According to a study by IHS, a global consulting group, the proposed Keystone XL pipeline would have “no material impact” on greenhouse gas emissions or on the overall American carbon footprint. The study goes on to suggest that if the pipeline was not approved, the absence of oilsands crude in the Gulf of Mexico would be made up by an increase in heavy crude imported from Venezuela, which has a similar footprint to oilsands crude.
Solar’s Potential Eclipse of Oil Makes Sense
According to Royal Dutch Shell, solar could overtake oil as the world’s dominant energy source within the next 50 years. While analysts have long debated how much and how quickly solar could displace oil, this is probably the first time that a supermajor oil company has – through its own analysis – come up with quantifiable numbers. Chevron and Exxon-Mobil, two other supermajors who are increasing their renewable portfolios at exponential rates, also foresee a similar picture, although not quite as quickly.
Big Oil as Financiers of Clean Tech Ventures
In the middle of December, Royal Dutch Shell became only the latest oil ‘supermajor’ to invest in a renewable/sustainable energy startup. Their $26m investment in GlassPoint Solar Inc., a company whose technology Shell intends to use to improve wellpad heating efficiencies, follows in the footsteps of Chevron who are in a similar partnership with BrightSource Energy, another startup. Combined with the efforts of practically all oil/gas majors/supermajors (Exxon-Mobil, Statoil, Suncor, etc) to create their own clean energy portfolios – particularly wind and ethanol – Big Oil is increasingly showing up as a potential savior of the renewable technology industry.
It’s important to note this growing influence because at present, the renewable industry is at a crossroads vis-a-vis investment. Currently, the largest investors in this industry are governments – directly or through subsidies – but the global economic slowdown has affected this funding source. Bank loans, another major area (although whether this qualifies as an investment is questionable), have also seen sharp declines in North America or Europe. Big Oil, therefore, with its robust profit margins and opportunity for improvement (both from the public perception and economic efficiency standpoints) is in prime position to become the flag-bearers of renewable/clean technology.
Clean Efficiency is of the viewpoint that this is as it should be. For renewable companies to demonstrate viability to potential investors, they have to be tried and tested on large scale. This will also help drive down costs and make them more competitive with conventional technologies. Having the oil companies, their direct competitors, finance this growth is nothing short of a masterstroke and provides a win-win for both sides.