This special interest group is for professionals to connect and discuss all types of carbon-free power alternatives, including nuclear, renewable, tidal and more.

Post

BIG OIL TRANSFORMATION TO RENEWABLES

Gareth Foulkes-Jones's picture
Chief Strategy Officer IGR Green

A confident and highly organized professional with experience of more than 12 years mainly in Renewables & Technology sector in multinational companies worked within multicultural...

  • Member since 2020
  • 17 items added with 13,540 views

2020 proved a momentous years in the world of big oil. This is ironically despite an overall reduction of circa 6% in the overall global energy consumption. However, Oil & Gas (O&G) companies in fact increased their overall investment into various forms of clean energy by over 30% according to Capital Economics during the same time.

In concrete terms, this equated to an investment of nearly US$9 billion compared to some US$6.5 billion just one year prior.

Your access to Member Features is limited.

The sample group utilised by Capital Economics consisted of over a dozen of the world’s O&G industry leaders. It is noteworthy that of this sample group, 10 indicated their intention to achieve a net zero emission status by the end of 2020. Unfortunately, at the time of writing, the author has been unable to verify how many of the aforementioned organisations were able to fulfil this undeniably ambitious, but evidently daunting pledge.

One point is self-evident from these exciting trends however. The sheer combined economic and political might that these goliaths of industry wield, unquestionably have the means to reshape the global socio-economic landscape. Through not only making a more liveable world, but one, which if properly executed can create countless sustainable jobs, thus further contributing meaningfully to the promotion of a more economically stable and harmonious global community

Assuming such a trajectory is maintained, CMS research has projected that peak oil will occur by approximately 2030. Assuming the figures and associated trajectories stand up to scrutiny, this would surely encourage the late adopters of the O&G industry to seriously reconsider their current business models lest they wish to risk inevitable redundancy.

Furthermore, it was observed that in the aforementioned report that the Covid-19 pandemic may have in fact acted as an accelerator underscoring the inordinate urgency for major corporates to meet the ambitions goals of the Paris climate accord. This was similarly acknowledged by Mr. Bob Henderson, the general counsel to Royal Dutch Shell.

Whilst on this particular point, Royal Dutch Shell should be credited with being the single largest investor into renewables over the past fiscal year at some US$2 billion. With TotalEnergies emerging as a close second.

These trends appear also appear to fall conveniently in line with the climate legislation issued by the European Union issued in April 2020. Under this new mandate industry is obliged to reduce its greenhouse gas emissions to net-zero by 2050, with a milestone figure of 55% reduction to be enforced by 2030. Under this new energy mix, O&G consumption would need to be reduced by in excess of 30% and 25% respectively within the next decade, using their 2015 levels as the benchmark by which their performance is to be measured.

However, despite the evident improvements, CMS has cautioned that the transition is still too slow in order to adequately stem the rise in global temperatures above the 2 degrees Celsius threshold, as outlined by the Paris Climate Accord.

Whilst, it is undeniable that many O&G majors have clearly made a significant improvement, organisations such as the Climate Change Group have made calls for significantly more ambitious and radical action to be taken in order to have a reasonable hope of stemming the tide of ecological and climatic disaster.

The Climate Change Group avoided committing to a precise figure of investment needed to address this critical environmental issue. But was confident in asserting that said quantum would be several multiples of what is currently being expended as of the 2020 levels.

In conclusion, in order to better drive major O&G’s diversification strategies, a more rapid route would be to combine their considerable economic resources with the tried and tested track records of already established clean tech and renewable energy market players. BP has used this strategy with considerable success with the likes of the bp Pulse initiative by way of example.

Certainly to achieve such ambitious goals within the very stringent time lines many market participants have set themselves, the route of mergers with pre-existing market participants is clearly the most feasible and expedient solution to this globally critical challenge.

