‘All good’: Shell CEO backs Biden’s climate law

President Joe Biden's climate agenda got a surprise endorsement Tuesday from the leader of one of the world's largest oil companies.

The bipartisan infrastructure law and Inflation Reduction Act "seem to be working in terms of attracting a significant amount of capital in different states, whether it's a red or blue state," Shell's chief executive, Wael Sawan, said at an event hosted by the Center for Strategic and International Studies, a centrist think tank.

"You're creating jobs. You're actually starting to anchor new industries. And over time, what you will do is you will create supply chains locally that are able to satisfy the demands of many of these industries," he added. "That's all good."

Sawan's comments aren't completely unexpected. Shell broke away from the broader oil industry to advocate in favor of the IRA, which Democrats passed without any Republican votes. And some industry groups that initially opposed it have now vowed to protect the clean energy portions of the law from a potential GOP assault.

But the oil executive's robust defense of U.S. climate policy is still striking in light of the looming elections, where control of the White House and Congress are up for grabs. Biden is running for reelection against former President Donald Trump, who has courted oil industry donors with promises to slash the Biden administration's tax credits for electric vehicles and wind power and expand drilling on federal lands.

Sawan spoke at the think tank ahead of a visit to Capitol Hill, where he said he plans to make a request for stability — both in terms of climate technology incentives and permitting of liquefied natural gas, or LNG.

"My message is one of pleading for stability and predictability in the energy system," he said. "We make investments with usually as a minimum 15- if not 25- [or] 30-year horizons. These investments are critical to be able to [sustain] the energy system today but also to be able to build the energy system of the future, one which we hope will be lower and lower carbon. There is nothing more important than stability and predictability in that complex effort."

Sawan's main criticism of the Biden administration focused on its decision to pause new LNG export permits until it could complete a thorough review of the climate impacts of the LNG building boom.

"I think sometimes the disagreement stems from the fact that it is a fossil fuel, therefore it cannot be clean. There is an almost absolutist perspective on this that some have" in parts of Washington and some European capitals, he said. "While I respect that view, the reality is it is an energy transition. And we need to be able to transition to lower-carbon solutions."

The Shell CEO highlighted the potential of LNG to offset the use of coal in power generation and some industrial processes in Asia and Europe. He also cast doubt on the viability of building import terminals that could be overhauled in the coming decades to import hydrogen that's produced using renewables, an approach the German government has pursued.

"The risk with it is, will you actually be able to attract the LNG, because typically the LNG is going to go for whoever is willing to pay the highest and whoever is willing to have the longest-term contract," he said. "So are you at risk of having what is a perfect strategy that is not actually executable?"

Under the leadership of Sawan, who took over Shell last year, the oil major has watered down its near-term climate commitments. The firm now aims to reduce the emissions associated with the products it sells 15 percent by 2030 from 2016 levels, rather than 20 percent.

Investors backed that weaker goal at the company's annual meeting last month and rejected a shareholder proposal that would've required Shell to align its production with global climate targets. Shell still has a long-term goal to reduce the company's total emissions to net zero by 2050.

At the think tank event, Sawan distanced Shell from oil major Exxon Mobil on the issue of shareholder resolutions. Exxon is suing the sustainable investment firm Arjuna Capital over climate proposals that the oil company argues would harm investors.

"We welcome shareholders' voices," he said in response to a question about the unusual litigation. "We are listening to what they expect of us. And we are trying, with the limited wisdom that we have, to be able to navigate through those difficult demands."

Democratic lawmakers have for years been investigating Shell, Exxon and other oil industry players for allegedly promoting misinformation in a bid to thwart efforts to wean the world off of fossil fuels. Last month, they urged the Department of Justice to launch a probe.

After the event, Sawan told POLITICO's E&E News the congressional referral had led to "nothing new."

"We're still assessing the situation at the moment," he added. "I suspect that this will be a long, drawn-out process."

A version of this report first ran in E&E News’ Climatewire. Get access to more comprehensive and in-depth reporting on the energy transition, natural resources, climate change and more in E&E News.