The oil industry is perceived by some people as a group of companies damaging the planet just for profit. The truth is that petroleum products are vital to many industries and integral to our life. At least how the system is established today.
A report by the IPCC (Intergovernmental Panel on Climate Change) estimates that we have 12 years to take action and fix climate change. The situation is frustrating for scientists who have been warning politicians and us for decades about the consequences of an increase in greenhouse gas emissions. Governments should have done more and should do more to change the current system. Oil companies contribute to the problem as burning fossil fuels like oil and natural gas release carbon dioxide, sulfur dioxide and other gases into the air.
Oil companies will not stop producing oil, that is their business; but some of them are realizing that they need to protect the natural environment from which they extract their precious products and are investing billions of dollars in socially responsible programs, as well as in research for renewable energy sources and carbon capture storage. That will not solve the problem; it is just mitigating it. However, it is important that they realize the world has changed and consumers are demanding cleaner energy sources. They are making changes.
Shell is investing up to 2 billion dollars a year in cleaner energy solutions, has opened hydrogen stations across Europe, California and Vancouver and fast charging stations for electric vehicles. The company is also helping startups focused on clean energies, is researching biofuels, has invested in wind and solar projects and has the Quest CCS facility in Canada, which is helping it achieve its climate goals. Shell also has plans to ramp up its electricity business to rival its oil, gas and chemicals business, reason why it acquired Sonnen, a clean and intelligent energy storage system company.
Total is betting hard on solar power, as it is the majority shareholder of solar panel manufacturer SunPower. The company also wants to grow its electricity business. In 2018, Total acquired 75% of the European utility Direct Energie. Total’s goal is for its low-carbon businesses to account for nearly 20% of its portfolio in the next two decades. Low-carbon businesses include downstream gas, renewables, energy storage, energy efficiency, clean fuels, carbon capture, utilization and storage technology.
Chevron joined the Oil and Gas Climate Initiative (OGCI) committing 100 million dollars to invest in technologies to reduce GHG emissions. Additionally, Chevron also launched in 2018 the Future Energy Investment Fund and is executing power purchase agreements for solar, investing in biofuels and technology to use less water in its operations. Similarly, British Petroleum is becoming a leader in solar, wind and hydrogen power programs.
Meanwhile, ExxonMobil has invested around 9 billion dollars in the development and deployment of lower emission energy solutions since 2000 and is collaborating with Stanford University on its Global Climate and Energy Project. Moreover, in May 2019, the company signed a partnership with the U.S. Department of Energy and NREL to invest up to 100 million dollars in two laboratories to develop advanced lower emission energy technologies to a commercial scale, principally biofuels and carbon capture. Last year, they announced that measures have been taken to reduce GHG emissions improving performance by 2020, including a 15% decrease in methane emissions and 25% reduction in flaring. However, their main business will continue being oil and gas as they expect demand to slightly increase.
The most interesting case is Statoil, which dropped the “oil” completely out of its name and is now called Equinor to reflect the shift it is taking towards cleaner energy. The company has wind farms off the coasts of the United Kingdom, the United States and Germany; and by looking at its website, the company is aiming to become a leader in wind power.
These are only a few examples; but given that fossil fuels account for 85% of all global subsidies receiving enormous amounts of taxpayers funding, oil companies should be putting more money and effort in reducing carbon emissions.
The next question is: what are we, the consumers, doing to mitigate climate change and help preserve the environment? In 2018, oil consumption grew by an above-average 1.4 million barrels per day or 1.5%; China and the U.S. being the major contributors accounting for more than two thirds of the increase.
Of course, there are industries that are hard to decarbonize such as aviation, maritime transport, petrochemicals like steel and cement. But even companies in those industries are making changes. One example is that all major U.S. aircraft operators and some smaller ones have voluntarily committed to a climate-mitigation plan named CORSIA MRV; and although it is voluntary now, it will become mandatory after 2027.
Automobiles represent only 20% of the world’s oil demand and the remaining is used in all the other industries mentioned where there is no alternative yet. All these industries have demand and we are the consumers. As Marteen Wetselaar, Integrated Gas and New Energies Director at Shell, said in the Energy Podcast by Shell, “the answer is not in producing less oil and gas, the answer is in consuming less oil and gas…We need to change the way people use energy and we need to help them. We have a role to play, so we need to give our costumer options.”
Sources: Forbes, The Energy Podcast, Yahoo Finance