Is the private sector fit for the energy transition?

Following our post on government initiatives of selected countries with regards to renewable energy subsidies, targets and ambitions, we have researched the private sector to obtain a more in-depth look into the big players and their plans for the renewable revolution. 

Following media, LinkedIn and press releases of those big fish one might think the move from fossil energy resources to renewable energy will be a walk in the park. But are the measures set, enough to force a clean energy transition and are we on track to complete all the ambitious goals?

Frankly, we have become a bit sceptical during the lockdown when the total amount of energy used has fallen (temporarily, at least) by about 20%, and a mass of posts and articles on all available platforms ringing in the age of renewable energy sources. However, those voices seem to have been silenced recently as the energy hunger is rising again, and renewable energy resources don’t provide enough power to cope with the demand. 

A look behind the facades by analyzing the plans and forecast of energy supply enterprises should provide some more detail on how our power will be produced in future. 

Olichange International recently released a discussion paper called ‘—Big Oil— Reality Check: Assessing Oil and Gas Company Climate Plans. They summed up their overview table with a devastating headline: ‘Failure across the Board’. 

The table below outlines all the available climate strategies and pledges of the selected corporations by comparing them against the Paris Agreement. The outcome is, frankly, pretty obvious. None of the investigated companies comes anywhere near the 1.5 Celsius target. To reach that target, they should stop new fossil exploration and phase out existing reserves, which clearly isn’t the case. 

We have taken BP, which emerges as the best performing company within the selected lot, to analyze its climate strategy. 

Scrolling through their homepage offers the impression of a company striving towards net-zero emissions with ambitious climate goals by living up to their new strategy and business model to convert from an oil company to an integrated energy company. However, as of now, most of these measures are time-intensive papers and not reality.

Admittedly, BP is investing vast amounts of capital towards the development of renewable energy assets and has set itself ambitious goals. How come, them, this still isn’t enough? 

In our opinion, the answer can also be found on their homepage: ‘Renewables are the fastest-growing energy source, contributing half of the growth in global energy…’ This statement sums up the situation we are in pretty precisely. Renewable energy is not replacing fossil energy but covering about 50% of the rising demand. 

Does this mean that if even one of the most ambitious energy companies isn’t able to budget and forecast with targets according to the Paris Agreement, we won’t get rid of dirty fuels in the foreseeable future? 

Bernard Looney, CEO of BP, states that: ‘By following this strategy, we expect bp to be a very different energy company by 2030.’

This statement is not satisfying as indeed renewables have proven to be competitive already. What’s more, as an energy company, this form of energy supply is hard to ignore in going forward. On the other hand, it may be a statement not promising too much of a change rather than telling everyone what they want to hear and failing that hussar ride. 

Anyway, we acknowledge BP to be an innovator and thought leader among all oil companies and would appreciate the same ambition of their competitors as well. 

However, having researched the companies shaping our energy future, we start to think that another massive push is needed towards reaching the Paris Agreement and maximum warming of 1.5 degrees.   

The push might come from major renewable energy companies like Siemens, Vestas, GE Energy, NextEra Energy, Inc., Suzlon, Berkshire Hathaway Energy, Avangrid Renewables, EDF Energy, NEXT Energy Capital, European Energy, Obton, Orstedt, Luxcara, and Green Investment Group, all leading the way forward.

We would love to see such companies teaming up with oil companies for know-how sharing and collaboration towards a more sustainable future.

To close this blog, we would like to cite another statement of Bernard Looney which is meant to describe BP’s situation but also outlines the global circumstances within these odd times very well:  

We are operating in an environment of greater uncertainty than at any time most will recall. But we are in action. Not just to weather the storm. But to emerge transformed and stronger for the opportunities ahead in the energy transition and our net-zero ambition.