By Dana Drugmand

Royal Dutch Shell is cutting ties with the American Fuel & Petrochemical Manufacturers over the group’s stance on climate change.

The decision came in response to demands by institutional investors for Shell to improve transparency on how its trade association membership aligns with its climate change positions.

The company reviewed the climate-related statements and actions of trade groups it belongs to and found it had “material misalignment” with the AFPM, according to the company’s Industry Associations Climate Review, which was released Tuesday. The company said its climate policies “aligned” with nine of the trade groups it belongs to and found “some misalignment” with the remaining nine groups.

Shell determined whether its climate policies aligned by examining four climate-related positions: support for the Paris Agreement; government-led carbon pricing policies; policy frameworks for low-carbon technologies; and the role of natural gas in the energy system.

Shell said it supports the goal of the Paris Agreement to limit warming to well below 2 degrees Celsius and supports policies on carbon pricing and low-carbon technology and innovation, as well as government regulation of methane emissions from natural gas.

The AFPM, which has not stated support for the goal of the Paris Agreement, opposes carbon pricing and other policies like the vehicle fuel economy standards.

The trade association maintains the Clean Air Act should not be used to regulate greenhouse gas emissions because it “threatens our nation’s economic and energy security.” The Clean Air Act’s regulation of greenhouse gas emissions is one of the main defenses that oil majors like Shell are using in climate liability lawsuits, arguing that the federal statute displaces and preempts tort claims against fossil fuel producers.

The AFPM thanked Shell for its “longstanding collaboration.

“AFPM will continue to foster collaboration among our nearly 300 members on important topics like safety and environmental protection. We will also continue working on behalf of the refining and petrochemical industries to advance policies that ensure reliable and affordable access to fuels and petrochemicals, while being responsible stewards of the environment,” an AFPM spokesperson said in a statement, adding that its policies don’t always align with its member companies.

Shell also identified “some misalignment” with nine other industry groups, including the American Chemistry Council, the American Petroleum Institute (API), BusinessEurope, Canadian Association of Petroleum Producers, European Chemical Industry Council, FuelsEurope, National Association of Manufacturers (NAM), U.S. Chamber of Commerce, and the Western States Petroleum Association (WSPA).

The WSPA opposed a Washington State carbon pricing ballot initiative in 2018, spearheading a campaign to defeat the measure. Shell said it decided not to contribute funding to the campaign due to its “general support for government-led carbon pricing.”

NAM and the Chamber of Commerce both have expressed concern or criticism of the Paris Agreement. The Chamber commissioned a controversial study claiming high costs of the agreement, which the Trump administration used to justify announcing the U.S. withdrawal in June 2017.

Despite these misalignments, Shell remains committed to these trade associations. Both NAM and the Chamber of Commerce are supporting Shell and its oil industry peers in climate liability lawsuits.

Shell said the report is a “first step to greater transparency” and that it “follows talks with investors, NGOs and consultants about our activities with industry associations.”

ShareAction, an investor advocacy group promoting sustainability and responsible investing, praised Shell’s review of its trade association memberships and decision to ditch the AFPM..

“The AFPM has a history of obstructing the implementation of sensible climate policy. Notably, it funded campaigns to oppose carbon tax policies in Washington State in both 2016 and 2018 and has consistently opposed [electric vehicle] subsidies and mandates,” said Jeanne Martin, a senior campaigns officer at ShareAction, adding that her group is pleased that Shell identified and acted on the risks of remaining in the American Fuel & Petrochemical Manufacturers (AFPM) following forceful engagement by institutional investors and non-profits organizations.

“Shell has also put its membership of nine other trade bodies, including the American Petroleum Institute, the National Manufacturers Associations and the US Chamber of Commerce, under review,” Martin said.

“This should send a strong message to the US lobby powerhouse that the days of funding climate denial groups and being a toxic drag on US climate policy debate are coming to an end. Investors should keep a close eye on Shell’s engagement with these trade associations and urge the other oil majors to follow suit.”

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