OPINION: Europe’s largest oil companies are eager to show investors and the general public that they are taking energy transition seriously by investing in renewable power projects and low-carbon solutions.
In quarterly reports in the past week, BP, Total, Eni and Equinor pointed to investments in industries such as wind or solar energy, biofuels and hydrogen aimed at helping the world reduce greenhouse gas emissions.
However, their efforts are being met with scepticism.
The public reject the oil players’ renewable plans as attempts to “greenwash” their main fossil fuel businesses, while investors are concerned the lower-carbon projects will not match the high rates of return they expect.
Chief executive Bob Dudley of BP, the target of numerous attacks by climate activists in the past year, admitted he feels the UK giant is being unfairly singled out and called for tougher measures to combat climate change.
“If the climate goals laid out in the Paris Agreement are to be met, we need to all come together to take action collectively to bring about a rapid transition to a low-carbon future,” Dudley said.
According to the Intergovernmental Panel on Climate Change, limiting global warming to 1.5 degrees Celsius “would require rapid, far-reaching and unprecedented changes in all aspects of society” — a mobilisation effort in line with that seen in allied nations during World War II, only on a permanent basis.
Such sweeping changes cannot be achieved by a single company or industry but require bold action from politicians and governments to revamp fiscal and regulatory frameworks to give companies, industries and individuals no choice but to reduce their carbon footprints.
New fiscal frameworks are needed if oil companies are to step up renewable investments, as they have to satisfy investors’ demands for a certain level of return.
“We have looked at a lot of (wind power) opportunities and chosen not to bid because we didn't want to compromise on the returns,” Equinor’s chief financial officer Lars Christian Bacher told analysts when quizzed on the profitability of its recently awarded Empire Wind project off New York.
The sentiment was echoed by Dudley, who told investors: “Even though we get a lot of pressure, we have also got to maintain the fact that we have to be an investible proposition.”
That large, commercial companies will not invest in low-carbon projects unless the returns are acceptable, should surprise none but the most naive climate activists.
Protestors’ energies would be better spent outside parliament buildings than outside BP’s offices.
One activist who understands this is Greta Thunberg, the 16-year-old Swede who has inspired teenagers across Europe to skip school to demonstrate against their governments' lack of action.
As Dudley, Bacher and other oil executives were busy reassuring investors that they will not lose sight of profits while pursuing their green targets, Thunberg announced she will next month attend a United Nations climate summit in New York after finding an emissions-free way of getting there — by sailboat.
Thunberg’s radical stance has resonated with tens of thousands of youngsters who will soon reach voting age in the home countries of BP, Total, Equinor and Eni.
If they keep up the pressure, the oil industry and its investors could soon start feeling the winds of change.
(This is an Upstream opinion article.)
Protestors’ energies would be much better spent outside parliament buildings than outside BP’s offices.
