The oil industry is finally talking climate crisis, but don’t expect change to come easily

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It took approximately one hour for someone to mention Greta Thunberg.

Standing onstage at a Monday morning event at the start of the annual International Petroleum Week in London, Chris Midgley, the global head of analytics at S&P Global Platts, flipped to the next slide on his Powerpoint presentation, and an illustration of the Swedish climate activist loomed over a ballroom full of oil and gas executives.

“This young lady, Greta Thunberg, has had a huge impact,” he said. 

Thunberg, who has launched to global fame in the months since her “Fridays for Future” protest movement spread worldwide, was not present at the oil industry’s annual event, a weeklong mash up of conferences and parties in London that operates as a temperature-taking for the industry.

But her presence was clearly felt, as the face of the growing public pressure on the oil and gas sector to act on climate change. This year, that pressure was a major theme for the oil industry, bringing environmental questions to a business that has often been accused of looking the other way; presenting difficult questions about the possibility of meeting increasing energy demand while also decarbonizing; and frequently drawing assurances that the world—regardless of environmental commitments—would still need oil for many years to come.

‘Obsolescence and destruction’

By the following day, that pressure was increasingly obvious, even as climate protestors themselves were nowhere to be seen. (Last year, Extinction Rebellion protestors glued themselves to the venue’s doors.)

Also conspicuously absent at the official International Petroleum Week event, which began on Tuesday, were the usual keynotes from CEOs of the world’s largest oil and gas companies. In their place were two sets of speakers: experts, some from within the sector, who offered the industry sharp rebukes on its record on climate change—and executives charged with the awkward task of defending their companies’ records on the environment. 

“Many oil and gas companies are facing a major challenge,” said Fatih Birol, the head of the International Energy Agency, speaking at the event. “On the one hand, short-term profits. On the other hand, having a social license [to operate]. How are they going to balance these things?”

So far, not well. Claims that the industry was investing in clean energy did not bear out scrutiny, Birol said: an IEA analysis showed that 99% of investment by major oil and gas companies worldwide was in fossil fuels, with just the remaining 1% in clean energy. Meanwhile, oil companies’ own operations contributed 15% to their emissions, with the majority of that in the form of methane.

“Ladies and gentlemen, these methane emissions can be reduced with existing technology, and at no or low cost,” he said. “We need companies not to be greedy here.”

The industry must take “immediate action”, and work with the other sectors it serves in order to stay relevant, said Andrew Smart, Global Energy Lead at Accenture.

“We’re clearly confronted with the fact that many other industries and sectors have embraced the circular economies, are driving the circular economies, far quicker and more effectively than we have today,” Smart said. “And that there is a massive opportunity for us if we step in and embrace that.”

The industry has the background and the capability to play a major role in the energy transition, particularly in developing carbon capture and storage technology, Bob Ward, from the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

But the lack of investment in clean energy gives the impression of a sector “invested in its own obsolescence and destruction”, he said, while climate denial is still being allowed to continue.

“The oil and gas industry has a track record of dragging its feet on this issue,” Ward said. “There are those within the industry that have in the past—and continue to—promote climate change denial. Every time somebody from within the industry promotes climate change denial, it damages the whole industry. And you’re going to have to call them out on it. It’s bad science, it’s bad economics, it’s bad politics, it’s bad ethics.”

‘Nothing less than a complete change in the economic model.’ 

For energy companies, it was a tense act to follow. Speaking after the other panelists, executives at Shell and Equinor, the Norwegian national energy company, made statements recognizing the severity of the impact of climate change, while also defending their own companies’ efforts.

Sinead Lynch, U.K. Country Chair for Shell, said the company had set ambitious emissions goals for 2050—which, until BP committed to net zero emissions in 2050 earlier this month, were broadly viewed as the most aggressive among the world’s largest oil majors—and was backing solar and wind projects, while supporting the creation of a government carbon tax in every market they operate in. 

But she also argued that the shift was going to be more difficult if all the players on the energy sector were not working together with “unprecedented” levels of collaboration.

“One of the challenges of that deep collaboration that we need is that the public debate on climate change is becoming increasingly polarized,” she said.

Rising populations and the search for better living standards would inevitably raise energy demand, Lynch said, “and as much of that energy as possible needs to be clean. But oil and gas will also need to play a role, and so society’s use of oil and gas will not necessarily reduce at the pace many might like.” 

Echoing Lynch’s comments, Al Cook, executive vice president of Global Strategy and Business Development at Equinor, pointed out the company’s investments in carbon capture and storage near Norway, and a wind energy project offshore Scotland. The impact of climate change was clear, he noted.

“Even in Norway, at the beginning of January, we saw a temperature 19 degrees [celcius],” or 66 degrees Fahrenheit, he said. “If you’ve been to Norway, you’ll know that that is not normal for the beginning of January.”

But he, too, said that the industry needed more collaboration, including with governments and investors.

“We’re working together for nothing less than a complete change in the global economic model,” he said. “For 200 years, we’ve made the environment the servant of the economy, extracting resources to drive wealth, and it has benefited billions.”

Now, Cook said, it was time “to make economies the servant of the environment.” 

If it felt like a mediated confrontation between the tensions of public pressure over climate change, and what the future of energy companies will look like, it was still a notable shift.

Reflecting on the discussions of climate change dominating this year’s event (alongside another crisis: the coronavirus outbreak), Paola Rodrigues-Masiu, an analyst at energy consultancy Rystad, said the needle had finally shifted from “if” the energy transition was happening—to what that transition would actually look like.

It was a shift that was “unthinkable” just a couple years ago, she said—and meant two traditionally divided actors on climate change would finally be forced to meaningfully interact.

“Oil companies and environmentalists: they can no longer ignore each other,” she said. “I think that’s the slogan of 2020.”

More must-read stories from Fortune:

—In China, oil won’t be the only sector battered by the coronavirus
Energy emissions plateaued in 2019
Oil demand was set to rise in 2020, then the coronavirus outbreak hit
Can Germany phase out nuclear energy and coal?
—Coronavirus may be the straw that breaks the back of oil fracking

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