The oil companies are the biggest losers in the energy transition. Every step towards cleaner energy and a stable climate is a chink in their profits. Every electric car sold is a customer who won’t ever fill up at the petrol pumps. It’s why some of them have spent decades undermining climate science, buying up and burying EV technology, and lobbying against climate action. But it’s catching up with them. They may be getting some late encouragement from the Trump administration and other petro-states, but that will only delay the inevitable. Fossil fuels are on slow but inexorable shuffle towards the exit door. The only question of any importance is whether it happens fast enough to avoid catastrophic climate change.
Oil majors face a big decision. Do they keep drilling while the drilling’s good, or do they take a longer term view and start to plan for the future? BP tried this a few years ago, briefly toying with the idea that their name could stand for ‘Beyond Petroleum’. A change of leadership swept that all away, but it was a good idea and ahead of its time. Perhaps it’s not too late for them to change their minds.
Others are certainly doing it, and there were two announcements this week that show the shift in progress. On Wednesday the Norwegian oil company StatOil formally rebranded to Equinor. Some are going to consider it greenwash until proven otherwise, but to the company it’s a deliberate change to reflect a changing business model. Not a transition into dietary supplements for horses, which is what the name Equinor suggests to me, but to a wider category of energy. “We have a responsibility to change” says their badly punctuated PR blurb. “To find a better balance. To provide the energy the world needs and effectively fight climate change. Evolving from an oil and gas company into a broad energy company.”
On the same day the Spanish company Repsol announced a plan to freeze investment in oil and gas, and hold their reserves steady at eight years’ supply. Here is major oil company telling its investors that it intends to stop growing its fossil fuel assets – and the investors don’t dump their stock in panic. That’s a fairly clear sign that the ‘carbon bubble‘ message is getting through: large reserves of fossil fuels are a liability in an age of climate change. Repsol is now actively looking for opportunities to move into renewable energy.
Shell is one to watch too. Last year their retail arm announced that they were moving into EV recharging, a bid to keep those customers at their service stations. It’s also been trying to extricate itself from the Canadian tar sands. In a global energy transition, a big stake in the tar sands is like ending a game of hearts with the Queen of Spades. In February Shell completed its buy-out of First Utility, making it an energy supplier to 825,000 British households. Shell also wants to be an energy company, not an oil company.
To see where this journey might end, we can look to the one oil company that has successfully transitioned itself out of fossil fuels altogether. That’s Danish Oil and Gas, or DONG energy. It has progressively sold off its fossil fuel interests, and invested in renewable energy, particularly wind power instead. With no oil and gas any more, it has been able to quite legitimately rename itself (although American slang being what it is, there was always a good argument for not being called DONG). They’re now called Orsted, and describe themselves as “a renewable energy company that takes tangible action to create a world that runs entirely on green energy”.
Update: Also in May 2018, BP signed an MOU with Chinese funders to develop EV charging infrastructure in China.