Transitioning to Renewables: What Are Big Oil Doing in the West?

(Cover Photo: Reuters)

Renewable energy includes sunlight, wind, rain, tides, geothermal heat, and the like. It is a kind of energy that is collected from renewable sources. Most renewable energy sources are sustainable in the short run or the long run. Renewable energy is becoming the main trend in the energy market under the current situation that humans have huge energy consumption. Meanwhile, as global climate issues are becoming more important, reducing carbon emissions is needed. More importantly, renewable energy is becoming more efficient and cheaper, which makes the transformation to renewable energy possible. Therefore, many countries have been increasing the use of renewable energy. Many countries around the world already have renewable energy contributing more than 20% of their total energy supply, with some generating over half their electricity from renewables.

With this global trend, what have the big oil companies done to comply with this transition? And how will they take further action to gain development?

For the US oil industry, in the past year, Exxon Mobil and Chevron Corporation announced increased targets for reducing emissions. Both companies admitted that their low-carbon energy transition strategy had excluded renewable electricity, which got warnings from investors. However, they have been proving that carbon capture, biofuels, and hydrogen fuels are feasible alternatives. ExxonMobil and Chevron Corporation are also developing carbon capture, renewable natural gas, and hydrogen. Their high-ranking company administrator explained that they had raised substantially the low carbon investment expenditure in the investment plan, however, it was still only a low proportion of its total capital expenditure. This indicated that carbon capture, renewable natural gas, and hydrogen have higher economic viability. Both of them promised that if the market develops faster than expected, the investment will be accelerated. Meanwhile, Exxon Mobil, once the world’s largest oil company, is under unprecedented pressure, as the Biden administration has issued a series of policies related to developing new energy sources and curbing fossil fuels. The board of directors of ExxonMobil was discussing whether to proceed with several major oil and gas projects as it reconsiders its investment strategy in the fast-changing energy sector. Including Exxon Mobil, many integrated oil companies need to implement low carbon projects to build the credibility of transformation and accelerate the progress of transformation.

As for Europe, on one hand, the European energy system has low self-sufficiency and is highly dependent on imports. On the other hand, the Russia-Ukraine crisis has raised the energy prices and furthermore exacerbates the inherent fragility of Europe’s energy system due to this geopolitical conflict. And this caused a sharp rise in the production costs. As a result, in order to reduce energy dependence, Europe is accelerating energy transformation. For example, its share of renewable energy in the electricity supply quickly rose to 40% in recent years. For the Europe oil industry, BP, and Shell plc are transforming their traditional energy usage into clean energy, such as sunlight and wind. The head of Royal Dutch Shell predicted that half of the company’s energy mix will be clean energy over the next decade. Its future goal is to become a truly emissions-free energy company, according to reports. Meanwhile, BP raised its target for renewable energy projects to 23 gigawatts and plans to complete the final investment decisions on 20 gigawatts of wind and solar projects by 2025 and 50 gigawatts of renewable energy investments by 2030. Total is also carrying out a series of large-scale projects, including the joint hydrogen and renewable energy development project in Iraq and Libya.

In all, transitioning into renewable energy is a global trend, different strategies are applied by different countries or companies to conform to this tendency.

Author: Amber Zang

Leave a Reply

Your email address will not be published. Required fields are marked *