Is Big Oil Really Serious About Renewables?

On Chevron’s website there is a green mission statement. Alongside a video featuring some earnest-looking members of the public and Chevron employees talking about the importance of renewables, the statement says this:

“It’s time oil companies get behind the development of renewable energies.”

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image via Shell

Elsewhere on the same page the company boasts that its own investment in geothermal, biofuels and solar is to the tune of millions of dollars.

Chevron is not the only oil company making a big deal about its green portfolio. BP has been using the tagline “Beyond Petroleum” for years now.

Nor does a quick review of the numbers quite undermine both companies claims.

According to figures released recently by the American Petroleum Institute (API), a trade group, Big Oil is the biggest investor in the race to create green fuels.

The API says that in the last decade the industry has put $71 billion into zero- and low-emission and renewable energy technologies. In contrast, the U.S. government has spent about $43 billion on similar efforts over the same period.

BP, for example, spent $1.6 billion last year to construct wind farms in Pennsylvania and Kansas, joining the 11 wind power plants it has already constructed. Chevron, meanwhile, recently opened a 29-megawatt thermal solar-to-steam facility at one of its oldest oil fields in California’s San Joaquin Valley, which will increase crude oil production at the site.

However, everything is relative, and delve beneath the surface and it becomes clear that Big Oil’s relationship to renewables is far more complex than the bold taglines and mission statements might imply.

For a start, most of the $71 billion figure touted by the API went toward making oil companies’ existing fossil-fuel business more environmentally friendly. Only $9 billion went toward renewable energy investment. And even if all that money had been sunk into renewable technology it would still only be a drop in the ocean compared to what Big Oil spends on its core business.

To take the example of BP again: the $1.6 billion it spent on wind projects needs to be balanced against the $14 billion the company intends to spend on oil and gas exploration in the North Sea — only one of its many projects around the globe.

Between 2004 and 2009 Shell spent $1.7 billion on alternative projects. That amount is dwarfed by the $87 billion it spent over the same period on its oil and gas projects around the world.

When you consider that the top 15 oil and gas companies have a market capitalization of $1.9 trillion it’s clear that the $71 billion over 10 years which we started with begins to look less and less impressive.

Of course, Big Oil would argue with some justification that this also is a reflection of market realities. The vast majority of the world’s energy needs are still supplied by fossil fuels and in spite of the incredible leaps and bounds made by cleantech in the last two decades renewables remain a niche industry and, some would argue, unproven as a major power source for the future.

This view was best summed up by Rex W. Tillerson, the CEO of Exxon Mobil, who noted following the election of Barack Obama in 2008 that nothing had really changed.

“We don’t oppose alternative energy sources and the development of those,” Tillerson said at the time. “But to hang the future of the country’s energy on those alternatives alone belies reality of their size and scale.”

Paul Willis has been journalist for a decade. Starting out in Northern England, from where he hails, he worked as a reporter on regional papers before graduating to the cut-throat world of London print media. On the way he spent a year as a correspondent in East Africa, writing about election fraud, drought and an Ethiopian version of American Idol. Since moving to America three years ago he has worked as a freelancer, working for CNN.com and major newspapers in Britain, Australia and North America. He writes on subjects as diverse as travel, media ethics and human evolution. He lives in New York where, in spite of the car fumes and the sometimes eccentric driving habits of the yellow cabs, he rides his bike everywhere.