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Tim Daiss

Tim Daiss

I'm an oil markets analyst, journalist and author that has been working out of the Asia-Pacific region for 12 years. I’ve covered oil, energy markets…

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Is U.S. Oil Getting Left Behind In The Green Energy Race?

In what can only be called a rebuke over American oil and gas companies’ lack of commitment to climate change concerns, a new report released late last week by CDP, a climate-focused research provider that works with major institutional investors with some US$87 trillion in assets, reported that European companies have outspent their U.S. rivals on clean energy investments.

According to the report, top oil and gas companies jointly spent around 1 percent of their 2018 budgets on clean energy. The study comes as European oil and gas heavy weights such as Royal Dutch Shell, Total, BP and others have in recent years accelerated spending on wind and solar power as well as battery technologies. The companies’ increased green investment shows that they are seeking a larger role in global efforts to slash carbon emissions to battle global warming, the report added. However, U.S.-based oil companies are just now bowing to pressure from investors who are calling on boards to spend more investment dollars on low-carbon energy and increased disclosure on climate change.

“With less domestic pressure to diversify, U.S. companies have not embraced renewables in the same way as their European peers,” CDP said, adding that Europe’s oil majors account for around 70 percent of the sector’s renewable capacity and nearly all the capacity under development today.

ExxonMobil, the world’s largest traded publicly owned oil company, for its part, was heavily criticized over its slower move to embrace the concerns of climate change. However, the company said in August that it was looking to secure between 100 and 250 megawatts of delivered solar or wind power in Texas. According to Bloomberg, Exxon’s request for proposals closed June 8 and asked for contracts lasting 12, 15 or 20 years. It wasn’t clear what the electricity would be used for, or even if it would go to Exxon. The company declined to comment to Greentech Media but said it “continually evaluate[s] opportunities to supply power for our facilities.”

Related: Aramco CEO: Expect IPO In 2021

Also, earlier this year ExxonMobil announced a $500 million joint venture (JV) with Synthetic Genomics to genetically engineer photosynthetic algae to produce renewable crude from sunlight and carbon dioxide. U.S.-based Chevron announced earlier this year small investments in projects spanning wind power, solar, and geothermal that can power a combined 113,000 U.S. homes; leader in renewable diesel infrastructure.

Not only are oil companies bowing to pressure from board members and investors but the threat of lawsuits are mounting. Several oil companies breathed a sigh of relief in June when a federal judge dismissed New York's lawsuit against five big oil and gas companies for their role in climate change. New York had claimed that five of the biggest oil companies — BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell — should compensate the city for the cost of mitigating the effects of global warming.

European oil majors take the lead

Moreover, European companies are still outpacing their U.S. counterparts. Shell plans to spend $1-2 billion per year on clean energy technologies out of a total budget of $25 to $30 billion. Norway’s Equinor plans to spend 15-20 percent of its budget on renewables by 2030, according to the report. French oil major Total has since 2010 spent the most on low-carbon energy, around 4.3 percent of its annual budget.

Related: Could Brazil's Oil Sector Trigger An Economic Miracle?

Yesterday, France's Engie said it plans to invest 902 million over the next five years in the development of green gases as it looks to support a French government target of at least 10 percent green gas penetration by 2030. A S&P Global Platts report said the development of green gases (such as biomethane, hydrogen, power-to-gas projects and other forms of gas decarbonization) is a growing trend in the European gas industry as it looks to retain a role for gas in a decarbonized future Europe.

More is still needed

As a whole, the world’s top 24 publicly-listed companies spent only 1.3 percent of total budgets of $260 billion on low carbon energy in 2018. However, that amount is still nearly double the 0.68 percent of investments the group made between 2010 and 2017. Meanwhile, low-carbon and clean energy investments increased quickly in the aftermath of the U.N.-backed 2015 Paris Climate Agreement where governments agreed to reduce net emissions to zero by the end of the century in order to limit global warming to below 2 degrees Celsius (35.6°F).

By Tim Daiss for Oilprice.com

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  • Lee James on November 14 2018 said:
    Investors and citizens can encourage U.S. oil companies to transition to becoming "energy" companies, in the broad sense.

    Name change may be in order. Statoil of Norway has refocused and renamed itself Equinor. Shell is doing a balancing act so as to stay in step with customers on clean energy. Total is the longer lived clean energy model.

    U.S. oil companies will eventually embrace a cleaner product as it becomes clear that self-interest is safe-guarded by being around for the long haul.
  • Steve on November 15 2018 said:
    There is no such thing as clean renewable energy. These are intermittent sources that have and will drive the costs of electricity per KW up. They also have to be mined and manufactured by fossil fuels which drives there energy return on investment down where they cannot be be used in large scale due to buffering effect (back up natural gas power plants or large scale battery backup that also takes a lot of fossil fuels to mine/manufacture). A good thing American companies are not being hoodwinked by these so called clean energy sources or else we would see higher utility costs that Europeans pay! Climate alarmism is political science!

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