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Is Big Oil Finally Getting Smart on Renewables?

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solar-panels

I have long been flabbergasted that more corporate in the fossil fuel industry didn’t realize there was tons of money to be made in renewables and that grabbing hold of those resources early on would mean lots of profits in the long run. Now that the price of renewables is dropping rapidly, maybe some fossil fuel companies are finally going to get smart.

So has the fossil fuel industry finally woken up to the dangers posed to their futures by a move to a low-carbon world, or is this all “greenwash” – relatively insignificant investments designed to shake off critics?

Or does it just make good business sense for Big Oil to do this at a time when oil prices are low, renewable projects look like steady long-term investments, and green businesses can be snapped up on the cheap?

Some of the moves certainly have serious amounts of cash behind them. Total of France, for instance, announced two weeks ago that it planned to spend nearly €1bn on buying 100-year-old battery manufacturer Saft. Chairman and chief executive Patrick Pouyanné said the deal would “allow us to complement our portfolio with electricity storage solutions, a key component of the future growth of renewable energy”.

There’s other good news presented in this piece as well. But of course there’s a lot of reason to be skeptical:

Even Exxon Mobil, often dismissed by climate change activists as the most conservative oil company of them all, has recently unveiled plans to investigate CCS more fully in a new partnership with a fuel cell company.

But some of the sums being invested are quite small: the Shell New Energies, for example, has a capital expenditure budget of just under 0.5% of its total. And oil companies do have form for shouting loudly about moving into renewables only to beat a hasty retreat.

BP in particular was pilloried for promising to go “beyond petroleum” – then running down its alternative energy division. Shell used to have a very big solar business, but this was scaled down several years ago.

Environmentalists are increasing the pressure on oil companies by accusing them of trying to slow the march to low-carbon energy, if not of being the climate-change deniers some were of old.

There are even claims that Big Oil has been deliberately infiltrating renewable energy lobby groups so that it can push its agenda of keeping gas, in particular, as a “transition fuel” of the future – something the companies deny.

So we will see. Someone is eventually going to make a whole lot of money in this industry. Whether it’s the current players in fossil fuels remains to be seen.

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  • Murc

    I have long been flabbergasted that more corporate in the fossil fuel industry didn’t realize there was tons of money to be made in renewables and that grabbing hold of those resources early on would mean lots of profits in the long run.

    One of the big rules of business, as I understand it, is to never compete with yourself if at all possible. That is, it is usually a bad idea to develop, maintain, and offer two different products that fulfill the same need and of which people are likely to only choose one. You vastly increase your overhead without actually increasing market share. It’s more efficient to try and simply out-compete other offerings that fall into that space rather than develop your own version. This is a concern in, for example, consumer electronics; Apple is perennially worried that its ultra lightweight laptops are competing directly with its tablets in the mobile computing marketplace, because most people will just buy one of those and not the other as their mobile option of choice.

    This is just me spitballing, but I’ve long felt that this is why traditional energy companies have dragged their heels on renewables. Renewables directly compete with their own legacy products, people are likely to only purchase one of whatever (car, power plant, etc.) and they already have established investments in extracting, maintaining, developing, and selling their traditional energy offerings. Getting into renewables would mean sinking a load of bread into learning how to do a whole new thing, a whole new thing that results in you… competing directly with yourself.

    Or that’s my theory anyway. I’m unsure enough about it to want to, say, bet money on it, but it seems colorable.

    • BigHank53

      Corporations have a terrible track record when it comes to re-invention. Railroad companies did not start building automobiles, automobile companies mostly did not even attempt entering the aviation market, few vacuum tube manufacturers made the jump to transistors, and the market for integrated circuits is dominated by companies that started off making integrated circuits.

      No idea if it’s corporate culture of the fear of endangering current products or just the not-invented-here attitude, but it’s very real.

    • AMK

      Getting into renewables would mean sinking a load of bread into learning how to do a whole new thing that results in you…competing directly with yourself.

