Is resistance to renewable power crumbling – well, everywhere except in the White House, that is?
Just a week after President Donald Trump pulled the United States out of the 2015 Paris Agreement – hailed around the world as a triumph of international consensus – energy consultancy, Wood Mackenzie said that the world’s largest oil producers could capitalize on the world’s ever-growing embrace of renewable power, including solar and wind power. Both of which are showing the potential for growth over the next 20 years.
The downside from a shareholder’s perspective is that renewable power – especially solar power – remains a blip on the screen regarding a big picture look at the world’s energy production.
While indicators show renewable power headed in the right direction, compared to gas and oil exploration, renewable power remains an afterthought. Solar power in the United States, for example – a place where there’s plenty of sunshine – is hardly a contender in the big scheme of things. For big oil to invest in solar power, it would be like McDonald’s investing in sweet potatoes. It’s a nice idea – but nothing to write the shareholders about, unless it comes with some good PR.
By the numbers, natural gas is now the largest energy source for electricity production in The United States, generating 34 percent of the country’s electricity or about 4 trillion kilowatt hours of electricity per year, according to the Energy Information Administration. Coal has dropped to No. 2, while still accounting for 30 percent of our energy mix, while petroleum, in contrast, produces 1 percent of the country’s electricity.
Nuclear power accounts for about 20 percent, leaving 15 percent of the country’s electricity to come from all renewable power sources combined, which includes hydro, wind, biomass, solar and geothermal power.
Hydro accounts for nearly half of all the power produced by renewable sources – 7 percent of the country’s electricity.
Wind is coming into its own and by 2018 was producing almost 6 percent of domestically produced U.S. electricity.
This leaves little room for biomass, solar and geothermal, which together accounts for about 2 percent of the country’s electricity generation. That’s less than 1 percent for each source.
Still, PR does count for something and a growing trend that shows promise that should not be ignored. Recently, Norwegian oil giant Statoil joined a growing list of petroleum companies to announce it was ready to hedge its bets with an investment in renewable power, seeking to funnel 20 percent of its annual investment dollars into renewable power by 2030.
Britain’s BP (formerly British Petroleum) also sees the writing on the wall, according to a spokesperson quoted by United Press International. “BP continues to believe that it’s possible to provide the world the energy needs and achieve economic growth, while also helping to transition the world to lower-carbon forms of energy,” said spokesperson Geoff Morell.
Environmentalists believe the switch to renewable power sources should accelerate to warp speed, the sooner, the better.
Still, if it means anything at all, it is getting harder, at least once in a while, to tell if it’s the Sierra Club being quoted or Big Oil.
But to judge the impact of the Statoil strategy: A 20 percent increase in investment in wind and solar power over the next 15 years – it is hard to turn these monstrous companies around on a dime – also represents a 20 percent decrease in investment in oil exploration. Suddenly, that 20 percent has a value of 40 percent to an environmentalist. Further, it represents a major shift to have an oil company announce it was going to cut investment in the development of its bread-and-butter product: Petroleum.
The reason: Renewable power is growing. But it also looks profitable.
How far does this go? It goes as far as Saudi Arabia.
If there were one place on the planet that is synonymous with Big Oil, it’s Saudi Arabia. But, along with the world’s 198 nations minus three – Nicaragua, Syria and The United States – that are party to the Paris accords, Saudi Arabia is moving forward with its pledge to reduce its dependence on oil, announcing major initiatives into the wind and solar power.
While its foray into renewable power will allow Saudi Arabia to put that much more of its oil into the international market, the Kingdom’s move to burning less of its oil could translate into less oil burned each year.
In April, the Saudi government moved forward on two major projects, selecting firms to bid on work for a 300-megawatt solar facility and a 400 MW wind farm.
“The market response to the kingdom’s invitation to its first renewable energy project has been overwhelmingly positive,” the country’s Oil Minister Khalid al-Falih said. The goal, the government has said, is to produce 10 percent of its electricity from renewable sources by 2023.