This is very interesting and I believe significant news for the renewables and bio-based chemicals industries. Shell recently announced that it will not renew its membership with the US fossil fuel and petrochemical lobby group American Fuel & Petrochemical Manufacturers (AFPM) association by 2020 as according to Shell the AFPM’s stance on climate-related policies is not aligned with the company’s (and maybe most importantly its investors’) position.

Shell released a report assessing its alignment with 19 industry associations on climate-related policy, which, according to the company, will serve as the basis for further conversations with industry associations, investors and civil society.  Shell, like many other European-based oil and chemical companies, has been increasingly pro-active in intending to cut its carbon emissions as it moves towards the goal of the Paris Agreement on climate change.

The AFPM is the first among the 19 industry associations that Shell has reviewed to cut off its ties due to the AFPM’s position on the following climate-related policies that reportedly undermines’ Shell’s drive for greater corporate transparency on this topic.

• Paris Agreement: AFPM has not stated its support for the Paris Agreement goal to limit the rise in global average temperatures this century to well below 2°C above pre-industrial levels. Shell said it is clear about its support for the Paris Agreement.
• Government-led carbon pricing: AFPM stated that it does not support carbon pricing. Shell said it has supported carbon pricing initiatives at the state and federal level such as the California cap-and-trade program.
• Policy frameworks for low-carbon pricing technologies: AFPM reportedly opposes government action that includes a carbon tax and the mandated use of certain fuels. AFPM also supports the EPA’s proposed rollback of fuel economy standards in the USA, which Shell opposes. In 2015, AFPM also mounted a challenge to the EPA’s Clean Power Plan over whether it was compliant with the Clean Air Act. Shell said it decided not to join the legal challenge and instead focused its own advocacy on other elements of the CPP such as the use of natural gas and emission-reduction targets.
• The role of natural gas: AFPM does not take positions on the role of gas and the reduction of methane emissions. Shell said it supported the use of natural gas and government regulations to address methane emissions.

Shell is currently a member of the board of directors at AFPM.

Other industry associations that are currently under review despite their opposite stance on several climate-related policies include the American Chemistry Council (ACC), American Petroleum Institute (API), BusinessEurope, Canadian Association of Petroleum Producers (CAPP), European Chemical Industry Council (Cefic), FuelsEurope, National Association of Manufacturers (NAM), US Chamber of Commerce (USC) and Western States Petroleum Association (WSPA). Shell reported that it will closely monitor the alignment of its position on climate-related policy with these associations and will take one or more of the following actions:

• Increase transparency about its own position and the differences with these associations by publishing this information on Shell’s website.
• Increase engagement with these associations in areas of differing views.
• Pursue its advocacy independently or through other conditions when having these misaligned views.
• Reassess its membership including ending activities such as board and committee participation or ending overall membership.

Several news reports indicated increasing pressure from company shareholders especially in Europe to line up their business models with the Paris Agreement. This will likely reverberate across the industry and among Shell’s peers who are also facing investor pressures.

The AFPM issued a statement thanking Shell for their longstanding collaboration and wishing the company all the best in the future.

Shell also recently announced the launch of a $300 million 3-year program focusing on natural ecosystem-based projects that will reduce its net carbon footprint by 2-3% beginning this year. The program will include reforestation partnerships in Spain and the Netherlands; investments in 200 new rapid electric vehicle charge-points in the Netherlands powered by renewable energy; linking its new and existing investments in natural emission reduction programs to a new offset service for customers; and nature conservation and forest regeneration projects in Queensland, Australia, and in Malaysia.