Out With The Old, in With The ReNEWable
In recent times large oil and natural gas companies, including British Petroleum, Shell, and others, have rebranded themselves as energy corporations. This has been in response to the rising population of climate change activists, the newly elected democratic political party, and recent poor annual performance. Moving away from the well-known “oil industry,” and reinventing operations, has been a way for these companies to both improve their public image and create new revenue streams from the rising renewable energy industry.
Traditional oil companies have been categorized as some of the largest polluters of harmful emissions that contribute to a variety of environmental issues. As such, many companies have decided to integrate the concept of net-zero emissions between 2030 - 2050 in order to “avoid the worst climate impacts” from the ongoing emissions crises. These impacts include sea-level rise, poor air quality, and other negative externalities (Levin and Davis 2020). To avoid these effects, the net-zero movement aims to reduce overall emissions from fossil fuel contaminates from the environment. This is achieved when greenhouse gases (GHGs) are balanced out by carbon removal, or through removing GHGs from the atmosphere. This was first discussed in the 2016 Paris Agreement, which sought to limit the global temperature increase contributing to climate change. Aiming to maintain temperature increases below a 2 degrees Celsius rise from pre-industrial levels for this century is considered a reasonable task (NRDC 2015). In other words, The Paris Agreement focuses on combating climate change by legally binding countries, who pledged to participate, to reduce their greenhouse gas emissions. If this is not managed effectively, environmental disasters and the irreversible collapse of essential ecosystems will more than likely result from the earth’s temperature increasing 2 degrees Celsius over the next century. Analysis projects that more than 70% of the world’s coastline may suffer from catastrophes such as increased flooding, erosion, and water supply issues (Buis 2019). With the existential threat that is climate change, the next 30 years as we look to 2050 and the remainder of the century will require a level of unprecedented global cooperation to get to net zero emissions unlike anything the human race has ever seen before. Bill Gates says to get there, while possible, will be “the most amazing thing mankind has ever done” (60 Minutes 2021). With just under three decades to achieve this long-term goal, what does this mean for these traditional energy companies? In 2020, U.S oil suffered a record 8% loss in crude oil production (EIA 2021). It can be argued that this loss was due to COVID-19 effects, the Biden administration goals, the resigning of The Paris Agreement, or the movement toward renewable energy sources. Regardless of how the annual production drop occurred, the current market and societal positions made it apparent that a change was bound to occur. In order for companies working in energy markets to be competitive and sustain profits, the course towards renewable energy is necessary. While there are conversations that commonly discuss that oil companies are against moving towards renewables, as it changes major company dynamics, I believe the movement will be beneficial.
More investment into alternative and renewable energy sources will ultimately push capital and acquisitions into companies focused on meeting their goal. In 2019, new investments into wind and solar reached an all-time high of $55.5 billion dollars (Rathi and Hodges 2020). In more recent times, President Joe Biden initiated an infrastructure plan set to allocate $174 billion towards the electric vehicle (EV) market in order to shift away from gas-powered cars (Newburger 2021). Furthermore, British Petroleum has built off of the rising investment in EV production by stating that they aim to increase charging points for EVs from 7,500 today to more than 70,000 by 2030 (BP 2021). British Petroleum has also begun collaboration with the mega car company, Volkswagen, to develop fast-charging infrastructure, as slow recharging is a common downfall of EVs (BP 2021). While these reinventions will alter traditional oil company operations, the transformation will hopefully foster long-term growth for goods & services and research & development. Not only does the net-zero decision between 2030 - 2050 cause an increase in new energy market investments, but job creation within the energy sector will also rise. Existing companies will have to hire new workers with expertise in renewable energy alternatives and incorporate new training for existing staff. New companies will seek new talent in order to develop technologies that change the course of the energy industry. Analysis suggests that by 2050, more than 5.5 million new jobs could be created (Rissman 2020). While there are pros and cons towards deciding whether or not to move towards net-zero emissions, it gives the energy industry a much-needed surge of life.
Moreover, there has been controversy behind large energy companies moving towards net-zero emissions including arguments of the entire movement being a hoax and the realization that much of the world still runs on fossil fuels. Climate believers get frustrated that large oil companies are not doing more to reduce their impact and believe their operations have increased the pace towards a negatively transformed climate changed planet. While oil companies obviously contribute to pollution, an industry-wide progressive movement is needed to create a more sustainable world. With that, comes an entirely new market of renewable investments and job opportunities that will foster prosperous action towards healthier planet earth. The momentum needs to continue.
Sources
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Bp. “Volkswagen Group and Bp to Join Forces to Expand Ultra-Fast Electric Vehicle Charging across Europe.” Bp Global. Released March 15, 2021. https://www.bp.com/en/global/corporate/news-and-insights/press-releases/vw-group-and-bp-join-forces-ultra-fast-ev-charging-europe.html.
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Levin, Kelly, and Chanta Davis. 2019. “What Does ‘Net-Zero Emissions’ Mean? 6 Common Questions, Answered.” World Resources Institute, September 17, 2019. https://www.wri.org/blog/2019/09/what-does-net-zero-emissions-mean-6-common-questions-answered.
Newburger, Emma. 2021. “Biden Infrastructure Plan Spending on Climate Change, Clean Energy.” CNBC. March 31, 2021. https://www.cnbc.com/2021/03/31/biden-infrastructure-plan-spending-on-climate-change-clean-energy.html.
Rissman, Jeffrey. 2020. “Near-Zero Industrial Emissions By 2050 Would Boost U.S. GDP 3.3%, Create 5 Million Jobs.” Forbes Magazine. December 14, 2020. https://www.forbes.com/sites/energyinnovation/2020/12/14/cutting-us-industrial-emissions-to-near-zero-by-2050-would-boost-gdp-33-create-5-million-jobs/?sh=178131f3483a.
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