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By Valerie Volcovici and Bruce Wallace
WASHINGTON, June 2 (Reuters) - Europe's oil and gascompanies took direct aim at the coal industry Monday, callingupon governments to set a global price on carbon emissions thatcould dramatically drive market share from coal to natural gas.
The joint declaration issued by six European oil and gasmajors was cautiously embraced by the United Nations, which willhost negotiations this December in Paris aimed at designing aplan to cut the fossil fuel emissions that scientists blame forrising temperatures.
Total SA, Statoil, BP Plc, RoyalDutch Shell Plc, Eni and BG Group Plc called for "decisive action" at the Paris summit that wouldrecognize the "vital role of natural gas."
The companies argued that when burned to make electricity,natural gas typically generates around half the carbon emissionsof coal.
The willingness of oil and gas firms to accept a fee oncarbon emissions was widely seen as an attempt to improve theirimage at coal's expense.
It comes as the oil and gas industry is caught in a growingdivestment campaign that urges investors to withdraw from fossilfuel companies because of their carbon emissions. They also face pressure from policy-makers in several countries who wantto shut off billions of dollars in production and consumptionsubsidies that benefit the sector.
"Oil firms are under a fair amount of pressure to not beseen as obstructionist on climate," said Alden Meyer of thenon-profit Union of Concerned Scientists, who was in Bonn,Germany where international negotiators are preparing thegroundwork for a deal in Paris.
"They are hearing it from their shareholders, frominstitutional investors. This appears to be their strategy: towork on an international pricing mechanism."
The UN welcomed the signal of cooperation from a sector thatonce resisted any attempt to add costs to doing business.Christiana Figueres, the UN's chief climate negotiator, noted inBonn that oil companies have "enormous engineering capacity(and) enormous financial weight in shifting capital from onesource of energy to another."
The direct victim of such a shift would be the coalindustry, already under tremendous financial stress from a U.S.domestic boom in oil and gas production and public policies,especially in Europe, that target its heavy carbon emissions.
The industry has fought back with a pre-Paris strategy ofits own: seeking to build alliances with developing countriesthat regard energy shortages as a bigger problem than carbonemissions. The industry says coal remains the cheapest way toprovide energy "justice" for poorer countries.
"We see energy poverty development and climate change asintegrated priorities," said Benjamin Sporton, acting CEO of theLondon-based World Coal Association (WCA). "We need to see moreinvestment in ensuring that people can access new coaltechnology."
In its attempt to push back, the coal industry has reachedout to governments that "anticipate a significant role for coalin their future energy mix," Sporton said. The WCA has met withofficials from India to Indonesia, Pakistan, the Philippines andMalaysia, with the aim of enlisting them to defend a place forcoal-fired power generation in any Paris agreement.
Nor will the WCA be without support in Paris fromindustrialized economies. Australia - a major coal producer -continues to pursue coal exports and finance coal power stationsoverseas. And the Japanese government sees a promising future inselling its emissions-reducing technologies to coal producersaround the world.
"Developing countries need more electricity and they willbuild more coal-fired plants no matter what developed countriessay," said Takafumi Kakudo, coal division director at Agency forNatural Resources and Energy.
But coal's "energy poverty" messaging is firmly rejected bygreen groups. Environmentalists warn that simply shiftingconsumption from coal to natural gas would dangerously delay thewider implementation of renewable fuels that are essential tocurbing global warming.
James Leaton, research director at the Carbon Trackerenvironmental group, called it "a bit desperate when the coalindustry has to rely on the poor as the main source of theirlong-term growth."
Indeed the six European companies could count on that lackof popular sympathy for Big Coal in deciding to advocate fornatural gas to displace coal.
"The European companies are trying to find a place forthemselves in what they know will be - in Europe - a much morecarbon-constrained world," said David Goldwyn, an energyconsultant who headed international energy affairs at the StateDepartment from 2009 to 2011. What we are seeing, he says, "is afight for gas as the back-up fuel over coal."
Yet other observers took the move by oil and gas companiesat face value, calling it a significant step.
"It's part of a growing chorus of support from the businesscommunity for carbon pricing and for a stronger agreement inParis," said Elliot Diringer, executive vice president at the
Washington-based Center for Climate and Energy Solutions, anonprofit policy group.
"They are calling for government regulation. I think thatgoes beyond PR."
(Reporting by Valerie Volcovici and Timothy Gardner inWashington and Alister Doyle in Bonn; addtional reporting byYuka Obayashi in Tokyo; Editing by Lisa Shumaker)
