Friday, April 10, 2009
Deciphering Big Oil's Retreat from Renewables
Big Oil has a limited attention span for renewables.
By Peter Fairley
| Despite its "Beyond Petroleum" logo, BP sells mostly fuel. |
A New York Times article this week concludes that major oil and gas companies are, as the headline roared, "Loath to Follow Obama's Green Lead." Such stories bashing Big Oil's slim investment in renewable energy tend to fall short by failing to consider how renewables intersect with an oil company's core business, and this one is no exception.
As the Times ably demonstrates, Big Oil is freezing or cutting investment in renewable energy and doing so from a relatively small base. It notes that Shell, which has frozen spending on wind, solar, and hydrogen energy, has invested just $1.7 billion on alternative energy projects since 2004, compared to $87 billion to keep its oil and gas flowing.
That should come as little surprise, since Big Oil's insubstantial and fickle commitment to renewable energy goes back decades. Following the 1973 oil shock, for example, U.S. oil majors of the time such as Mobil and Chevron embraced photovoltaics, only to dump the projects when oil prices crashed and OPEC's power waned a decade later. British Petroleum's promise to go "Beyond Petroleum" already looked weak five years ago when it ditched production of next-generation cadmium-telluride thin-film photovoltaics--technology that Arizona-based First Solar has since ridden to the top of the world PV market.
Big Oil has a limited attention span for renewables because such firms are not, despite their marketing claims, "energy" companies. They are marketers of specific energy products--primarily petroleum refined into motor fuels and natural gas for heating. Power generation, the focus of most renewables, is but a secondary market for their natural gas.
As Christopher Flavin, president of the DC-based Worldwatch Institute, put it to me a few years ago, "There couldn't be anything more different than selling devices to make electricity on rooftops and selling gas at the pump." Flavin's comment ran in my 2005 look at GE's leap into renewables, which at the time elicited similar but unwarranted skepticism. He was among those who noted that power generation was a key market for GE's equipment, and time has proved him right as GE continues to expand investment in renewables and energy efficiency.
The exception to Big Oil's retreat from renewables--its ongoing support for biofuels developments--cements the "core markets" analysis. Biofuels are, at present, the best response to the return of battery-powered electric vehicles after a century of suffering at the hands of the internal combustion engine and Big Oil's liquid fuels. Biofuels provide a natural product for gas stations, and blending with gasoline and diesel fuels will sustain the latter for decades.
Given the practical and policy challenges arrayed against biofuels, its supporters will need all the help they can get from Big Oil. According to a report in DomesticFuel.comlast week, fuel trackers with the Department of Energy's Energy Information Agency say that the United States will likely fall short of legislated goals for cellulosic ethanol: 100 million gallons of cellulosic ethanol in 2010, rising to 4.3 billion gallons by 2015.
Massachusetts Institute of Technology
Comments
What's especially cute about their commercials is the "man on the street" stuff where some shmuck tells us what oil companies should invest in. I think the oil companies know what they should invest in - more oil. If you want off their brand of transportation energy, you gotta find an alternative that can compete in price.
kstauff
04/10/2009
Posts:96
Nuclear power -- especially thorium breeders -- is the only known technology that could realistically replace fossil fuels. So, why, you ask, isn't Big Oil running hard after nuclear? Because:
1) Big Oil has absolutely NO expertise in nuclear;
2) the general public's hysterical worry about radiation and radioactive waste coupled to their selfish NIMBY attitude that causes decades-long delays (and often outright cancellations) together result in nuclear power being nonprofitable; and
3) there is still plenty of fossil fuel around (and of course that is a proven money-making business in which Big Oil are experts).
dmm
04/10/2009
Posts:193
One benefit is that advanced LFTR versions can operate at high temperatures near 900C, allowing efficient disassociation of water into oxygen and hydrogen. The "hydrogen economy" has blessedly been exposed as a silly idea, but the hydrogen has the potential to combine with CO2 to make subsititues for gasoline and diesel oil. Nobel prize winner George Olah's book The Methanol Economy points out that methanol is an auto fuel that has been used for years in the Indy 500. Methanol (CH3OH) contains 88% of the chemical potential energy of hydrogen, and it is a lot easier to deal with. Diesel fuel can be replaced by dimethyl ether. The Aim High presentation quantifies how oil can be replaced (slowly) even for airplanes. Electric cars are a better bet when gasoline becomes too expensive.
Aim High is at
http://rethinkingnuclearpower.googlepages.com/aimhigh
I've written to BP, and they politely respond that they are investing in "hydrogen" rather than "nuclear". It's the only oil company I received any response from.
robert.hargr...
04/11/2009
Posts:27
The problem isn't generation, which wind and solar can clearly provide enough of and are within our industrial capacity to produce (needing something like the aluminum production that goes into cans). The problem is storage. If we can create batteries that store 2X more energy in the same space at say 50% the cost, transportation can be taken off of oil. If we develop flow batteries at say 25% of current costs ... along with a new, smart, electric grid, we can replace electric generation with renewables.
The reason to do so may have more to do with security and predictability than cost right now.
GaryB
04/13/2009
Posts:65
If we are to run our standard of living while emitting less than half of the CO2 and methane we current put out, oil and gas must be mostly phased out with a different kind of technology,
Oil and Big Oil are increasingly unrealistic choices for our economic and ecological future.
citygod
04/12/2009
Posts:1
Big Oil consists of some pretty well run businesses, unlike those on Wall Street and Detroit. They understand our collective appetite, even when we don't.
z0rr0
04/13/2009
Posts:54
lasertekk
04/13/2009
Posts:78