OPINION: Two decades ago, BP’s then-chief executive John Browne announced the UK supermajor was going “beyond petroleum,” setting aside $10 billion for renewables and establishing a BP Alternative Energy arm with its own headquarters.
Following a series of accidents and scandals, Browne was pushed out, the “beyond petroleum” initiative was scrapped, and the Alternative Energy arm was shut by his successor Tony Hayward on a cost-cutting mission.
Shell followed a similar but smaller trajectory by investing in — and then pulling out of — the world’s biggest wind farm, the London Array, while building up a solar business in the early 2000s that was then sold off.
Shell and BP are still juggling with the energy transition. Both remain under fire from environmentalists for not doing enough, or conversely, for keeping investors happy.
Would their earlier forays into low-carbon energy — if they had held their nerve — have helped now?
Some of their latest initiatives certainly would have astonished the oil and gas industry if they had been launched 20 years ago.
Charging hub, green hydrogen
Shell has just received the go ahead to convert a petrol station in west London into its first UK electric vehicle-charging hub. Electricity to power the super-fast system will come from renewable energy sources.
Two weeks ago the Anglo-Dutch supermajor started up what it claims to be Europe’s largest green hydrogen electrolyser as part of a bid to become a leading supplier of no-carbon or low-carbon hydrogen for industrial customers.
Shell is already buying into more wind farms to secure the renewable capacity for electrolysers to produce green hydrogen, while also remaining keen on “blue” hydrogen made from natural gas with carbon captured.
BP has been making similar efforts – but sometimes has bought into “green” wind assets at high prices.
Shell is also part of the UK’s Northern Endurance Partnership (NEP) with BP, Italy's Eni and others. They plan to capture carbon dioxide from east coast chemical plants and store it in old North Sea oilfields.
NEP last week unveiled a strategy of joining forces with a similar BP-led Net Zero Teesside project and an Equinor-led Zero Carbon Humber scheme to create a combined East Coast Cluster.
This conglomerate will bid for public subsidies and could be a major boost for the UK’s 10-Point Plan to capture 10 million tonnes per annum of CO2 by 2030.
A recent study by engineering consultancy Afry and Cambridge Econometrics indicated that annual funding of £1.2 billion ($1.6 billion) would be needed to execute carbon capture, utilisation and storage (CCUS) in line with the 10-Point Plan.
Meanwhile Ineos, the private company that owns the key UK North Sea Forties pipeline, has unveiled plans to capture carbon from the huge Grangemouth refinery and chemical plant in Scotland.
World falling short
The moves by the oil and gas industry come as BP’s annual Statistical Review of World Energy was published and noted that the world is still far short of the “decisive shift” needed to meet the Paris climate agreement goals.
Both BP and Shell are building up their renewable power businesses while trying to keep hydrocarbons in play by neutralising emissions through CCUS and experimenting with different kinds of hydrogen.
It’s easy to be wise in hindsight when pressures to go green were much lighter, but it’s hard not to wonder what the oil majors would have gained in experience and credibility had they stuck by their earlier convictions and investments.
Meanwhile, the fight for a big role in the future continues.
(This is an Upstream opinion article.)