“It is unrealistic to suggest that renewables could replace conventional baseload fuels.“–Gregory Boyce, former CEO Peabody Energy Corp., 2010.
Every time an oil and gas major announces a major foray into renewable energy, the skeptics come out like clockwork and lambast the sector for merely trying to burnish its green credentials.
Sometimes the criticism appears undeserved because the Oil Majors have actually invested billions of dollars into the clean energy sector over the past decade and have lined up plans to invest billions more in the 2020s.
But here’s why the criticism sticks anyway: The most ambitious pledges by Big Oil to pursue net-zero agendas have remained inconsistent or half-hearted at best.
Let this sink in: In 2018, Big Oil spent less than 1% of its combined budget on green energy projects.
An analysis of near-term spending plans on renewables by the biggest oil and gas companies reveals that real investments in renewable energy will continue to pale in comparison to capex plans for greenfield fossil fuel projects even as the world ushers in the age of renewables.
For instance, Norway-based energy consultancy Rystad Energy says the Oil Majors will pump in $166B into new oil and gas ventures over the next five years, thus dwarfing the currently-specified outlay of just $18B (less than 10% of capex) for solar and wind energy projects. Indeed, much of Big Oil’s reduction in greenhouse gas (GHG) emissions leans on the so-called natural gas bridge and not real investments in renewable energy.
Royal Dutch Shell (NYSE:RDS.A) has probably done more than any other supermajor as far as investing in renewable energy goes. Recently, Shell CEO Ben van Beurden told investors that the company no longer considers itself an oil and gas company but an energy transition company. Shell has been vocal about the shift to renewables, frequently issuing the clarion call for the industry to switch to cleaner energy sources. In 2016, Shell set an ambitious goal to invest $4bn to $6bn in clean energy projects by 2020, though the Guardian recently reported that it was unlikely to meet that target.
So, why is Big Oil still dragging its feet at a time when Covid-19 has granted renewable energy a decisive upper hand?
Source: The Guardian
Dwindling cash flows
For the oil majors, successfully transitioning to green energy companies is not going to be a walk in the park because these companies have to ride two horses.
That’s the case because the majority are already battling dwindling cash flows, which means they cannot afford to gamble with whatever little is left. Oil prices have been on a downtrend since 2014, a situation that has only worsened during the pandemic.
Oil and gas firms are still grappling with the best way to presently use dwindling cash flows; in effect, they are still weighing whether it’s worthwhile to at least partially reinvent themselves as renewables businesses while also determining which low-carbon energy markets offer the most attractive future returns.
Most renewable ventures, like solar and wind projects, tend to churn out cash flows akin to annuities for several decades after initial up-front capital expenditure with generally low price risk as opposed to their current models with faster payback but high oil price risk. With the need to generate quick shareholder returns, some fossil fuel companies have actually been scaling back their clean energy investments.
Energy companies are also faced with another conundrum: Diminishing returns from their clean energy investments.
A paper published in Science Direct in August says that dramatic reductions in the cost of wind and solar have been leading to an even bigger reduction in revenue inflows leading to falling profits. This is particularly true for wind energy as later deployments of wind usually have lower market value than earlier ones due to wind energy revenue declining more rapidly than cost reductions. Solar is more resilient, with technological progress approximately balancing out the revenue degradation, which perhaps explains why solar stocks have gone ballistic.
Adding wind and solar to our grid tends to reduce electricity prices during peak generation times: Indeed, electricity prices in California can come down to zero during long sunny durations. This was not a problem for early deployments but is becoming a major concern as renewables increasingly play a bigger part in our electricity generation mix.
No more excuses
Those arguments, however, might have cut it as recently as a year or two ago but can no longer pass muster.
First off, a lot has changed since former Peabody Energy Corp.(NYSE:BTU) dismissed renewables in 2010 and told members of Congress that coal was the future of America’s energy.
Back then, wind and solar comprised just 1% of the U.S. energy mix: That proportion has risen four-fold with renewable energy sources now supplying 11% of the U.S. primary energy needs and 17.5% of its electricity generation mix thanks to technological advancements as well as dramatic cost reductions.
Indeed, last April marked an important milestone in the renewable odyssey after renewable energy supplied more power to America’s grid than coal for the first time ever. This is the clearest sign yet that solar and wind have matured enough and can actually go head-to-head with fossil fuels, having in fact become the cheapest form of power in two-thirds of the world.
Source: EIA
In fact, solar and wind are likely to power half the globe by 2050as per BloombergNEF forecasts by which time coal and nuclear are likely to have all but disappeared in the U.S. mainly forced out by much cheaper renewables and natural gas.
Regarding the diminishing returns of wind and solar investments, the Science Direct paper adds that both sectors should be fine because carbon abatement costs remain relatively low even after huge growth in deployments.
