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U.S. Oil Biggies Agree to Join OGCI to Curb Climate Change

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In a concerted effort to curb carbon emissions, three major U.S. oil companies namely—Exxon Mobil Corporation (XOM - Free Report) , Chevron Corporation (CVX - Free Report) and Occidental Petroleum Corporation (OXY - Free Report) —have finally joined the Oil and Gas Climate Initiative (OGCI), which was formed in 2014. Notably, these are the only American companies to join the initiative, which aims at pooling promising technologies and business models to reduce greenhouse gas emissions. ExxonMobil, Chevron and Occidental Petroleum will become official members of OGCI on Sep 24. Each of these three companies carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The initiative currently includes 10 members including supermajors like BP plc (BP - Free Report) , Royal Dutch Shell plc (RDS.A - Free Report) and TOTAL S.A. (TOT - Free Report) , Equinor, Petrobras, Repsol SA, Eni SpA, Saudi Aramco, China National Petroleum Corporation and Pemex Oil. Following the addition of the three companies, OGCI will account for 30% of global oil output. The addition of U.S. companies will also widen the global reach of OGCI, which currently includes companies from China, Europe, Latin America and the Middle East.

In a bid to shift toward a low carbon economy, OGCI has created a $1 billion fund to support clean technologies. Members of the initiative are committed to collaborative efforts to reduce methane and carbon emissions along with improving energy efficiency by providing advanced technologies and practical solutions to address the adverse impacts of climate change.  

Notably, in June 2017, American President Donald Trump pulled the country out of the landmark Paris climate change agreement, which was expected to bring an end to the fossil fuel era. Trump stated that the deal would hurt the economy, cut jobs, weaken American sovereignty, and put the country at a permanent disadvantage to other countries. While Trump’s decision was lauded by the industry advocates, it received major backlash from green crusaders.

Many companies have been accused of damaging the environment, with various states filing lawsuits against supermajors. However, many such cases have been dismissed. The plaintiffs have held fossil fuel companies accountable for rising sea levels, changing landscapes, higher global temperatures and increased risk of storms and droughts.

Oil companies, of late, have been under immense pressure from investors and green campaigners alike to mitigate climate change risks. Interestingly, the latest move marks a 180 degree turn for ExxonMobil and Chevron that have been reluctant in joining OGCI since its creation. ExxonMobil has especially been criticized many a times of publicly downplaying climate change facts stated by its own scientists. Acknowledging the goals of the Paris Climate Deal, ExxonMobil, Chevron and Occidental Petroleum will contribute $100 million each to the OGCI fund as their first endowment.

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