Editorial: As Texas politicians tilt at wind turbines, Big Oil confronts real foe — climate change

Almost as unconscionable as their failure to prevent the deadly loss of power over the past week is Texas politicians’ haste to milk the misery for partisan advantage.

Republican lawmakers wasted no time declaring war on renewable energy, and calling for wind and solar to be supplanted with more fossil fuels on the power grid — completely ignoring the fact that the vast majority of what failed us during the epic winter storm were thermal facilities: natural gas, coal and nuclear.

In winter, those thermals power 80 percent of Texas’ electric grid. Only 10 percent, to Gov. Greg Abbott’s own admission, was wind and solar. So, although wind turbines did freeze up, their sliver of energy generation wasn’t nearly as missed as natural gas, coal and nuclear, which accounted for nearly twice as much of the sudden fall in capacity. The big problem was failure to weatherize plants, which Abbott has thankfully set about addressing.

Those facts won’t deter Republican lawmakers but the good news is they encourage those who choose to acknowledge reality.

That includes Big Oil. While state officials tilt at wind turbines, major oil companies are confronting the real foe: climate change.

The cold hard truth is that the changing climate — spurred on by the burning of fossil fuels — will make extreme weather in all varieties — from winds to floods to freezes to scorching heat waves — more frequent.

Some of the biggest powers in the oil and gas industry, which contributes so much to the prosperity of Houston and Texas, have already begun making fundamental shifts. in how they approach oil, coal and natural gas.

It’s momentum that all Texans — from elected leaders to ordinary consumers — desperately need to get behind.

The week before last, one of the world’s largest oil companies — Royal Dutch Shell — confirmed it would never again produce as much oil as it did in 2019. Peak oil production at Shell, said CEO Ben van Beurden, has come and gone.

The week before, ExxonMobil had made a similarly telling announcement: It is spending billions on a subsidiary formed to advance technologies to reduce the company’s carbon emissions and develop new products to help its customers do the same.

Last August, BP announced it would by 2030 reduce its oil and gas production by 40 percent, scale back its refinery capacity by more than 30 percent, and up its annual spending on renewable fuels and low-carbon technology tenfold, to $5 billion.

Pandemic or no, and no matter who is in the White House, the oil business is entering an exciting, scary new frontier — and there’s no turning back. The sooner Houston, the oil and gas capital of America, embraces that reality, the better its prospects, and those of its energy industry workforce, will be.

We welcome the oil giants’ announcements. We also acknowledge they come as many in Houston were already on edge, even before last week’s deep freeze arrived. Just last month, newly sworn-in President Joe Biden made clear he means to keep his campaign promises to accelerate America’s move away from fossil fuels and toward renewables.

No, they don’t constitute a “ban.” But Biden’s decisions — from a moratorium on new oil and gas leases on federal lands to rejoining the Paris accord to canceling the Keystone pipeline — triggered a backlash from Texas lawmakers in Austin and Washington worried that too sudden a shift could mean tens of thousands of jobs lost in Texas and Houston.

The lingering concern about the impact on jobs from a too-sudden shift away from oil and gas is valid, as we wrote Jan. 30, But the Shell and Exxon announcements underscore that changes away from oil have been taking place for years — especially in Europe and, of late, the United States. These efforts are gathering steam now only in small part because of voters’ rejection of President Donald Trump in November.

More powerful currents — propelled by the companies’ own understanding of both the climate emergency, their customers’ preferences, and by investors demanding change — are leading a global reevaluation of the role oil and gas will play between now and 2050. That’s the year the United States and many of the world’s largest businesses — from BP and Shell to General Motors and a host of leading tech companies — have pledged to have net-zero carbon emissions. Even China has pledged to be carbon neutral by 2060.

Van Beurden’s statement explicitly referenced those dynamics. “We must give our customers the products and services they want and need — products that have the lowest environmental impact,” the Shell CEO said. BP sent a further signal when it announced a massive investment in the UK to boost offshore wind farms.

Those big companies are reacting to the same kind of customer demands that smaller firms tell U.S. Rep. Lizzie Fletcher they are hearing. “They want the green energy plans and plans powered by renewable fuel,” said Fletcher, a Houston Democrat. “These companies are hearing the push (toward greener options) from multiple sources, including their customers.”

