OPINION: Top tech stocks slid significantly in September, with the Nasdaq 100 index falling nearly 6% — and clean tech stocks taking a dive, too.
The slump did not last, and valuations have recovered most of the lost ground. But the volatility caused nervousness for oil companies that are ramping up investments in this area either by purchasing stakes, making acquisitions or initiating their own moves into green power.
BP has just acquired Blueprint Power, a US start-up that aims to turn commercial buildings into virtual power plants able to trade green energy.
Shell-backed independent power producer Silicon Ranch has bought Clearloop, a start-up that helps companies offset their carbon emissions.
Companies such as Equinor are busy putting money into “green” as well as “blue” hydrogen schemes through new ventures.
Chevron has just unveiled plans to spend $10 billion on clean tech over the next seven years, along with plans for Scope 1 and 2 greenhouse gas emissions to hit net zero by 2050.
Chevron and other major oil and services companies are working more closely with clean tech start-ups in the oil hub of Houston.
Many oil companies now have increasing personal financial incentives to make green moves, even as Brent crude prices hit $86 per barrel, with a portion of long-term incentive plans tied to greenhouse gas emissions targets.
Certainly, 2020 was a boom year for leading tech stocks, with the tech-heavy Nasdaq 100 index rising by almost 50%. Data companies were the winners from Covid-19 lockdowns, while green energy gained favour as Joe Biden became the US president, the energy transition gathered pace and COP26 climate talks came into view.
PitchBook, a data company that tracks private capital markets, estimates that more than $40 billion of venture capital money has swept into the climate tech sector from January 2020 to August this year. But there were fears last month that prices had risen too far, too fast. With inflation rising, central banks are expected to raise interest rates and choke off cheap credit — something vital for emerging companies.
This has led to speculation as to whether we are heading for a second “mini green bubble” after the first one burst in 2011 after the wider global financial crash.
Many oil companies now have increasing personal financial incentives to make green moves, even as Brent crude prices hit $86 per barrel.
There are good reasons to think it will be different this time, not least due to public pressure on policymakers to act far more decisively on climate heating. Also, falling costs for wind and solar projects make them much more competitive with fossil fuels, while the electric car revolution has turned from niche to mainstream.
Stock market-listed companies that are in a good position to take advantage of the energy transition away from fossil fuels are now collectively worth $6 trillion, claims Bank of America, which plans to deploy $1 trillion itself in the area of sustainable business.
In comparison, fossil fuel companies’ moves into green power have been high-profile but tentative.
With record greenhouse gas levels and governments under serious pressure to act at COP26, oil companies look more likely to miss out, rather than lose out, on clean tech.
(This is an Upstream opinion article)