Quantcast

Faced by Falling Oil Prices and Plunging Profits, Big Oil Invests in Renewables

Energy

The big oil companies’ on-off affair with renewable energies seems to be back on track.

Recent reports say Shell, the Anglo-Dutch oil conglomerate, is to invest $1.7 billion in forming a new company division aimed specifically at developing renewable energy and low carbon power. 

As a recent report pointed out, the oil companies have failed to adapt to an increasingly fragmented global energy system. Buffeted by low oil prices and tightening climate change-related regulations, they have seen a sharp drop in their financial fortunes.

This follows on the heels of an announcement by the  French oil company Total, another of the oil giants, that it is stepping up its investments in clean energy, spending more than $1 bn buying Saft, a major battery manufacturer. Total has also purchased  a majority share in SunPower,  a leading solar concern.

Even ExxonMobil, for long an organization which cast doubt on the whole science of global warming, has recently announced plans to investigate fuel cell technology in order to build carbon capture and storage facilities and eliminate greenhouse gas emissions from power installations. 

Low Investments

On the face of it, this is all good news in the battle against climate change. Emissions from fossils fuels, particularly from oil and coal burning, are a major driver of global warming.

Yet as a proportion of their overall spending, the oil giants’ investments in renewables are still very low, and are dwarfed by their spending on fossil fuel-related activities.

Also, in the past, the oil majors have made much-publicized announcements about alternative energy investments, only to later quietly withdraw their support.

As a recent report pointed out, the oil companies have failed to adapt to an increasingly fragmented global energy system. Buffeted by low oil prices and tightening climate change-related regulations, they have seen a sharp drop in their financial fortunes.

BP has been worst hit, reporting a loss of $6.5 billion in 2015 compared to a profit of $3.8bn the previous year. 

Market Share Lost

Operating in an oil market which is increasingly chaotic and unstructured is not easy. The major oil companies—once all-powerful in the energy market—have over the years lost production and market share to state-owned conglomerates, most of them gathered under the Organisation of Petroleum Exporting Countries (OPEC) umbrella.

In recent years OPEC itself has begun to fracture, and production level agreements have broken down.

Member countries Saudi Arabia and Iran are bitter enemies. Libya is in a state of near civil war. There is political chaos in Venezuela. Rebel groups are attacking oil installations in Nigeria

Meanwhile non-OPEC members—the U.S. and Canada—have been adding to a global oil glut—caused primarily by a slowing world economy—by pumping out millions of barrels of oil from shale deposits and by fracking

Experts say that in order to survive, the oil majors have to invest in new technologies, including renewables. Once again, the companies are taking tentative steps along that path, but it might be too little, too late for them to survive.

Kieran Cooke, a founding editor of Climate News Network, is a former foreign correspondent for the BBC and Financial Times. He now focuses on environmental issues

YOU MIGHT ALSO LIKE

India Records Highest Temperature Ever: 123.8 Degrees Fahrenheit

How Carbon Farming Can Reverse Climate Change

Trump Cannot Derail Paris Climate Deal

Fossil Fuel Industry-Funded Attorneys General Try to Block Exxon Climate Fraud Probe

EcoWatch Daily Newsletter

A glacier is seen in the Kenai Mountains on Sept. 6, near Primrose, Alaska. Scientists from the U.S. Geological Survey have been studying the glaciers in the area since 1966 and their studies show that the warming climate has resulted in sustained glacial mass loss as melting outpaced the accumulation of new snow and ice. Joe Raedle / Getty Images

By Mark Mancini

On Aug. 18, Iceland held a funeral for the first glacier lost to climate change. The deceased party was Okjökull, a historic body of ice that covered 14.6 square miles (38 square kilometers) in the Icelandic Highlands at the turn of the 20th century. But its glory days are long gone. In 2014, having dwindled to less than 1/15 its former size, Okjökull lost its status as an official glacier.

Read More Show Less
Members of Chicago Democratic Socialists of America table at the Logan Square Farmers Market on Aug. 18. Alex Schwartz

By Alex Schwartz

Among the many vendors at the Logan Square Farmers Market on Aug. 18 sat three young people peddling neither organic vegetables, gourmet cheese nor handmade crafts. Instead, they offered liberation from capitalism.

Read More Show Less
Sponsored
StephanieFrey / iStock / Getty Images

By Lauren Panoff, MPH, RD

Muffins are a popular, sweet treat.

Read More Show Less
Hackney primary school students went to the Town Hall on May 24 in London after school to protest about the climate emergency. Jenny Matthews / In Pictures / Getty Images

By Caroline Hickman

Eco-anxiety is likely to affect more and more people as the climate destabilizes. Already, studies have found that 45 percent of children suffer lasting depression after surviving extreme weather and natural disasters. Some of that emotional turmoil must stem from confusion — why aren't adults doing more to stop climate change?

Read More Show Less
Myrtle warbler. Gillfoto / Flickr / CC BY-SA 2.0

Bird watching in the U.S. may be a lot harder than it once was, since bird populations are dropping off in droves, according to a new study.

Read More Show Less
Sponsored
Amazon CEO Jeff Bezos announces the co-founding of The Climate Pledge at the National Press Club on Sept. 19 in Washington, DC. Paul Morigi / Getty Images for Amazon

The day before over 1,500 Amazon.com employees planned a walkout to participate in today's global climate strike, CEO Jeff Bezos unveiled a sweeping plan for the retail and media giant to be carbon neutral by 2040, 10 years ahead of the Paris agreement schedule.

Read More Show Less

By Winona LaDuke

For the past seven years, the Anishinaabe people have been facing the largest tar sands pipeline project in North America. We still are. In these dying moments of the fossil fuel industry, Water Protectors stand, prepared for yet another battle for the water, wild rice and future of all. We face Enbridge, the largest pipeline company in North America, and the third largest corporation in Canada. We face it unafraid and eyes wide open, for indeed we see the future.

Read More Show Less
The climate crisis often intensifies systems of oppression. Rieko Honma / Stone / Getty Images Plus

By Mara Dolan

We see the effects of the climate crisis all around us in hurricanes, droughts, wildfires, and rising sea levels, but our proximity to these things, and how deeply our lives are changed by them, are not the same for everyone. Frontline groups have been leading the fight for environmental and climate justice for centuries and understand the critical connections between the climate crisis and racial justice, economic justice, migrant justice, and gender justice. Our personal experiences with climate change are shaped by our experiences with race, gender, and class, as the climate crisis often intensifies these systems of oppression.

Read More Show Less