Meet Cleantech's Biggest Investors: Big Oil
September 13, 2018 (Investorideas.com Newswire) A growing shift in priorities has led to the top oil and gas corporations investing in cleantech in unprecedented numbers over the past few years, to the surprise of literally everyone.
What Is cleantech?
Cleantech, sometimes referred to as clean technology or greentech, is an umbrella term encompassing the fields of alternative energy (such as solar and wind power), Alternative materials (materials with the potential to replace petrochemicals), and environmental impact (technological concepts such as carbon capture and home and vehicle efficiency).
In 2015, the number of venture capital stakes, project investments, and acquisitions by oil majors totaled 21. Just one year later, that number more than doubled, jumping to 44, according to Bloomberg New Life Energy Finance.
Integrated Oil Companies, defined by CB Insights as international and state owned companies with operations across the oil and gas value chain, are incentivized for investing in enabling the replacement of hydrocarbon energy to lower operating costs of providing fuel.
Chevron and BP are the current investment leaders in the oil and gas (O&G) industry. CB Insights analyzed data from the investment activity of the largest companies in the O&G value chain.
This move toward renewable energy investment comes as quite a shock, considering that 78% of the United States total carbon emissions currently come from industrial sectors, transportation, and electricity generation. As we know, investments in renewable energy saw a steady increase in the first decade of the new millennium, but tanked following the implosion of Solyndra, in 2011. The PR nightmares they faced after a few widely publicized oil spills led both private and public investors to expel holdings in the oil and gas industry. In effort to reboot their image, interest in cleantech has been rapidly building. Mirroring this increase in investment, we've already seen a large increase in renewable energy jobs, with solar and wind accounting for nearly half of all jobs in the energy sector in 2016.
Though this change has been unexpected, the money being spent on clean energy is still a drop in the bucket when compared to the sums invested in crude oil each year. While oil majors are far from done dealing with their tried-and true cash cow, the effort to explore more planet-friendly sources of energy is a big step in the right direction. How big? Bloomberg New Energy Finance estimated that in 2016, nearly $290 billion was spent on clean energy. Exxon Mobil alone is currently spending $1 billion per year on researching low carbon technologies. One small step for Big Oil, one giant leap for the future of humanity.
Which cleantech Concepts are Getting the Most Funding?
Solar energy leads the herd in terms of projects funded by oil companies. Wind came up second at roughly half the amount of funded projects, with a marked rise in offshore wind investments. Offshore wind investment projects are the riskiest and largest scale in the cleantech field, which makes their potential for profitability soar. The world's first floating wind farm was developed by ASA off the coast of Scotland. Biofuel seems to have peaked when oil prices went sky-high in the years following 2010, and have since tanked after the 2014 oil price crash.
Which Big Oil Companies are Leading Clean Energy Funding?
Total SA is currently dominating when it comes to the number of clean energy acquisitions and joint ventures, due in large part to having purchased a majority stake in SunPower Corp. in 2011 and Saft Group, a battery company, in 2016.
What Types of Projects are Being Funded?
Producing 200 million gallons of low-carbon ethanol annually, Oil giant BP aims at using renewable liquids to leverage its global fuels infrastructure. Some of its factories in Brazil have been able to power themselves by burning agricultural waste.
DuPont has joined forces with BP, forming a venture called Butamax. They plan to genetically engineer microbes to make butanol, an alcohol that can blend with gasoline, similar to ethanol blends in the US. The total market opportunity in the US hovers around 20 billion gallons.
Exxon Mobil has recently displayed a heavy focus on synthetic biology, aiming at genetically engineering algae on large outdoor farms, with the hope of being able to use industrial CO2 and sunlight to produce renewable crude. This project has the possibility of becoming very large scale. The oil giant is also working with Renewable Energy Group, a biodiesel producer, to genetically engineer microbes that will convert waste biomass into biodiesel.
What's Next for cleantech?
Will the trend of big oil and gas companies investing in cleantech continue, or will regulations under the current administration de-incentivize such investment? Either way, we see this recent trend as a positive development: carbon reduction targets look to be within reach and the future seems a bit greener.
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