OPINION: Total's decision to leave the American Petroleum Institute (API) should make the US oil and gas association think hard about its messaging — and its future.
The French supermajor's move is a clear signal of deep unhappiness with the advocacy arm of the API, which also provides certification services and helps develop industry standards.
Total is no lightweight that can be easily shrugged off. It has invested $7 billion in the US and expects to become the largest liquefied natural gas exporter in the country this year.
News of its impending exit came days before major energy policy change is set to hit the US with Joe Biden's arrival in the White House.
In the past four years, the API and US oil companies have basked in the glow of outgoing Republican President Donald Trump, who lent his full support to fossil fuels.
But Biden promises to change the industrial landscape with a commitment to pursuing a “green” energy revolution.
Already there are reports of investors rushing to switch money out of oil and into alternative energy funds ahead of an expected boost for clean tech.
The incoming Democrat has promised to use executive orders within days to rejoin the Paris Agreement on climate change, which his predecessor exited.
It is in this atmosphere that Total has flown the API coop, citing the lobby's support for politicians who oppose the Paris Agreement, its opposition to electric vehicle subsidies and carbon pricing, plus the institute's backing for Trump’s retreat on tackling methane emissions.
There is now growing pressure on other European companies, such as Shell and BP, to follow suit.
There will also be pressure on the API to reassess where it stands, or risk being out of step with a changing world around it.
BP America, which has already left the American Fuel & Petrochemical Manufacturers and Western States Petroleum Association, said it is “actively monitoring” its membership of trade associations — clearly including the API — but hoped to use its influence to effect change inside those groups.
The API has softened some of its rhetoric in recent days, insisting it is willing to work with the Biden administration on issues such as methane emissions and trade.
But it also reiterated that it would be prepared to fight on other issues, including access to federal land.
'Change is in motion'
API president Mike Sommers has made clear his view that the US energy transition in its current form is going fine.
“Over the last decade, our nation achieved the largest-ever decline in energy-related greenhouse gas emissions. Change is in motion, and it’s a long arc as the majority of the world’s energy needs are projected to come from natural gas and oil far into the future.”
Sommers almost certainly has the full backing of ExxonMobil and many other oil companies thus far. But will that last? Or will some of the more progressive US companies, such as Chevron and ConocoPhillips, start to rattle the API cage?
Total will continue on its journey to become a “broad energy company” called Total Energies, with a push on low-carbon growth.
Gas will be a major part of its business and LNG will get particular focus, not least in the US.
Meanwhile, the API has some thinking to do.
As the Union of Concerned Scientists said: “It's a very big deal” for an oil major to leave the biggest US trade association.
(This is an Upstream opinion article.)