The US was among the 196 signatory countries of the Paris climate agreement in 2015. However, in 2017 Donald Trump, the former President of the US, withdrew from the agreement stating that it would prove too costly for the country’s economy and that it would provide little tangible benefits, such as the decrease in global temperatures. However, Joe Biden, the successor of Trump, signed an executive order on the first day of his office reversing this withdrawal. This move came as a part of Biden’s aim to make the US a leader in the global fight against climate change and make the country a net-zero carbon emitter by 2050.
While climate protection advocates have welcomed this decision, there were concerns that it would negatively impact the US oil and gas companies. The country’s oil and gas industry has already been impacted by the COVID-19 pandemic and is also facing headwinds in the form of Biden administration plans to limit fracking and prohibiting new oil and gas well permits on public lands and waters. The rejoining of the US in the Paris climate agreement would further compound the problems for the US oil and gas companies, thereby limiting their investments in the country. Less investments could lead to less development and negatively impact the employment in the sector. This has been reinforced in a poll conducted by GlobalData, wherein around 51% of the respondents opined that the return of the US to the Paris climate agreement would have a negative impact on the oil and gas companies in the US.
According to the poll, 23% of the respondents stated that it would have a positive impact on the country’s oil and gas companies as it could encourage them to cut carbon emissions and invest in sustainable measures and technologies, such as carbon capture and storage. Already Occidental Petroleum Corp announced its aim to become a net-zero emitter by 2040 from its operations. ExxonMobil announced plans to cut down greenhouse gas emissions from its upstream operations by about 15 to 20% by 2025 when compared to 2016 levels. The company is also accelerating its plans for more than 20 carbon capture and storage projects.
However, 13% of the respondents opined that the returning of the US to the Paris Climate Agreement would not have any impact on the oil and gas companies. This is highly unlikely as the decision is expected to have considerable impact on the oil and gas companies in the US, such as impacting their strategies and investments plans. On the other hand, 14% of the respondents stated that they did not know about the impact of the return of the US to the Paris Climate Agreement.