All of the above

Fletcher praised Biden’s decision to return America to the Paris Climate Agreement, but she also joined many Republicans in criticizing his temporary ban on new leases on federal lands. She was thinking about jobs. The oil and gas business makes up roughly 10 percent of the Houston GDP, Houston-based economist Jesse Thompson of the Dallas branch of the Federal Reserve told the editorial board. If indirect spending is included, that share jumps to roughly 30 percent.

That’s a lot of workers. Fletcher told this editorial board her message to her colleagues in Washington, and to the White House, is that Texas supports an all-of-the-above strategy when it comes to America’s mix of fossil fuels and renewables such as wind and solar.

“We believe in science and believe in climate change,” Fletcher said, adding that she supports federal incentives for low-carbon technologies and sensible regulation that rewards best practices. “But oil and gas are going to be part of the mix for a long time to come.”

True, oil and gas aren’t going away overnight. But here’s what Fletcher and other oil industry boosters leave out: The industry is going to shrink. The growing energy demand from developing nations won’t be enough to fully counteract a global shift away from fossil fuels and toward renewables.

Last year, Shell produced a series of three scenarios for the future use of oil and other sources of energy. In all of them — including what it called the business-as-usual case — the amount of oil consumed worldwide in both absolute terms and as a share of all energy use falls in coming years.

That’ll mean fewer jobs as we know them in oil and gas, no matter how weak or aggressive the U.S. climate policy is. In that light, it might sound like good sense for supporters of the industry to cling to every last oil and gas job. But that short-term approach will tie their hands in the long run.

‘More stable wages’

For years, the Obama administration kept saying the green economy will spin off hundreds of thousands of new jobs to replace those lost as the world consumes less oil. The problem with that scenario, for Houston anyway, is that if those new jobs are located elsewhere, they won’t do much to stave off a mighty economic reckoning here.

We believe, however, that the same companies that call Houston home, the ones with famous names and tens of thousands of highly skilled energy workers — from scientists to materials engineers to oil patch roughnecks — could help lead the push into new products, new technology and ultimately new energy sources. When Exxon announced it was creating its low carbon subsidiary, it amounted to a recognition that as the world changed, so too was Exxon’s willingness to slide more of its chips over to the green economy. Shell, which has 8,000 workers in the Houston area, is moving more aggressively still: the Chronicle’s Paul Takahashi reported it will divest itself of oil and gas assets to the tune of $4 billion a year over 10 years.

Thompson, the Federal Reserve economist, said that’s likely to continue. There are thousands of workers in Texas who could easily transfer their skills to a greener economy. “The same people who are drilling for oil could be building off-shore wind farms,” he said. “Will it be a one-to-one transfer? Probably not,” he said. “But there is still really good reason to believe the industry will be able to innovate its way through this transition.”

A lot depends on what forms the new energy investments take. If Big Oil leads the way in developing hydrogen fuel sources, for instance, then the highly skilled scientists already working in the area will be very welcome, he said.

Even lower wages in other areas could have a positive trade-off. “They might have to accept somewhat lower wages,” Thompson said, “but they will be more stable wages.”

Confronting the crisis

The real excitement behind Exxon’s announcement is that it signals American oil giants are moving to confront the climate crisis. Quickly enough? Not nearly. But it marks a fundamental shift in mindset.

John Hofmeister, the former president of Shell Oil, Royal Dutch Shell’s U.S. subsidiary headquartered in Houston, told us the industry’s embrace of greener fuels is accelerating: “The European majors are well ahead of their American counterparts on energy transition, but there is a desire on the part of the American companies to catch-up.”

That’s great news, and not just for the planet. The very companies that anchor the Houston economy now are the ones that have the deep pockets, highly skilled workers and increasingly, the customer-driven incentives to reinvent the way the world uses energy. It’s in everyone’s interest — including their own — to fully embrace that future.

If the pain of the last week has shown us anything, it’s that when it comes to energy, the old ways and old thinking no longer suffice.

Updated 3:20 p.m., Feb. 19: This editorial updates a previous version published online Feb. 13.