      No. They wouldn’t need to “learn” or “do” anything…..just buy stakes in renewable and emerging technology players, virtually all of which are much smaller than even the most market-battered oil major. Sure, sometimes they might get turned down, but even the greenest of the greens at Vegantech Solar will be hard-pressed to turn down a nine-figure check.

      And it’s not like they haven’t done this before. Exxon and Shell and BP did not hesitate to buy their way into North American fracking and natural gas when it became clear they were behind the curve there. I think the resistance to doing the same thing with renewables is more cultural (“real men drill for energy!” etc..) than anything else.

      • Judas Peckerwood

        They wouldn’t need to “learn” or “do” anything…..just buy stakes in renewable and emerging technology players…”

        They fossil fuel companies have been snapping up solar and other renewable energy patents for decades. When BP’s Deepwater Horizon disaster occurred, the town I was living was in the process of installing solar-powered parking stations made by… BP Solar. Caused quite a bit of consternation in town.

  • Exxon had a renewable energy division going back to the 70s. My father who was a thermodynamics engineer for Grumman was headhunted to work for it when I was a kid and we even started looking at houses in New Jersey. Good thing he didn’t take the job at the time as Exxon seriously scaled back the division (maybe even folded it, I don’t recall) after Carter’s energy programs got slashed by Reagan.

  • I guess it’s hard to justify overthrowing third world countries for solar energy?

    • Ken

      Well, they’re often close to the equator, and it’s not like they’re using the land for anything important to me – other than chocolate and bananas, and I’m already preparing myself to give up bananas.

  • NeonTrotsky

    “Environmentalists are increasing the pressure on oil companies by accusing them of trying to slow the march to low-carbon energy, if not of being the climate-change deniers some were of old.”

    I have to say, whether or not oil companies are themselves climate deniers shouldn’t matter to me as much as whether or not they continue to fund them

    • njorl

      At the same time the fund climate denier researchers, they also plan for drilling in Greenland, where receding icepacks will tip the scales toward profitable drilling.

  • addicted44

    You know someone is unserious about renewables when they start investing money in CCS.

    CCS is a joke. Ethanol was a joke. Conservatives seem to love putting money into dead end renewable ideas. If I thought they were smarter than they are I would have thought it’s likely a deliberate evil plan to prevent money being invested in actually viable renewable energy options which have been improving exponentially. Sadly, I think it’s just a case of them not being imaginative enough to envision a world that operates differently from the one they see around them right now. So their idea of renewable involves no changes in source of production of energy, delivery of energy, or changes in consumption patterns. Their idea of renewables is limited to simply using a slightly cleaner fuel source in existing systems.

  • tsam

    I was always flabbergasted that they didn’t see developing renewals as nothing more than self preservation. They all KNOW we can’t burn fossil fuels forever. Imagine being the first energy company to develop an affordable, scalable renewable, zero carbon energy system. You’d be sitting on the top of the world.

    • addicted44

      That would require having an outlook for their companies that exceeds the 4-5 years they are CEOs. It would mean they need to care something other than pumping their stock price so they get huge bonuses, and then either quit for a better paying gig, or are fired with massive golden parachutes.

  • Bruce Vail

    Hmmm…BP had a solar panel manufacturing plant here in Maryland for a long time. They closed it to expand other plants in Mexico and Poland.

    I don’t think we want to rely on any of the oil majors to be a reliable partner in a better energy system.

  • rjayp

    Even at the current low price, the oil companies have a lot of asset “value” (reserves) in the ground. I don’t see how they can walk/run away from that.

    • Barry_D

      “Even at the current low price, the oil companies have a lot of asset “value” (reserves) in the ground. I don’t see how they can walk/run away from that.”

      In some book on global warming, somebody looked at what the proven reserves amounted to, in terms of gigatons of carbon. These are the reserves on which the stock prices of those companies are based.

      The amount was sufficient to blow through the 2 deg. C zone like a rocket.

  • Seitz

    I may be completely wrong, but Big Oil getting into renewables has a distinct “Big 3 getting into public transportation” feel. The goal probably isn’t to run a profitable renewable venture as much as it is to stifle their progress to keep us in fossil fuels for as long as possible.

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