Picture: BP advertising, 2000.
Q: Are they actually committed to diversifying beyond oil and gas this time, or is this just a fresh round of greenwash?
A: All this is beyond greenwash, but far short of retreat consistent with the Paris Agreement – the oil and gas companies and are essentially taking out hedge bets: a halfway house between blind adherence to incumbent business models and the 180-degree U-turns away from fossil fuels being attempted by many big utilities.
Q: What is spurring the current round of acquisitions of renewables developers, power suppliers and EV infrastructure firms? Is it market pressures (e.g. EVs, renewable cost reductions) rather than government policies that are forcing change?
A: Its a mix of these two plus the realisation by some senior oil players that the game really is up with their business models, climate policy or no climate policy. They know that all they can do at $50 oil is lose money. For how long can they gamble that oil will stay far enough above $50 for long enough to make money? What kind of business model is that, long term? At some point a critical mass of investors is going to realise it is a house of cards, and then the punishment in the markets will really start. In the face of that growing risk, the sooner they can retreat to clean energy tech the better.
Q: How is this different from beyond petroleum and Shell renewables plans of early noughties?
A: This is utterly different. Then, most in the industry really did think they were engaged in greenwash, with technologies that grown ups would never use at scale because they would never be cheaper than the incumbency fuels. Now they, and much of the rest of the world, know different.
Q: Which of the IOCs is most serious about changing?
A: Statoil and Total. And latterly I think the sum of Shell’s moves is moving them close to these two. But while all these companies persist in the view that the future is gas, with some renewables alongside, they increase the chances that they won’t make it across the energy transition to the decarbonised future.
Q: What should we expect in 2018?
A: Plenty of drama, for sure. The first company may break with the pack, name the end years for oil and gas (2040 would do, but 2030 would be more prudent), and map an energy-transition strategy back from that. That’s what they should do. But incumbency blood runs thick in this industry.