- Oct 3, 2021 3:27 pm GMT
Everyone in the Big Oil club has announced various plans to cut emissions and invest in low-carbon energy over the past 18 months. Yet, there are stark differences between European super majors and US oil giants in the ways they are approaching the emissions problem.
EUROPEAN COMPANIES (Equinor BP, Shell Total and ENI)
- Have all committed to becoming Net-zero energy businesses by 2050 or sooner.
- All of them bet on investments in renewable electricity generation—along with hydrogen, carbon capture and storage, biofuels, and electric vehicle charging networks
- All of them aspired to be 'Energy companies'
AMERICAN COMPANIES (Exxonmobil Chevron)
- No net-zero commitments or targets have been announced
- U.S. supermajors Exxon and Chevron are betting on renewable fuels and CCS,
- They are steering clear of investments in solar and wind power generation.
- Shareholder returns are more important for Chevron than investing in wind and solar energy
- Returns in wind and solar are low, and US company believe they can't create value for shareholders
- Exxonmobil & Chevron are creating a CCUS industrial hub in Houston ship channel that will significantly reduce the emissions.
WHATS NOT MENTIONED IN ARTICLE
- US companies have significantly larger oil & gas reserves compared to EU, therefore flexibility to switch to renewables is less.
- US has much larger oil & gas infrastructure to develop commercial CCUS hubs; not only for capturing but storage.
- US has very large shale resources (both oil and gas) that EU does not have; especially natural gas that can help reduce emissions in Asia-Pacific region in coal-to-gas shift strategy in Asia.
WHAT IS DIFFERENT IN THIS ENERGY TRANSITION
The main differences between this 'Mother-of-All-Energy-Transition and previous ones are; previous ones were supply focused, created value for shareholders, were asset centric with no time limit. This one is demand focused, requires stakeholder capitalism, with global emission targets that are time bound. The latter point is usually ignored by many.
- All companies will choose their own transition strategy which may differ considerably in pathways and in time frame. The U.S. supermajors have not pledged any net-zero emission targets which is a concern. But they are likely to follow a different route to energy transition that may not include renewables but is expected to be heavily focused on CCUS.