Leggett: Dawn of an energy famine

This week the shape of the global energy crisis came into its sharpest focus yet. The world needs renewable energy fast, but as BP and Shell announced record profits, they also demonstrated that they are in essence retreating from renewables, perhaps with the exception of biofuels. They intend to focus their record billions on expanding production of what remains of traditional oil and gas, plus tar sands and liquid fuels from coal – ruinous in their effect on the climate.

The oil giants are recarbonising, wilfully choosing to forget both global warming imperatives and the need for renewables in national security terms. Shell pulled out of the biggest offshore UK windfarm yesterday and BP is losing interest in solar and investing in the tar sands – having once refused to do so on ethical grounds because of the greenhouse gas emitted in processing.
The European oil giants are behaving in this way in part because ExxonMobil became the most profitable of the big players while turning its back on the climate issue and pouring scorn on renewables investment. BP and Shell can no longer resist the calls of investors who demand short-term Exxon-type performance, whatever the final cost.

Others think differently. In New York, members of the Rockefeller clan – descendants of Exxon’s founder – called yesterday for radical reform of the company because they can no longer stomach its irresponsible attitude towards the climate. They want a board that will invest in renewables. Meanwhile, in London, a big asset management house took out newspaper ads spoofing a death announcement for fossil fuels and one for the birth of renewables, in which its alternative energy fund will invest.

This fund, and others like it, are investing in renewables because they enjoy some of the fastest growing markets in the world. This growth is driven in large measure by feed-in tariffs – to encourage the use of renewables. Thirty-three Labour MPs rebelled this week against the government’s energy bill because it ignores the feed-in mechanism. The UK government persists with its discredited renewables obligation, a measure that has seen the renewables mix in UK primary energy sit for several years now at just 2%.

Meanwhile, North Sea oil and gas are depleting rapidly. BP and Shell know there are no more rich oilfields to be discovered there. They are being forced to invest much further afield in the search for the huge fields they so badly need.

Guardian