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Big Oil Is Betting Billions On Clean Energy

Big Oil Is Betting Billions On Clean Energy

As reported by Bloomberg, the world’s biggest oil giants are spending billions on clean energy deals in an effort to diversify their businesses as pressure mounts and growth accelerates for green technologies.

These oil titans have more than doubled their number of acquisitions, project investments, and venture capital stakes, from 21 in 2015 to 44 last year according to research published Tuesday by Bloomberg New Energy Finance (BNEF). Since 2002, they’ve made 428 transactions and have spent $6.2 billion building positions in clean energy companies.

“This reflects their underpinning strategy to test our new ideas and businesses,” said Richard Chatterton, one of the analysts who contributed to the report. “The international oil companies are identifying opportunities and building expertise, and when a commercial opportunity becomes clear, they will invest at scale.”

While investments in green energy by big oil companies is growing, it sill represents a fraction of what is invested in crude each year, indicating that oil majors are still focused on their core business.

BNEF estimates the clean energy industry attracted nearly $290 billion in 2016. For oil companies, solar energy was the most attractive and landed the largest number of oil-backed projects.

Source: Bloomberg.

Wind had the second highest number of deals, with offshore wind investments catching up with windmills stationed on land. This is largely because offshore wind projects are some of the largest-scale and riskiest projects in the renewable industry, leading to higher profitability. In fact, Shell has a stake in the Borssele III and IV wind projects in the Dutch North Sea, and Statoil ASA developed the first floating wind farm in the world off the coast of Scotland.

The data showed that interest in biofuels has declined. The interest in biofuels peaked when oil prices were high as companies were motivated to find alternatives. After oil prices crashed in 2014, investments in biofuels declined rapidly, and there have been no deals in the sector this year.

As demand for clean energy rises, so too will big oil’s investments in the sector. Perhaps in the near future, the world’s biggest polluters will become the worlds largest clean energy powers.

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