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Withdrawal from Paris agreement increases regulatory

ambiguity,

risks

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US energy firms planning long-term investments in

technologies

aimed at fighting climate change

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US oil industry prefers engagement in global climate talks

By Valerie Volcovici and Sheila Dang

WASHINGTON, Jan 22 (Reuters) - U.S. oil and gas

producers are thrilled that President Donald Trump wants to

encourage domestic energy development but say his decision to

withdraw the United States from international climate

cooperation will not help their investment plans in the global

transition to cleaner energy.

The position reflects a rare note of discord between Trump

and Big Oil, one of his most important constituencies and long

considered the top villain behind climate change for pumping and

selling the fossil fuels driving planetary warming.

Removing the United States from the Paris climate deal for

the second time was among a flurry of first-day moves by Trump

aimed at pumping up already record high domestic energy

production, sending a signal to the rest of the world the U.S.

will no longer engage in multilateral efforts to combat climate

change.

He called the decade-old pact to limit global warming a "rip

off" that puts the U.S. at a competitive disadvantage to China.

Big U.S. oil companies, however, believe the withdrawal only

limits Washington's ability to influence an ongoing global

energy transition and exposes them to an uneven regulatory

environment, according to Reuters interviews with industry

representatives.

Marty Durbin, president of the U.S. Chamber of Commerce's

Global Energy Institute representing U.S. energy companies, said

its members would have preferred Trump keep the U.S. involved in

the pact.

"While we prefer that the U.S. government remain engaged in

the UN climate process, the private sector is committed to

developing the solutions necessary to meet the energy needs of a

growing global economy while addressing the climate challenge,"

he said.

Bethany Williams, a spokesperson for the American Petroleum

Institute - whose members include Exxon Mobil ( XOM ) and

Chevron ( CVX ) - said the group has "long supported the

ambitions of the Paris Agreement."

Exxon's CEO Darren Woods had made an early plea to the

newly-elected president at the COP29 climate summit in

Azerbaijan in November to keep the U.S. in the Paris pact,

saying the cycle of exiting and re-entering the agreement would

create long-term policy uncertainty for companies.

Exxon and other big oil companies are planning long-term

investments in technologies intended to fight climate change,

including green hydrogen and carbon capture, while also

navigating decisions about new oil and gas exploration.

Exxon and Occidental did not respond to requests for

comment. Chevron ( CVX ) and ConocoPhillips ( COP ) declined to comment.

Asked about the Paris withdrawal order, the president of the

American Exploration and Production Council (AXPC), representing

U.S. independent drillers, said it was important for U.S.

industry to be part of the global climate discussion.

"It's critical that any conversation about addressing

climate change must be global in nature, and also recognize that

America is the world leader in both energy production and

emissions reductions," said AXPC CEO Anne Bradbury.

A shift in the U.S. power industry away from coal has

contributed to a roughly 17% decline in U.S. carbon dioxide

emissions since 2007, according to government data.

Climate liability risk specialist Wynne Lawrence of

insurance law firm Clyde & Co said policy volatility around

international climate participation puts U.S. companies at risk.

"The U.S. withdrawal from the Paris Climate Agreement will

increase regulatory ambiguity, creating increased complexity

and, potentially, lead to legal disputes as companies deal with

the resulting uncertainty around transition strategies across

multinational groups and supply chains," said Lawrence.

In recent years, oil majors had begun sending executives to

annual UN climate conferences, where they touted investments in

clean energy projects and cuts in the operating emissions.

Frank Maisano, senior principal at law firm Bracewell, which

represents energy industry clients, said it "makes little sense

to give up a seat at the table."

"U.S. industries in all sectors continue to invest in new

technologies and innovations that are driving the global energy

transition in a way that reduces emissions and protects our

economy," he said. "We should be shouting that success story

from every rooftop and in every venue."