Despite funneling tens of billions of dollars into their traditional oil and gas businesses, BP and its peers Royal Dutch Shell, Total, Chevron, and Saudi Aramco are increasingly investing smaller sums in low carbon technologies and clean energy startups.
Actual data shows that the venture arms of these five groups are the most active and are on track to participate in deals worth more than $1bn in 2019. Spending has risen eightfold between 2015 and 2018. Of these deals, clean technology investments represent a growing share, rising from just three in 2015 to 27 this year so far.
Traditionally tasked with seeking new technologies that help improve core operations, such as exploration, production, and refining, these venture arms are now targeting and nurturing companies working in areas such as battery development, smart-charging for electric vehicles and carbon storage. The energy majors see these investments as a way to make speculative bets, typically only worth a few million dollars, in areas that could become the industry-changing technologies in time to come.
A BP Ventures investment spans several strategic areas which are digital transformation, mobility, clean energy technologies, power and carbon management. BP’s venturing was more like leveraged research and development. Among investments this year, BP drew funds from its $200m venture pot to invest $30m in Calysta, which transforms natural gas into protein for animal feed.
Shell Ventures invested an undisclosed amount in Corvus Energy, an energy storage company and Total Ventures was part of a $60m funding round for Scoop, which helps people form carpools. Saudi Aramco invested in Daphne Technology, which utilizes Nanotechnology to develop a product that scrubs emissions from ships.
Despite these early-stage investments by energy majors, there have been huge skepticism about the willingness of big oil to provide the financial might to create the next generation of technologies to reduce the world’s greenhouse gas emissions, with public and political pressure growing about their role in enabling global warming. Climate activists and investors have criticized the sector for only plowing a fraction of its annual capital spending into low carbon research and development, in a sign of reluctance to go beyond traditional hydrocarbon businesses.
Indeed, of the 3,043 patents filed by the world’s top 25 oil and gas companies in 2018, only 8 percent were in low carbon technologies and cleaner energies, according to data from an Energy consultancy Thunder Said.
Source: Financial Times