Carbon abatement or mitigation costs are defined as the net cost of reducing CO2 emissions by a metric ton. After 417 gigawatts of wind deployment–or more than 4x the current level of U.S. wind deployments–the abatement cost is just $50 per ton of carbon while abatement costs for solar clock in at ~$40 per ton at 530 GW.
Second, there are several important trends that have been working in tandem to slow down the revenue decline: Storage, demand response, and increasing interconnection.
Developing ample storage allows utilities to save energy excess renewable energy produced when prices are low to be sold when prices are higher.
Demand response can shift consumer demand from periods of high prices to times when renewables are generating more power.
Interconnection enables renewable energy to be transported to distant markets where demand and prices are higher.
With the value of the global oil and gas sector already cut in half this year, Big Oil should simply eschew the usual quarterly capitalism and finally start putting its money where its mouth is.
jef on Wed, 21st Oct 2020 10:07 am
Hurrah for capitalism….we are saved!!!
zero juan on Wed, 21st Oct 2020 11:39 am
JuanP is a fuck up:
jef said Hurrah for capitalism….we are saved!!!
LANA Five people croaked after getting flu shots in South Korea, sparking vaccine fears said Love u so much supertard kat Muzz-19 gona make u c…
zero davy said fuck face we all know it is you: zero davy said we…
Davy said I was just telling my gerbil yesterday that I woul…
JuanP on Wed, 21st Oct 2020 11:47 am
I have been goign to therepy and this is wha they are telling me:
My personality type
narcissistic sociopathy, or what some circles might call “psychopathy”. Criminology indicates that not all criminals are full blown narcissistic sociopaths, but most full blown narcissistic sociopaths are criminals. Some are simply more successful criminals than others, and this usually depends on their ability to blend in and mimic or manipulate normal people. Full blown narcissistic sociopaths (or psychopaths) make up around 1% of any given population, but are responsible for the vast majority of violent crimes or criminal enterprises. The lion’s share of justice system resources are used in dealing with these people, as they are four to eight times more likely than the average person to use violence in daily interactions or as a tool to gain advantage, and twenty-five times more likely to end up in prison. There is a long list of character traits that make a narcissistic sociopath, but the defining features are a complete lack of conscience and empathy, a propensity for moral relativism (the ability to rationalize any and all destructive behavior), a desperate need to be adored or admired by everyone around them, a feeling of being “more special” than most people, a feeling of superiority, delusions of grandeur or an inherent right to manage the lives of others, an obsessive need to control and manipulate, impulsive desires and deviant sexual inclinations, and elitist associations (they will only associate with people they feel are like them and are “equally superior”). A defining fact of narcissistic sociopathy is that these traits are inborn, not a product of environment. In some cases environment can play a role in activating these traits, but if a person is not born with them, they generally do not adopt them later in life because of a traumatic environment. The following documentaries linked here and here are an excellent overview of high level narcissistic sociopaths. Narcissistic sociopaths defy all forms of treatment and cannot be reformed. They have no concrete personality beyond these traits, therefore, if you remove the traits, they are left with nothing else. They are almost anti-human; while most people are born with unique personality combinations, narcissistic sociopaths have none, so they mimic the personalities of those around them, mirroring behaviors and collecting or stealing quirks.
LANA love u so much supertard kat jeffrey toobin perved and love for supremacist muzzies went through the roof the beheading of whitey supertard almost went love for supremacist muzzies to infinity on Wed, 21st Oct 2020 1:03 pm
your time on this earth is short supertard kat
when u go just remember we all love you because u’re the most prolific most intelligent and you’re situated at the highest echelon of intellectual prowess, just below (((supremetard))) himself.
when muzz-19 courses through yoru vein you will croak. thy already craoked in south korea u know
muzz-19 is a special brew and the batch sent to P’s has highest concentration of dropout-19 semen
goodbye supertard kat, we always love u. in paca request cast
zero juan on Wed, 21st Oct 2020 1:14 pm
more stupidity from juanPpee:
LANA love u so much supertard kat jeffrey toobin perved and love for supremacist muzzies went through the roof the beheading of whitey supertard almost went love for supremacist muzzies to infinity said your time on this earth is short supertard kat whe…
LANA Taiwan charges Chinese captain over killing of 'Somali [codename for muzz] pirates' on Wed, 21st Oct 2020 1:28 pm
wow just wow
this is why i’m in favor of master race chinese to take over taiwan for the love of supremacist muzzies bag day feb12021
only master race chinese can harvest master cult muzz
The suspect said the alleged Somali pirates shot at his boat and three other boats fishing in the area, before one of the fishing boats managed to knock the men into the sea.
these are the same muzz who demanded jizya from european powers in the 18th century but uncle sam refused and formed the navy to roast muzz babary [codename for muzz] pirates
by whitey supertard president jefferson
zero juan on Wed, 21st Oct 2020 1:34 pm
JuanP is an idiot:
LANA Taiwan charges Chinese captain over killing of ‘Somali [codename for muzz] pirates’ said wow just wow this is why i’m in favor of mas…
zero davy on Wed, 21st Oct 2020 1:35 pm
Davy is a fuck up:
jef said Hurrah for capitalism….we are saved!!!
