Why Shell Cut Ties to Conservative Lobby Group Over Climate Change

Hint: It's got something to do with the company drilling offshore in the Arctic

Does it matter that Royal Dutch Shell plans to cut ties to the American Legislative Exchange Council (ALEC) over climate policy? 

Shell follows big oil rival BP and Silicon Valley titans Google, Facebook, and Yahoo in distancing itself from ALEC, a prominent nonprofit that advocates against government regulation, primarily at the state level. The corporations quitting the group have stressed ALEC's opposition to state laws intended to curb carbon emissions and address human contributions to global warming.

"ALEC advocates for specific economic growth initiatives, but its stance on climate change is clearly inconsistent with our own," Curtis Smith, a Shell spokesman, said in a statement. In a response, ALEC said its opposition "to government mandates and subsidies of all type" has been mischaracterized "as climate change denial."

Shell's timing deserves both scrutiny and skepticism. The multinational began to drill for oil this summer in the Chukchi Sea, northwest of Alaska. Environmentalists argue that Shell's Arctic foray not only threatens to exacerbate climate change by producing billions of additional barrels of petroleum, but it also risks a spill in a remote and ecologically sensitive region.

One could dismiss Shell's withdrawal from ALEC as hollow public relations, an extension of the company's yearslong attempt to foster an image of social responsibility. After all, as Ben Elgin of Bloomberg News has reported, ALEC is not the only pressure group opposing climate-friendly rules that Shell has backed while simultaneously, in Jekyll-and-Hyde fashion, insisting that it favors limits on carbon.

But without shilling for Shell, I'd argue that more is going on here than standard corporate double talk. Shell has developed a corporate mindset that recognizes the inevitable need to shift to renewable energy sources even as it justifies continuing to do what it's always done (drill for more oil). Shell even endorses imposition of taxes on burning oil and other CO2-emitting fuels, such as those enacted by some European countries (but not the U.S., China, or India).

That's not going to satisfy environmentalists, and it shouldn't. But the company's decision to depart ALEC is a reminder that it's silly to expect a $420 billion corporation to cease doing the sole task it's designed to do, especially when there are buyers for its wares. (Current oil prices mean that Shell's Arctic venture wouldn't be profitable, but the company projects that rising demand for air conditioners and automobiles in Asia will push prices back toward $100 a barrel by the time Chukchi oil comes online.)

Instead of demanding that oil companies commit economic hari-kari, activists and politicians ought to focus on enacting the rules Shell professes to favor—and ALEC opposes—including carbon taxes, cap-and-trade systems, and the sort of emission reductions contained in the new Obama Clean Power Plan. Each time a major corporation, especially a major oil company, backs away from ALEC, the plausibility of real regulatory progress grows.