Gareth Foulkes-Jones's picture
Thank Gareth for the Post!
Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.
More posts from this member

Discussions

Spell checking: Press the CTRL or COMMAND key then click on the underlined misspelled word.
Matt Chester's picture
Matt Chester on Jun 10, 2021

Furthermore, it was observed that in the aforementioned report that the Covid-19 pandemic may have in fact acted as an accelerator underscoring the inordinate urgency for major corporates to meet the ambitions goals of the Paris climate accord

This is interesting as it compares with some of the stories we also read about the pandemic putting a pause or delay in certain larger renewable installation projects. I suspect we're still a bit away from knowing the actual net impact one way or the other

Bob Meinetz's picture
Bob Meinetz on Jun 10, 2021

"Whilst on this particular point, Royal Dutch Shell should be credited with being the single largest investor into renewables over the past fiscal year at some US$2 billion. With TotalEnergies emerging as a close second."

Gareth, $2 billion is a drop in the bucket for supermajor Shell, which has been making these investments for decades solely to greenwash its dirty fuels.

Though the company has been remarkably consistent with its mis-messaging, every once in a while some rep lets one slip:

"'We believe we can be the largest electricity power company in the world in the early 2030s. We are not interested in the power business because we like what we saw in the last 20 years; we are interested because we think we like what we see in the next 20 years,' said Maarten Wetselaar, director of Shell’s new-energies unit. 'With our brand, our global presence…and the adjacency to our gas business – we can get our hands on the cheapest gas anywhere – we should be able to win.'"

Shell Aims to be World's Largest Electricity Producer Using Natural Gas

Gareth Foulkes-Jones's picture
Gareth Foulkes-Jones on Jun 12, 2021

Hi Bob. What can I say... When you are right. Your are right! US$2 Billion is petty cash to a company of that size. Yet they are ironically still the biggest spenders of the whole lot.

Thank you for helping place this issue in context!

Mark Silverstone's picture
Mark Silverstone on Jun 11, 2021

Thanks Gareth - Indeed, as you suggest, we may well look back on 2020-2021 as the period in which momentous change was put firmly under way for much of Big Oil.  However, notwithstanding the Dutch court ruling regarding Shell, it will be difficult to resist planning to produce more oil when the price hovers around $70 or more per barrel.  As it stands now, Shell claims to have peaked carbon emissions in 2018 and peak oil in 2019.

Royal Dutch Shell also says it hit peak carbon emissions in 2018, and has a comprehensive strategy to reach net-zero emissions by 2050. In general, European energy companies are touting more robust plans to address climate change than their US counterparts.

Royal Dutch Shell on Thursday announced it hit peak oil production in 2019, and said it will divest around $4 billion a year in oil and gas while accelerating its transition to net-zero emissions energy products.

As Senator Everett Dirkson once said: "“A billion here, a billion there, and pretty soon you're talking real money."

One correction:

"It is noteworthy that of this sample group, 10 indicated their intention to achieve a net zero emission status by the end of 2020."

Did you not mean 2030?  I doubt any of the oil majors are planning on 2030, unless they are forced to do so by governments, or shareholders.  As we know, events tend to force changes to our plans, especially longer term ones.  As you point out, it is hard enough to understand the true impacts of events of the relatively recent past.

Bob Meinetz's picture
Bob Meinetz on Jun 11, 2021

What is "net-zero" but an empty excuse, Mark? Oil companies will invest in the perennially-elusive promise of carbon capture and sequestration, and stuff all the CO2 their products are emitting back in the ground...toothpaste, back into tube?

Last I heard a total of 1 million tons of CO2/yr were being sequestered. Either Shell and other majors will ramp that up by a factor of 37,000 by 2030, or Shell is lying. What are the chances?

Gareth Foulkes-Jones's picture
Gareth Foulkes-Jones on Jun 12, 2021

You know Bob. I really am intrigued by that point. I am actually going to do some further investigation and see if I can put together an article in the near future which deals more directly with this particular point.

Thank you for raising same!

Gareth Foulkes-Jones's picture
Gareth Foulkes-Jones on Jun 12, 2021

Hi Mark

Thank you for the outstanding comment. In terms of the query over 2020 as opposed to 2030, I was similarly thrown off by this initially. However, when I double checked my sources, it was indeed confirmed as being 2020. 

Personally, this particular point doesn't quite add up either from a timing perspective. I frankly this it is easy for many of them to make such.... "ambitious" claims and assertions when many still view it from far more of a PR stunt as opposed to a vehicle of truly meaningful change.

Thank you for taking the time to make this interesting comment! I really enjoyed it!

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »