Oil Companies must do more for Climate Change
There has been an increase in investments in Renewable Energy with the International Energy Agency (IEA) expecting almost 200GW of new clean energy generation capacity to be added by the end of the year. The IEA expects out of 115GW/200GW will come from Solar.
IEA is benching on solar and wind technologies as the cornerstones of global efforts to combat climate change, reduce air pollution and provide energy access for all.
At this point, we are even seeing more push on Oil companies to reduce Green House Gases generated by the burning of fossil fuels.
In the recent past, during the offshore Europe 2019 conference in Aberdeen, Total Chief Executive, Patrick Pouyanne made a very profound statement.
“We have a lot of stakeholders today who look at us as dinosaurs. Dinosaurs have disappeared. I don’t want Total to disappear. But the only way not to become a dinosaur is to act, to invest and progress together. We have the technologies, people and financing,” he said.
Pouyanne was emphasizing the need for the Oil and Gas industry to improve their energy efficiencies and invest in carbon capture and storage, while also developing profitable low-carbon electricity businesses.
The Oil and Gas Climate Initiative, which includes BP, Chevron, CNPC, Eni, Equinor, ExxonMobil, Occidental Petroleum, Pemex, Petrobras, Repsol, Saudi Aramco, Shell, and Total are launching a new initiative to unlock large investments in carbon capture use and storage.
The group targets to de-carbonize multiple industrial hubs situated in the UK, US, Norway, Netherlands, and China.
Norway based Equinor, is also leading the pack in making major investments in offshore wind. Equinor has outlined investments within new Energy solutions of 750 million to $1.5billion annually between 2020 and 2025.
International Oil Companies have now an opportunity to play regardless of the very competitive renewable energy space.
According to energy consulting firm, Wood Mackenzie, International Oil companies could have certain competitive advantages when it comes to succeeding in renewable energy.
- Sub-Saharan Africa has a very ripe market where large projects could be deployed and competition very much less intense
- They have the needed capital, which enables them to take on mega renewable energy projects.
- Their Research and Development capability gives them a competitive advantage in the renewable energy space.
The global renewable energy market is growing at a very exponential rate as a result of the friendly government policies and technological advance. For International Oil Companies, Solar Pv and Wind would be the most appropriate to invest in.
Oil majors have less than 2% of the ownership of global wind and solar projects. This shows a lot of needs to be done on the side of these oil companies.
Wood Mackenzie has forecasted that Solar PV and Wind Combined will account for 35% of global power capacity by 2035. They have estimated that investments in Solar and Wind will amount to 1,032 billion USD which accounts for 40% of the global upstream Oil and Gas.
Further, by 2025, 3700GW of wind and solar would have been installed worldwide, which will exceed oil and gas at a share of 35% of global power capacity.
Despite the risks involved, Oil companies need to pursue a low carbon strategy, they have a duty to familiarize themselves with the transitioning energy landscape and prepare for the energy transition towards a low carbon future.
They have no choice but to balance between their oil and gas business while also keeping in consideration of investing in alternative energy sources.
@ Bandhiga Media