In a stunning reversal on years of opposition to a global carbon price, the CEOs of six European oil and gas giants have said they are now ready for a price on carbon. But not so they can save the planet.

Big Oil has broken ranks with Big Coal in a bid to save its own business model, hoping that an international carbon price will phase out coal and cause more gas to be consumed.

The CEOs of the European oil giants Shell, BP, Total, Statoil, Eni and BG Group, with a combined revenue of $US1.4 trillion – although notably not the US giants Chevron and Exxon – sent letters last Friday to the head of the UN climate negotiations, Christiana Figueres, and Laurent Fabius, France’s Foreign Affairs and International Development Minister who will also lead the Paris climate talks later this year.

In the letter, also published in the Financial Times (subscription required), they called for the implementation of “widespread and effective pricing of carbon emissions” with a view to fighting climate change. It is the first time Big Oil has got together in this way, although analysts note that is a move not devoid of self interest.

“This initiative may well in time come to be seen as the first step towards a full acknowledgement on their part of the fundamental shift required in the global energy system,” Kepler Chevreux analyst Mark Lewis wrote in a report. “As such we think it is a very significant and welcome development.”

At the same time, Lewis said the principal rationale behind the move was to explain how gas can replace coal in power generation if the carbon-pricing signal is sufficient.

This, in turn, would help relieve some of the pressure the oil and gas majors have suffered in the last couple of years over the questions of stranded assets and the broader sustainability of their business models.

“Our view is that this is a very positive development as far as it goes, but on its own it will not be sufficient to address growing concerns over the long-term sustainability of the O&G majors’ business models,” Lewis writes.

In effect, Big Oil is turning on Big Coal, primarily to save its own business model. The oil majors recognise that the current trajectory of emissions is incompatible with a 2°C world, but their letter stops short of arguing for a policy framework that would restrict emissions to a trajectory that would be consistent with a 2°C world.

“The challenge is how to meet greater energy demand with less CO2. We stand ready to play our part,” the CEOs write,.

“Ahead of UN talks on climate change in Paris in December, we write to highlight the major role natural gas can play in addressing climate change. We believe the pragmatic step of implementing a widespread and effective pricing of carbon emissions is critical to realizing the full and positive impact natural gas can have.”

They argue that internal carbon pricing within corporates, or even national systems, will not be enough. They call for global linkage between carbon pricing systems.

Lewis says the fact that such an impressive group of O&G companies have come together to argue collectively and forcefully for widespread carbon pricing is an unequivocally positive development.

“We think that the fact that Europe’s largest O&G majors have grouped together in this way to argue for gas over coal (for that, in our view, is what this is ultimately all about) shows that they are genuinely concerned about the increasing intensity of the debate around carbon risk and stranded assets as far as their own activities are concerned, and are therefore now arguing for a more explicit targeting of coal in global policy making.

“We agree that pushing gas ahead of coal wherever possible in the global policy mix is a necessary step towards a low-carbon future, but we do not think that on its own it will be sufficient, especially if a 2°C trajectory is to be achieved.

“In particular … we think that the oil majors need to be much more concerned about the risks inherent in investing today in new high-cost, high-carbon projects (such as new oil-sands, ultra-deepwater, and Arctic developments).”

“In short, while we think that this is a very welcome initiative on the part of Europe’s largest O&G majors, and that the content of these letters is to be applauded as far as it goes, we would also note that the measures recommended in these letters are not designed to be consistent with a 2°C world, nor do they address what we see as the major risk to the long-term sustainability of the oil majors’ business model posed by the disruptive threat of renewable energy and storage.”