No matter how you slice it, it’s clear that we are heading into a new and unprecedented era for energy. The novel coronavirus has shaken up the global energy sector in previously unimaginable ways. At the beginning of this year, who could have predicted in just four months the West Texas Intermediate crude benchmark would plunge into unprecedented negative territory, that Halliburton would leave the shale shale sector for dead, and that nations around the world would be scrambling to design stimulus packages that will define the future trajectory of the ways we power our planet?
This rare opportunity to redefine the future of the energy sector has not gone unnoticed by pundits, world leaders, or the private sector. The World Economic Forum has loudly advocated for a “new energy order” and a “great reset.” International agencies such as the United Nations, the International Energy Agency, and the European Union, are all either currently considering or actively drafting green stimulus plans. One notable exception, however, is the United States, which has been slow to follow the green stimulus trend, potentially missing out on a major economic opportunity, and earning the scorn of a number of blue chip companies, around 30 of which petitioned the U.S. Congress to reconsider and develop a stimulus package rooted in green energy.
Now that “Big Oil’s Most Profitable Business Is No Longer Oil,” leaning into the global green energy transition makes a lot of economic sense. But in the United States, it’s going to require a huge sea change and governmental mobilization as sweeping as Franklin Delano Roosevelt’s New Deal to decarbonize the domestic economy in time to prevent catastrophic climate change. But it can--and should--be done. PV Tech recently reported that there is “a raft of new studies” which has “come to underscore the business case of pushing renewables to the heart of the COVID-19 recovery, amid claims green energy plays offer a low-cost, high-return opportunity for investors.” And just last week, “physicist, engineer, researcher, inventor, serial entrepreneur, and MacArthur ‘genius’ grant winner” Saul Griffith’s organization Rewiring America “made its big debut with a jobs report showing that rapid decarbonization through electrification would create 15 million to 20 million jobs in the next decade, with 5 million permanent jobs after that.” Related: Big Oil Forced To Change Strategy After The Oil Price Crash
While it remains to be seen whether leadership in the U.S. will see the writing on the wall in terms of the economic necessity of a green energy transition, many other governments and much of the private sector isn’t wasting any time. “Global investment in offshore wind more than quadrupled in the first half of 2020. More new wind farms were approved at the height of the pandemic than during all last year,” reports Greentech Media. “Some of these offshore projects include battery storage or hydrogen. Some of them include floating solar panels. Is this what the future of projects looks like for oil and gas majors?” According to some experts, the future of energy doesn’t just lie in renewables, it lies in a "super-hybrid" approach to renewables.
Over recent years and months, global energy giants have entered a sort of race for their slice of the green hydrogen pie. And in this market, “super-hybrid” renewable production makes a lot of sense. Hydrogen holds great promise as a clean fuel source that burns leaving nothing but water vapor in its wake. But hydrogen’s carbon neutrality is in vain if that hydrogen is produced using fossil fuels, creating what’s known as “gray hydrogen.” To truly decarbonize the global economy, the entire life cycle of energy has to be assessed, and all stages of production need to be green. In short, we need to innovate. And so far, it looks like these super hybrids are winning the race to the top of a new era for oil majors.
By Haley Zaremba for Oilprice.com
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