, a Texas Railroad Commissioner fired off a jeremiad at Engie SA for turning up its nose at US gas. Now Total SE, the French oil champion, is pulling out of the big kahuna of industry lobbyists, the American Petroleum Institute (API).
The move is a bombshell but one that’s been coming for a while. Total, similar to several other European oil majors, has staked out a decarbonisation strategy at odds with the stance of the API and the US oil and gas industry in general. Moreover, the particulars of Total’s strategy make the API’s positions not just philosophically dissonant. They’re plain bad for business.
Transforming a behemoth that’s been pumping oil and gas for decades into a giant in greener,
more electrified energy markets
is the innovator’s dilemma on steroids. Cutting emissions tends to mean cutting sales of the things that produce those emissions — oil and gas — which also happen to fund the company (including its dividends). Total wants to thread this needle with a plan to keep growing its energy production but cut the emissions-per-unit so much that its absolute emissions fall.
It’s also a tall order. Using Total’s objectives updated last September, HSBC calculates that in order for the company to cut its absolute emissions by 5% to 10% by 2030, while also growing energy production by a third, emissions intensity would have to drop by 35%. Getting there will require a herculean effort in terms of cutting emissions from Total’s own operations as well as encouraging faster sales of lower-carbon fuels than oil. In broad terms, that means selling more gas, eliminating methane emissions from that gas, building a giant renewable-power business and making carbon capture viable. All in the space of a decade. This is the essential context for the three “divergences” Total emphasized in announcing its split with the API. These were the API’s support for weakening methane-emissions standards, opposition to subsidies for electric vehicles and its “differing positions” on carbon pricing. If your company its staking its future on higher sales of gas and renewable power, as well as being paid to capture carbon, then paying dues to a body that stands in the way of dealing with the methane problem and encouraging more battery-powered vehicles isn’t just hypocritical — it’s ridiculous.
The absurdity was continued, inadvertently, in the API’s response. Bidding farewell to Total, the group sniffed that “we do not support subsidising energy because it distorts the market and ultimately proves harmful to consumers,” no doubt a reference to renewable energy and electric vehicles. Yet the API also touts emissions reductions resulting from gas displacing coal and the
potential for carbon capture, most recently at last week’s “State of American Energy” event.
—Bloomberg