Big Oil investments in alternative fuels and energies – how serious are they?

In recent years, major oil companies (also known as Big Oil) have been investing in alternative fuels and energies to meet government and corporate mandates and through their own speculation about the future of oil supply and changing public attitudes. There’s been a mixed bag of perspectives shared by leaders in sustainability and cleantech on the role that Big Oil will play in the future; some would rather see these companies completely go away soon while other analysts suggest supporting oil industry investments in alternative energies and carbon mitigation. Here’s the latest from Lux Research and other analysts……….

Lux Research has seen enough movement in the alternative fuels industry to release a report analyzing how oil companies have been financing its commercialization. The analyst firm explored its database of over 1,000 deals and partnership engagements between 2000 and September, 2014. Methods analyzed included private placement, equity stake, JVs, mergers and acquisitions, other than general partnerships. The seven most active oil major companies in its database are Shell, BP, Total, Valero, Chevron, Petrobras, and Reliance.

Long before its Gulf of Mexico oil spill, BP has been active in alternative energy invesments; Lux Research says the oil giant leads its industry in investment frequency in a variety of alternative fuels and energies. BP has had a strong focus on the crop development by transgenics and breeding, with repeated investments made to Chromatin and Mendel Biotechnology. It also continues investing in biomass to sugar technology including cellulosic biomass.

Shell forecasts that energy demand will double in the world by 2050 and is now working with partners to ensure that it can survive through the next century; carbon emission mitigation is another force for change Shell is monitoring. Meeting that demand will require being open to new energy resources. Shell CEO Ben van Beurden talked about the urgency of mitigating carbon emissions and its impact on climate change in a recent speech at Columbia University. He also talked about supporting renewables and energy efficiency.

Shell has formed partnerships and joint ventures (JVs) with Codexis , Cosan, and Novozymes to support growth in cellulosic ethanol. Shell has invested in Raizen, its ethanol JV with Cosan to create what it calls the largest sugar and ethanol company in the world. It also partnered with Virent on the biomass catalytic conversion to produce renewable gasoline, and Cellana on algae biofuel.

However, don’t forget to keep it all in perspective. “If Shell is serious about investing in a clean energy future they must stop actively undermining our climate and clean energy laws,” said Merrian Borgeson, senior scientist at the Natural Resources Defense Council (NRDC). The Union of Concerned Scientists (UCS) also launched a campaign pressuring Shell to join tech firms in dropping support for the American Legislative Exchange Council, a group that has modeled legislation to oppose climate action and repeal incentives for renewable energy. Shell came under fire from environmentalists in 2009 for selling off its wind and solar projects to focus on biofuels and carbon capture and storage.

Oil companies do work hard at keeping their investment portfolios profitable – that might mean leaving an energy sector behind. In September, Chevron Corp. finalized the sale of its renewable energy subsidiary OpTerra Energy Services. The oil giant also sold the energy efficiency and renewable energy arm of Chevron Energy Solutions, a division of Chevron USA, and pulled back funding for biofuel projects. ExxonMobil Corp. has also dropped funding for biofuels projects; natural gas has paid off better for the oil giant. BP divested its wind farm division in the United States last year to focus on its high-yield oil and gas projects.

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