Large oil companies turn to renewable energy – IES

Business news for Wednesday, October 28, 2020

Source: Business 24

2020-10-28

The Institute for Energy Security (IES) think tank on energy policy says that big oil companies are beginning to focus on renewables, giving them attractive investment returns.

“Today, the big oil companies are investing heavily in renewable technologies and projects because that is where the cash is going,” the IES said of emerging trends in the global oil and gas industry.

Despite the growth of renewables, the IES said that so-called ‘big oil’ – a term to classify the world’s oil giants – only spent 1 percent of its combined budget on green energy schemes in 2018.

However, he said things have changed, referring to the big six – BP, Shell, Total, Chevron, Exxon and Eni – many of which have invested billions of US dollars in clean energy projects.

IES analysis of the revised strategies of large multinationals amid COVID-19 showed that large oil companies are simply transforming themselves into energy companies, with wind and solar power taking an increasingly important role in their current strategies. , to guard against tightening investor sentiment towards carbon emissions.

“They are progressively positioning themselves for the proclaimed energy transition, essentially trying to figure out how the best source of income currently available in the world can be substituted for the benefit of their own sustainable future,” the analysts said.

The institute said the former British Petroleum Company (BP), which changed its name to Beyond Petroleum (BP) in 2001, was the first major oil company to commit significant capital of more than $ 8 billion to renewable projects, such as wind power. and solar.

“The rebrand to Beyond Petroleum was to signify BP’s shift to other sources of energy, beyond oil,” he said.

The institute said that in early August 2020, BP announced a gigantic strategy to transform the company into an integrated energy company (IEC) with plans to increase low-carbon investment to $ 5 billion (10 times) per year. , and build a 50 gigawatt (GW) renewable energy capacity by 2030, while reducing oil and gas production by 40 percent compared to 2019.

He said Royal Dutch Shell, another integrated oil company (COI), with a market capitalization of close to $ 100 billion and a dividend yield of more than 5 percent (even in the face of Covid-19), is well prepared. for the change. to renewable energy to generate significant rewards for shareholders.

The Anglo-Dutch firm’s 2016 “New Energy Strategy” covered several areas, including electricity, wind and solar power, electric vehicle (EV) charging, and initiatives to foster the adoption of fuel cell electric vehicles hydrogen. The company’s investment objective for green energy projects was established between US $ 4 billion and US $ 6 billion for the period from 2016 to the end of 2020 ”.