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Global oil companies race to get involved in renewable energy

Global oil companies race to get involved in renewable energy

  • Aug 05, 2020

A few days ago, an industry research organization IHS Markit released a new survey study that shows that in the past 10 years, the number of renewable energy projects invested and constructed in the oil and gas industry has been increasing every year. In 2000, the oil and gas industry invested in less than 15 renewable energy projects throughout the year. This year, the number of renewable energy projects in the oil and gas industry is expected to exceed 45, an increase of 200%.

IHS Markit believes that at this stage, under the background of increasing pressure on climate and environmental protection, global oil and gas companies are facing the test of transformation. “In order to reduce carbon emissions, oil and gas companies have begun to get involved in the renewable energy business. Among them, many companies choose to install photovoltaic power generation facilities on the roofs of their factories and use zero-carbon green electricity, thereby greatly reducing the carbon emissions generated by factory operations.”

The survey shows that photovoltaic power generation, hydropower and wind power projects are the renewable energy projects with the largest number of investment and construction in the oil and gas industry. In 2018 and 2019 alone, the oil and gas industry invested in 13 and 15 renewable energy projects respectively. It is estimated that after these 28 projects are successfully completed and put into operation, they will contribute to the reduction of about 3 million tons of carbon dioxide emissions each year.

In February of this year, the International Energy Agency (IEA) pointed out in its "Oil and Gas Industry in Energy Transition" report that although traditional energy businesses such as oil and gas can bring substantial returns to oil and gas companies in the short term, if the reduction is ignored Discharge may threaten the social acceptability and long-term profitability of these oil and gas giants.

IEA believes that the participation of the oil and gas industry in investing in renewable energy projects is crucial. On the one hand, the oil and gas industry is still the cornerstone of today's energy system. In the next 20 years, oil and gas will remain one of the world's main energy sources, and this part of the demand needs to be guaranteed. On the other hand, the oil and gas industry emits relatively large amounts of greenhouse gases, and reducing their emissions is a key step to obtain environmental benefits. Therefore, in the face of emission reduction requirements, oil and gas companies should further "out of the comfort zone" and actively expand their renewable energy business.

IEA predicts that in the future, the oil and gas industry will further expand its investment in the renewable energy market. So far, oil and gas companies have invested less than 1% of total capital expenditures outside of their core businesses. In order to promote continuous progress in the global response to climate change, investment in low-carbon fuels in the global energy market will account for 15% of the total investment in fuel supply within 10 years, and oil and gas companies will further deploy renewable energy businesses.

IHS Markit believes that as the global renewable energy market continues to expand, oil and gas companies have unprecedented opportunities. According to its prediction, the renewable energy market in North America and Europe is still very large, and if the Middle East and Latin America can solve technical problems, the growth potential cannot be underestimated.

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