As Bob Dylan once said, "the times, they are a changin'." Even a year ago, it would have been tough to imagine a major U.S. oil company publicly calling upon the U.S. government to adopt a federal global-warming-emission cap. Yet that's precisely what happened yesterday, when ConocoPhillips (NYSE:COP) announced that it was joining the U.S. Climate Action Partnership, a group that I call the Jolly Green Giants, and which already includes such heavyweights as General Electric (NYSE:GE), DuPont (NYSE:DD), and Income Investor pick Duke Energy (NYSE:DUK).
Conoco claimed that it was joining the group because it now believes "that the science is quite compelling, and that climate change is certainly attributed to human activity and to the substantial use of fossil fuels." In so doing, it has joined its European counterparts BP (NYSE:BP) and Shell UK, a subsidiary of Royal Dutch Shell PLC (NYSE:RDS-B), in warming to the challenge of global climate change.
I believe the company is sincere in this belief, but I suspect that its rationale for calling for the cap is, shall we say, a little more pragmatic. As the Wall Street Journal reported earlier today, Conoco has obviously concluded that Washington is going to impose some kind of emissions cap, and that its interests are best served by having a seat at the table.
The Journal didn't note that Conoco will soon have something to bring to the negotiating table. You might recall that last month the company announced that it would be increasing its research spending on biofuels to $150 million -- about 38% of its total technology budget. It also indicated that it would make additional announcements about new projects involving ethanol, biodiesel, and other alternative energies this year. As these projects come to fruition, Conoco will want to ensure that all of these deals yield maximum benefits under any federal emissions standard.
Returning to Bob Dylan for a moment, while the times are indeed a-changin', I think it's still too early to say that Conoco has changed its color to green. But I do believe the decision to join the Climate Partnership is a smart move, and that it will benefit shareholders in the long run -- especially as the company continues to strengthen its hand in the field of alternative energy.
Interested in other energy-related related Foolishness? Check out these articles:
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Fool contributor Jack Uldrich is all in favor of caps, he just doesn't like having to wear one in April in his home state of Minnesota. He does not own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.
