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Oil majors' climate call exposes U.S.-Europe rift on carbon pricing

Wed, 03rd Jun 2015 10:42

* U.S. and European majors have held talks for jointinitiative Exxon wants carbon tax to be revenue-neutral

* European majors acted together more quickly

LONDON, June 3 (Reuters) - The failed attempt by the world'soil majors to speak on climate change action with one voice haslaid bare disagreement between U.S. and European companies onputting a price on carbon.

The world's top oil companies have struggled for years toform a joint front in the face of growing criticism for nottaking leadership against climate change.

This week's letter calling for a global carbon pricing byEurope's Statoil, Total, BP, Shell as well as ENI and BG showed firstsigns of such an agreement, albeit without the support of U.S.peers Exxon Mobil and Chevron.

Setting a price for each tonne of carbon that emittersproduce is meant to encourage companies to adopt cleanertechnologies and shift away from using fossil fuels, primarilycoal.

"While we have had discussions with European majors, and wewish them well, we don't believe we need to join this scheme,"said Exxon Mobil Vice-President Robert Franklin at an industryconference in Paris on Tuesday.

Another source confirmed Chevron had also been approached tojoin the initiative but that there was no enthusiam for theproposal, saying a domestic U.S. agreement on carbon pricing wasstill "light years" away.

Nonetheless, Exxon Chief Executive Rex Tillerson said at anOPEC seminar in Vienna on Wednesday if a carbon tax was imposedit had to be revenue-neutral as most economies around the worldare unable to shoulder the cost burden of a carbon tax.

Separately, Chevron and Exxon both work with trade groupInternational Petroleum Industry Environmental ConservationAssociation (IPIECA) to develop a common position for climatechange mitigation.

The IPIECA said on Tuesday it will put out a consensus viewfrom its members on carbon pricing later this month.

"ALL IN IT TOGETHER"

For Europe's oil majors, under growing pressure to actagainst climate change, introducing carbon price systems wherethey are lacking is a more pressing issue.

At home, they are already subject to the European TradingSystem that puts a market price on every tonne of carbon emittedand ties national governments to legally binding targets toreduce emissions.

"We got together as a group in Europe very quickly and madea lot of progress in a short period of time," said BP ChiefExecutive Bob Dudley at the same event.

After months of discussions that started at the WorldEconomic Forum in Davos in January and continued at a roundtablemeeting of chief executives in Oslo, the European companies'joint statement was finally agreed at last month's meeting ofthe Oil and Gas Climate Initiative (OGCI) in Paris, a forum foroil majors created last year ahead of UN climate talks thisDecember, sources said.

"There's a recognition that we're all in this together tosupport carbon pricing as an element of working towards fightingagainst climate change," said another source at one of thecompanies involved.

Total Chief Executive Pouyanne said he was still in talkswith the two U.S. majors and that he hoped one of them wouldjoin the European initiative soon.

The OGCI, which includes oil companies from across theglobe, is expected in the coming months to release a report onthe group's action plan to combat climate change, sources said. (Reporting by Oleg Vukmanovic, Michel Rose and Andrew Callus inParis; Marc Jones, Ron Bousso and Karolin Schaps in London;Writing by Karolin , editing by William Hardy)

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