The Biden Effect: Total Quits API, and Keystone XL Pipeline Is Off Again

President-elect Joe Biden campaigned on a plan to take decisive action on climate change, and some of the heavy lifting has already happened even before Inauguration Day. On Jan. 15, the France-based global energy company Total announced that it has withdrawn from the lobbying organization American Petroleum Institute (API), making it the third such company to leave in recent months. In addition, Biden plans to pick up the Keystone XL oil pipeline project where the Barack Obama administration left it — in the reject pile.

Total pivots to renewable energy

To be clear, Total still maintains an active interest in developing new fossil fuel resources. For example, on Jan. 14 the company announced a significant new oil and gas discovery off the coast of Surinam. Nevertheless, Total also represents the ability of global legacy firms to invest in a more sustainable business model — if they choose.

There certainly is a lot to choose from. Over the years, renewable energy startups have amassed considerable resources and know-how, making them ripe targets for acquisition and joint ventures with companies like Total.

Total has already amassed a strong renewable energy portfolio, and it poured on the heat in the days leading up to Inauguration Day. On Jan. 19, the company announced a $3.6 billion bond program to finance its renewable energy strategy, which will lean heavily on acquisitions. That includes acquiring a 20 percent interest in India-based Adani Green Energy, which plans to develop 25 gigawatts in wind and solar power over the next five years.

Three days later, Total joined with the firm Engie to develop a 100-megawatt green hydrogen project in support of Total’s La Mède biorefinery in France. The project will deploy solar power to generate hydrogen from water and will be the largest of its kind in France.

Total also made a big move in the U.S., and this is perhaps the one most relevant to its decision to withdraw from the API. On Jan. 14, Total joined with the Hanwha affiliate 174 Power Global in a development deal involving 10 utility-scale solar installations and two energy storage projects, which are already in the 174 Power Global pipeline. Together the 12 projects add up to 1.6 gigawatts in clean power capacity.

Interestingly, Total announced the deal out of its Houston office, deep in the heart of Texas oil and gas country. The Lone Star State will also be the location of five out of the 10 solar projects involving Total, which is also of interest. Despite its status as a top oil and gas producer, Texas has also become known for its leadership in the U.S. wind industry. More recently, the state has become a target for solar power developers, too. The other five solar projects are spread among Nevada, Oregon, Wyoming and Virginia, and the two storage projects will go to Nevada and Hawaii.

Total withdraws from API

Somewhat ironically, in 2019 the API moved into new, energy-efficient platinum LEED-certified headquarters at Capitol Crossing in Washington, D.C.

That didn’t seem to impress Total. On Jan. 15, the company announced that it will not renew its API membership for 2021. Total based its position on a review of key points, including support for climate science and the Paris Agreement, as well as carbon pricing, carbon capture, and policies that promote renewable energy.

The review found that API is in partial alignment with Total on some of these points, but the company cited a clear split in the area of subsidies for electric vehicles, which API opposes.

Total highlighted another deep fissure regarding the Donald Trump administration’s rollback of methane emission rules for drilling operations, which API supported. Total says it is still committed to promoting natural gas as a transitional energy source, but it opposed the rollback due to the climate impact of the new policy.

The bottom-line impact of the rollback also became apparent last fall when Total’s home country of France rejected a $7 billion liquified natural gas deal, partly due to concerns over methane emissions from U.S. gas operations. A plan to import U.S. gas into Ireland through the Port of Cork also hit a brick wall earlier this week based on the country’s opposition to fracking.

The Biden effect and the Keystone XL Pipeline

In addition to citing particular parameters outlined in its September 2020 Getting to Net Zero report, Total noted that API supported a number of candidates who opposed the Paris Agreement on climate change.

The company did not cite President Trump by name, but its meaning was clear: “As part of our Climate Ambition made public in May 2020, we are committed to ensuring, in a transparent manner, that the industry associations of which we are a member adopt positions and messages that are aligned with those of the Group in the fight against climate change,” said Total Group Chairman and CEO Patrick Pouyanné.

API has already lost the support of two other leading energy-transitioning companies, BP and Shell. When President Biden takes office, the climate action focus of the new administration may soon motivate others to shift their lobbying resources in support of renewable energy.

As one sign that the Biden administration is serious about taking bold, attention-grabbing steps on climate action, earlier this week word leaked out that President Biden plans to sign an executive order revoking the permit for the notorious Keystone XL oil pipeline on his first day in office, in addition to restoring the U.S. to the Paris Agreement.

As a cross-border project bringing tar sands oil from Canada into the U.S., Keystone XL requires a State Department permit. The permit was denied in 2015, when Biden served as vice president during the Obama administration, partly on the basis of climate action. The Keystone XL project was later revived by the Trump administration in 2017.

Biden has already won high marks among environmental advocates for his climate action and environmental justice plan. By revoking the Keystone XL permit and rejoining the Paris Agreement, Biden has also made it clear that energy companies seeking to do business in the U.S. will need to join the global decarbonization movement.

As for API, the failed Jan. 6 insurrection incited by President Trump appears to have motivated the organization to reconsider its support for legislators opposed to climate action.

Last week, Reuters reported that API member Chevron is among a growing number of U.S. firms that are reviewing or have outright halted donations to the 147 Republican members of Congress who objected to the Electoral College vote on Jan. 6. Other API members are also taking that step, in a move that may factor into API’s own decisions as well.

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