Are the winds changing in the energy sector?

The major oil companies aren’t exactly known for their environmental fervor. Aside from promoting the use of fossil fuels – which have had a major impact on climate change, their extraction and processing methods tend to leave the environment worse off. Let’s not even talk about oil related disasters, spills that impact pristine coastlines and marine life, fires that pump toxic fumes into the atmosphere, should we go on?

For decades the oil industry has been on one side of the fence, controlling business pipelines and sometimes whole economies with seemingly little heed for environmental concerns. According to them climate change was a myth, and progress and growth were more important.  But now it appears things are changing.

Not only has the public voice, and with it the demand, for clean energy solutions gotten bigger, Mother Nature is also adding her 2 cents worth. Extreme weather in the form of hurricanes, winter blizzards, flooding, heatwaves and wildfires are now becoming the norm, and the climate change deniers aren’t shouting quite as loudly anymore. Even more surprising is the major investments being made in renewable energy technologies by big oil. Are they finally coming to their senses or are they taking the strategy of if we can’t beat them, then lets join them?

Big oil and renewable investments

A report in The Guardian highlights that continuing to invest in fossil fuels as opposed to clean energy is perhaps not the smartest move. The article cites a $90bn loss by Black Rock – the world’s biggest investor with combined funds larger than Japan’s economy. Black Rock has continued to invest in fossil fuels passing up opportunities in clean energy. While they claim they have investment options that are socially and environmentally responsible this makes up less than 0,8% of their portfolio.  

Big oil companies are themselves starting to invest more in clean energy initiatives, Shell, BP and Total SA are said to have invested more than $1bn in clean energy initiatives such as wind and solar PV systems. While this may seem encouraging, and it is, it needs to be placed in perspective. That $1bn is still pocket change compared to the $25 billion they’re spending on fossil fuel exploration and extraction. So while it may seem like a step in the right direction, it’s not really a move that is likely to make a dent in the industry. Unless more countries adopt Norway’s approach, that is.

Norway’s Government Pension Fund Global has announced it will redirect earnings from gas and oil to green energy investments, effectively making $14billion available for renewable energy initiatives. The plan aims to divest of 134 investments in major oil companies keeping only the investments in companies that are developing green energy initiatives. The reason cited for this move is to reduce the country’s exposure to what is cited as a permanent oil price decline.

The UK Government has announced major investments in offshore wind power projects and has set ambitious targets for reducing carbon emissions and switching to renewable energy generation. This may be promising, but given the current turmoil British parliament is in over Brexit, it’s optimistic to believe that these deals will be a government priority.

Sustainability or profits?

While big oil may be making token investments in clean energy and governments are giving lip service to investing in renewable energy, what actually develops in the end will come down to priorities. Oil companies claim that there will still be a demand for fossil fuels in the foreseeable future, and you can bet that they’ll probably do everything possible to slow a switch to renewable energy on a major scale. After all the profits to be made from fossil fuels still significantly outweigh those of renewables, for now. Bottom line is that big oil has never really been interested in sustainability, so why would they start now? 

Yet from another perspective, there are other business power players recognizing the value of investing in renewables. Three of the largest global brands, Amazon, Facebook and Google have all made major investments in renewable energy initiatives, developing major solar and wind farms in order to power their very large databases. Amazon has 66 renewable energy projects worldwide generating 39 million MWh per year. It has an ambitious target to be 100% renewable. Google reportedly already achieved its 100% renewable energy target in 2018. And Facebook has recently announced a direct investment in a 379MW solar farm in Texas as the sole tax equity investor, making this Facebook’s largest renewable energy investment to date.

The general public consensus appears to be that renewable energy initiatives are the way forward, but whether the investment and infrastructure can be put in place will largely depend on public and private funding availability. Will the powers that be prioritise profits or sustainability? We know what the answer should be – sustainability. Perhaps with enough public pressure in favour of renewables they will agree that sustainability is the only smart choice to make.