How to change the image of Energy's Black Sheep?
- Investments in R&D of green technologies by the oil and gas industry is a good start to change the negative perception compared to other industries.
- While Renewables will continue to grow rapidly, fossil fuels is expected to remain the dominant form of energy powering the global expansion for the next decades.
- With the oil industry under pressure from a severe downturn, and stagnation in R&D investment in Renewables, it may be time for these and other industries to join forces in Energy technology development.
This past weekend I saw the announcements on social media about the Oil and Gas Climate Initiative (OGCI), where major oil companies committed to an investment of $1 billion over the next ten years, to develop and accelerate the commercial deployment of innovative low emissions technologies.
The OGCI member companies, who aim to lead the industry response to climate change, include the major oil companies globally, who together represent one fifth of the world’s oil and gas production.
I found this communication somewhat inspiring since it is a step in the right direction in changing the perception of the oil and gas industry’s commitment to sustainable energy and combating climate change. Although this sounds like a large number, it did however make me wonder how it fits into the context of Research and Development (R&D) investments in the Energy industry and beyond.
Is enough being done to change the negative perception that exists about the oil and gas industry compared to the much more loved and socially accepted green industry of renewables, and electric vehicles?
One way to change this may be to join forces between the renewables, hydrocarbon and other industries in sharing ideas, and jointly committing to technology investment to change the world. Is this such a crazy idea, and are the industries too different to ever be able to collaborate, or even be associated with each other?
A good article was published in September 2014 by Ed Crooks titled “Oil majors’ R&D into conventional and renewable energy at risk - Fall in crude price puts pressure on long-term investments”, where concern was expressed that oil companies will not spend enough, either to sustain growth in their core businesses, or to open options in alternative energy sources.
At the time in 2014, the industry was however still investing an estimated $20 billion in R&D per year, although none of the oil industry companies made the global top 20 list of R&D spend. The companies with the highest spend in R&D worldwide continue to be dominated the Computing and Electronics, Healthcare, and Auto industries, who contributed over 60% of the $647 billion in global R&D spend in 2014.
By 2016, an article was published by the Ed Crooks titled “Research cutbacks hit oil groups’ ability to invest - Fears grow of inability to compete in a changing energy landscape”. It proved that the concerns were justified and R&D spend was reduced up to 40% by oil companies from 2013 to 2015. These affordability challenges have continued throughout 2016, with R&D spend perhaps at half the levels of 2014 globally. We have hopefully now reached the bottom of a protracted downturn for the industry.
On the Renewables side, a report published by the Frankfurt School UNEP Centre on Global Trends in Renewable Energy Investment 2016, found that the R&D investments in Renewable Energy by both governments and corporations, have been somewhat stagnant the past six years at around $9 billion, with an isolated spike in 2013 to $11.7 billion.
While the contribution of Renewable Energy to the world energy consumption has increased significantly over the past years, BP Energy Outlook still found “that fossil fuels [will] remain the dominant form of energy powering the global expansion: providing around 60% of the additional energy and accounting for almost 80% of total energy supplies in 2035. Renewables grow rapidly, almost quadrupling by 2035 and supplying a third of the growth in power generation.”
If many sources agree that both Fossil Fuels and Renewables will be equally important to our energy future over the coming decades, perhaps it is time for different industries to work together towards one objective: to develop technology that enables sustainable energy resources.
Instead of fueling the rivalry that exists between ‘clean’ and ‘dirty’ energy industries, we need to get the greatest young minds excited about Energy technology development for the future. By focusing on a common goal to drive collaboration, we may just be able to move the conversation from Fossil Fuels vs Renewables to Energy sustainability.