For years now, we have seen a growing divide between oil supermajors in Europe and the United States, as Big Oil has split into two factions on opposite sides of the Atlantic over what to do in response to climate change and increasing global calls for decarbonization. As climate activists grow louder and policymakers ramp up the pressure on the fossil fuels sector to clean up its act, European companies have rushed to diversify their portfolios and rebrand themselves as Big Energy. Meanwhile, in the U.S. Big Oil has stood its ground and doubled down on oil and gas, instead investing in schemes such as carbon capture, carbon offsetting, and biofuels. The approach in the United States has been criticized as insufficient to meet global climate goals at best and greenwashing at worst. Environmentalists point out that strategies such as carbon capture and offsetting do not discourage the extraction of fossil fuels at a time when we should be doing everything we can to keep them in the ground. The Intergovernmental Panel on Climate Change, the leading global body reporting on the science of global warming, has said that avoiding the worst impacts of climate change will require “immediate and deep” cuts in emissions in all countries.
On the other side of the argument, Big Oil in the United States points to the massive potential economic fallout and decline in energy security and independence that may come with a swift transition to green energy. And what of the massive infrastructure costs and all of the jobs that will be displaced? As it stands, the U.S. is extremely reliant on the fossil fuels industry, and breaking that dependence will inevitably cause serious growing pains. A recent study found that “between 2015 and 2020, fossil fuels generated roughly $138 billion each year for US localities, states, tribes, and the federal government.” That’s a lot to lose.
Related: Putin: Russia Won't Shut Down Oil Wells
But while Big Oil has been dragging its feet on the renewable revolution on this side of the pond, European supermajors have seen the writing on the wall, and have made enormous advances in the field of clean energy that threatens to bury any competition from the U.S. once renewables become the norm and oil and gas slowly but surely become overshadowed and then obsolete.
Already, Europe is moving into the United States and setting up shop, in none other than Texas, the oil and gas heartland. Shell announced this week that it will begin selling electricity generated from renewable sources directly to residents and businesses in the Lone Star State. In doing so, the company will increase consumer access to the state’s already abundant supply of wind and solar power, and offer them incentives to move over to their team. “It’s a significant, serious move but also not a surprise,” Michael Webber, a professor of mechanical engineering at the University of Texas at Austin, told the New York Times. “They can see the future as well as anyone, and they are not in denial about climate change.”
Shell’s play is one of the first in what is going to be a seriously competitive market to sell clean electricity to U.S. consumers, in what is going to be an exploding market with huge growth opportunities. The supermajor will likely be directly competing with Big Tech companies like Tesla, Google, and Apple, which have been at the forefront of the charge toward clean energy development in the U.S. “The irony is it should be coming from existing utilities, but generally speaking they have been very resistant,” said Amy Myers Jaffe, managing director at the Climate Policy Lab at the Tufts Fletcher School of Law and Diplomacy.
In fact, Shell noted that one of the reasons that it is prioritizing Texas as its first market is that “more than 26 million of the state’s nearly 29 million residents were served by a single grid operated by the Electric Reliability Council of Texas [ERCOT].” In fact, more opportunities to buy more energy outside of ERCOT can’t come fast enough, as Texas is staring down the barrel of potentially massive energy shortages during summer heat waves.
Climate advocates and skeptics alike can agree on one thing: becoming competitive with Europe will be essential to the future security of the United States economy. The U.S. energy sector has already lost valuable time investing in infrastructure and technology to stay relevant in a changing global energy sector. Oil prices may be high now, but fossil fuels are a fickle friend. On a long enough timeline, clean energy investing is a no-brainer. Just ask Shell.
By Haley Zaremba for Oilprice.com
More Top Reads From Oilprice.com:
- Natural Gas Prices Tank Again As Freeport LNG Remains Shut For Almost A Month
- Noway's Offshore Oil Workers Threaten To Strike
- More Iranian Crude May Be Coming To World Markets