Well, according to Reuters, BP, aka British Petroleum, or as their ads say, Beyond Petroleum, plans to double its investment in greener energy sources over the next three years, in reaction to soaring demand for low carbon energy.
Really, a big oil company going alternative? Is it possible? Is it serious or greenwashing?
“We are now at a point where we have sufficient new technologies and sound commercial opportunities within our reach to build a significant and sustainable business in alternative and renewable energy,” BP Chief Executive John Browne said.
Demand for solar systems is rising 30 percent per year, BP said. Ohhh, demand. That market driving force called `people want solar power’. That’s all well and good but in the past, some environmentalists have criticized BP’s renewables activities as a sop aimed at greening the firm’s oily image.
Not according to BP tho. “It is good business…The economy of the future will be a low carbon economy,” Vivienne Cox, chief executive of BP’s gas, power and renewables division, told reporters at a briefing.
However, the vast majority of BP’s around $15 billion annual investment budget will remain focused on oil and gas projects, which offer much higher returns.
The London-based oil giant will form a new unit called BP Alternative Energy to manage a fleet of projects that BP said had the potential to deliver sales around $6 billion a year within a decade.
An initial $1.8 billion will be invested over the next three years, spread in broadly equal proportions between solar, wind, hydrogen and combined cycle gas turbines. Cox said the larger part of this would be invested in the United States.
Browne added that within seven years the division would be expected to offer the same returns demanded of other customer-facing sections of the firm, such as fuel marketing. This is around 15 percent through the business cycle.
The exact level of investment in the new unit depends on the nature of opportunities and government support for renewables and for alternative energy technology such as carbon capture. So, in some cases they will still need our tax dollars. Well, I’d rather it go there then say Middle East oil fields.
Wind operators say they are experiencing growing problems in finding turbine sites which are suitable and unopposed by residents and environmental groups.
BP hopes to avoid this problem by erecting turbines on its own industrial sites. It has identified some U.S. sites which are in high wind zones away from residential areas.
It also hopes to build two hydrogen-fired power plants whose carbon emissions would be stored in depleted oil fields. One, at Peterhead in Scotland, will derive hydrogen from North Sea gas, although its development hinges on those government incentives. The other unidentified project would be in the United States and would burn hydrogen derived from low value refinery by-products. CO2 sequestration can also have the advantage of extending the life of oil fields, by keeping up reservoir pressure.
BP’s move is at odds with the views of some in the oil industry, including the world’s largest private oil and gas firm, Exxon Mobil, which argues renewables are a poor use of investors’ funds. And that’s an understatement. Exxon is not investing one penny in renewables and BP is, Shell is, others are, and that means there will be winners and losers in the future. You can guess my prediction and although I’m mighty suspicious of these large companies, maybe sometimes good things come in large packages. At least they’re trying.