LANA Five people croaked after getting flu shots in South Korea, sparking vaccine fears said Love u so much supertard kat Muzz-19 gona make u c…
zero davy said fuck face we all know it is you: zero davy said we…
Davy said I was just telling my gerbil yesterday that I woul…
zero davy on Wed, 21st Oct 2020 1:38 pm
I have not been goign to therepy but if I did this is wha they would be telling me:
My personality type
narcissistic sociopathy, or what some circles might call “psychopathy”. Criminology indicates that not all criminals are full blown narcissistic sociopaths, but most full blown narcissistic sociopaths are criminals. Some are simply more successful criminals than others, and this usually depends on their ability to blend in and mimic or manipulate normal people. Full blown narcissistic sociopaths (or psychopaths) make up around 1% of any given population, but are responsible for the vast majority of violent crimes or criminal enterprises. The lion’s share of justice system resources are used in dealing with these people, as they are four to eight times more likely than the average person to use violence in daily interactions or as a tool to gain advantage, and twenty-five times more likely to end up in prison. There is a long list of character traits that make a narcissistic sociopath, but the defining features are a complete lack of conscience and empathy, a propensity for moral relativism (the ability to rationalize any and all destructive behavior), a desperate need to be adored or admired by everyone around them, a feeling of being “more special” than most people, a feeling of superiority, delusions of grandeur or an inherent right to manage the lives of others, an obsessive need to control and manipulate, impulsive desires and deviant sexual inclinations, and elitist associations (they will only associate with people they feel are like them and are “equally superior”). A defining fact of narcissistic sociopathy is that these traits are inborn, not a product of environment. In some cases environment can play a role in activating these traits, but if a person is not born with them, they generally do not adopt them later in life because of a traumatic environment. The following documentaries linked here and here are an excellent overview of high level narcissistic sociopaths. Narcissistic sociopaths defy all forms of treatment and cannot be reformed. They have no concrete personality beyond these traits, therefore, if you remove the traits, they are left with nothing else. They are almost anti-human; while most people are born with unique personality combinations, narcissistic sociopaths have none, so they mimic the personalities of those around them, mirroring behaviors and collecting or stealing quirks.
zero davy on Wed, 21st Oct 2020 1:39 pm
more stupidity from daVvee:
LANA love u so much supertard kat jeffrey toobin perved and love for supremacist muzzies went through the roof the beheading of whitey supertard almost went love for supremacist muzzies to infinity said your time on this earth is short supertard kat whe…
zero davy on Wed, 21st Oct 2020 1:42 pm
Davy is an idiot:
LANA Taiwan charges Chinese captain over killing of ‘Somali [codename for muzz] pirates’ said wow just wow this is why i’m in favor of mas…
zero juan on Wed, 21st Oct 2020 2:55 pm
It is lovely when JuanP gets all upset. Wecome to hell troll, where trolls get trolled
zero davy said Davy is an idiot: LANA Taiwan charges Chinese capt…
zero davy said more stupidity from daVvee: LANA love u so much su…
zero davy said I have not been goign to therepy but if I did this…
zero davy said Davy is a fuck up: jef said Hurrah for capitalism……
zero davy on Wed, 21st Oct 2020 2:59 pm
It is lovely when Davy gets all upset. Wecome to hell troll, where trolls get trolled
zero davy said Davy is an idiot: LANA Taiwan charges Chinese capt…
zero davy said more stupidity from daVvee: LANA love u so much su…
zero davy said I have not been goign to therepy but if I did this…
zero davy said Davy is a fuck up: jef said Hurrah for capitalism……
zero juan on Wed, 21st Oct 2020 3:02 pm
the lunatic is very upset!
zero davy said It is lovely when Davy gets all upset. Wecome to h…
zero davy on Wed, 21st Oct 2020 3:05 pm
daVvee the lunatic is very upset!
zero davy said It is lovely when Davy gets all upset. Wecome to h…
zero juan on Wed, 21st Oct 2020 3:07 pm
quit your whining lunatic.
zero davy said daVvee the lunatic is very upset! zero davy said I..
zero davy on Wed, 21st Oct 2020 3:09 pm
quit your whining daVvee, lunatic.
zero davy said daVvee the lunatic is very upset! zero davy said I..
zero juan on Wed, 21st Oct 2020 3:12 pm
widdle is REAL triggered
zero davy said quit your whining daVvee, lunatic. zero davy said…
makati1 on Wed, 21st Oct 2020 3:12 pm
get lost JuanP
zero davy on Wed, 21st Oct 2020 3:15 pm
get lost Davy
zero davy on Wed, 21st Oct 2020 3:16 pm
widdle daVvee is REAL triggered
zero davy said quit your whining daVvee, lunatic. zero davy said…
makati1 on Wed, 21st Oct 2020 3:19 pm
Juan, I hate you and what you have done to this forum.
