Higher taxes on fossil fuels and the climate change goals of national governments are prompting oil and gas companies to recalibrate their energy mix to focus on natural gas, biofuels, solar power and technologies for power storage and carbon capture.
BP Plc., China National Petroleum Corp., Eni S.p.A., Petróleos Mexicanos, Reliance Industries Ltd., Repsol S.A, Saudi Arabian Oil Co. Royal Dutch Shell Plc., Statoil ASA and Total SA, representing one fifth of the world’s oil and gas production, announced a $1-billion fund last November under the Oil and Gas Climate Initiative (OGCI)—to finance development of low carbon technologies. France’s Total SA announced its 25% investment in a 27-megawatt photovoltaic power plant at Nanao in Japan’s Honshu Island.
Getting into renewable energy business is a natural expansion for global oil and gas companies as hydrocarbon reserves are finite. Renewable energy business helps them to have a sustainable product mix and with installation cost on the downward curve; it makes financial sense in the medium and long term, although it appears to be in conflict with their product portfolio in the short term. They are the new backers of the clean energy industry, as the transportation sector looks set to move away from fossil fuel guzzlers to electric powered vehicles.