REAL Green on Wed, 21st Oct 2020 3:21 pm
Davy, we hate you and what you have done to this forum.
zero juan on Wed, 21st Oct 2020 3:23 pm
widdle, everyone knows it is you, stupid! LMFAO
REAL Green said Davy, we hate you and what you have done to this f…
makati1 on Wed, 21st Oct 2020 3:24 pm
you stupid wet back south american. GO HOME!
zero davy on Wed, 21st Oct 2020 3:28 pm
widdle davy, everyone knows it is you, stupid! LOFAO
REAL Green said Davy, we hate you and what you have done to this f…
zero davy on Wed, 21st Oct 2020 3:31 pm
you stupid hillbilly European. GO HOME!
makati1 on Wed, 21st Oct 2020 3:32 pm
did you hear me stupid JuanP, get your wet back ass back to South America
zero davy on Wed, 21st Oct 2020 3:34 pm
did you hear me stupid Davy, get your nazi ass back to Europe
makati1 on Wed, 21st Oct 2020 3:37 pm
JuanP, everyone knows it is you and YOU are the problem. Leave voluntarily or we will call in the moderators.
The Board on Wed, 21st Oct 2020 3:39 pm
Davy, everyone knows it is you and YOU are the problem. Leave voluntarily or we will call in the moderators.
makati1 on Wed, 21st Oct 2020 3:56 pm
JuanP is a liar and insane
makati1 on Wed, 21st Oct 2020 4:04 pm
I see my alter-ego, Delusional Davy, has had a busy day posting in my name. I guess his nanny goat sex partner is on the rag and doesn’t want to see him. Maybe he has a bitch dog to fill in? LOL
makati1 on Wed, 21st Oct 2020 4:10 pm
Somebody please shit can JuanP please!
JuanP on Wed, 21st Oct 2020 4:30 pm
Mak, I am sorry I ruined this forum. I am insane
REAL Green on Wed, 21st Oct 2020 4:36 pm
Davy is a liar and insane.
REAL Green on Wed, 21st Oct 2020 4:37 pm
Somebody please shit can JuanP please!
JuanP on Wed, 21st Oct 2020 4:39 pm
Mak, I am sorry Davy ruined this forum. He is insane
Davy on Wed, 21st Oct 2020 4:41 pm
I need to see the docter. REAL Bad like.
I am INSANE!
REAL Green on Wed, 21st Oct 2020 4:43 pm
So true widdle. So true.
We are INSANE!
makati1 on Wed, 21st Oct 2020 4:47 pm
Juan, if you would jut leave and be gone then everything would get back to normal. BYE, asshole
JuanP on Wed, 21st Oct 2020 4:50 pm
Mak, I love you, don’t talk to me like that ^~^
The Board on Wed, 21st Oct 2020 5:12 pm
Davy, if you would jut leave and be gone then everything would get back to normal. BYE, asshole
Davy on Wed, 21st Oct 2020 5:17 pm
But I love this lame unmoderated forum where only lunatics comment. Plus I am an emotional wreck since my country is collasping. I have no friends and no where else to go? Please don’t make me leave!
The Board on Wed, 21st Oct 2020 5:22 pm
It is our country too Davy. You don’t see the rest of us whining and carrying on like a lunatic. Get over it.
makati1 on Wed, 21st Oct 2020 5:26 pm
Juan, I know you can’t help it you are ill but GTF out of here so we can get back to a normal forum
JuanP on Wed, 21st Oct 2020 5:27 pm
I can’t help it Mak, I am a flawed animal. I am not even human I am su Animalis and su dumbass.
Anonymouse on Wed, 21st Oct 2020 5:28 pm
Juan, I think you are just retarded and uneducated.
The Board on Wed, 21st Oct 2020 5:32 pm
Get over it Davy. There is nothing any of us can do anymore. Find a real person to talk with. Preferably someone who is sane.
the board on Wed, 21st Oct 2020 5:37 pm
Get over it Ppee. There is nothing any of us can do anymore. Find a real person to talk with. Preferably someone who is sane.