Renewable energy is expected to account for 90% of new power generation post pandemic and by 2040 it is projected that it will provide 14% of the world’s primary energy. Oil majors are facing the potential prospect of contraction as the industry declines and peak demands for oil begin to slow down.


Source: https://www.carbonbrief.org/analysis-world-has-already-passed-peak-oil-bp-figures-reveal


With this in mind, the oil industry is being challenged to reinvent itself by turning to renewable energy projects and the rising cost of hydrocarbon extraction has created an incentive for companies to switch towards more affordable renewable energy sources. Companies are faced with the question of how best to reinvent their businesses for the benefit of their own sustainable future. Furthermore, with the growing concerns regarding climate change, this may provide a further incentive for companies to alter their strategies.


The current business models of major oil companies and renewable companies are vastly different. The bulk of renewable energy costs come from building the technology in the first place, for example a new natural gas plant costs around $1,000/kW, the average cost to install a solar system ranges from $2,000/kW to almost $3,700 for residential systems and wind power costs around $1,200 to $1,700/kW to install. However, new research shows that, in the long-run, renewable energy is more cost effective than non-renewable energy. Company Lazard considered costs over the lifespan of energy projects and found wind and utility-scale solar could be the least expensive energy generating sources.


Pathways of the European oil majors


Many oil companies have pledged to reach a net-zero emissions target and whilst this a common goal, many companies have taken a different approach to achieving it as demonstrated by the likes of TotalEnergies, Shell and BP.


Total has made plans to become a global leader in the field of renewables by 2030 and has invested $8 billion towards this since 2016. The company has set a specific target of reaching 35 GW of renewable capacity by 2025 with an ambition to increase this to 100GW by 2030.


Shell, on the other hand, has not established any explicit investment or capacity targets but has continued to follow a strategy of investment in solar, offshore wind and onshore wind power. The company’s focus is on collaboration with customers to reach net-zero through growth in areas such as biofuel charging for electric vehicles, carbon capture and storage and fuels for business customers.

BP’s approach is perhaps the most unique in terms of its coherency with targets being in place for the short-term, medium-term and long term with the aim of achieving 20 GW of renewable energy capacity by 2025 and 50GW by 2030.

How are US companies moving away from fossil fuels?

The United States in particular is reported to be ‘struggling to move away from fossil fuels’ along with China, as evidenced on the Green Future Index. Researchers have stated that the US is responsible for 15% of global emissions although the Biden administration has pledged to make the US a 100% clean energy economy with net zero emissions by 2050.

“The U.S. lack of political leadership on climate and energy for the past four years has been very problematic,” according to Kurt Waltzer, Managing Director, Clean Air Task Force.

Comparing the US to other countries, the Middle East has continued to advance its climate plans. In Morocco, for example, over 40% of the country’s electricity is generated by renewable energy.


All energy sources have an impact on our environment although fossil fuels do substantially more harm compared to renewable energy sources. These fossil fuels harm the air and water, damage wildlife and natural habitats and increase global warming emissions. The goal for the world post pandemic is to look for ways to implement renewables further and to substantially decrease the use of fossil fuels.

The exact type of environmental impact that energy has is dependent on the specific technology used. By understanding the potential environmental issues associated with each renewable energy source, combined with a country’s own specific environmental capabilities, organisations and countries can take steps to effectively minimize the impact.


For example, harnessing power from the wind is one of the cleanest and most sustainable ways to generate energy with the ability to produce more than 40% of a country’s electricity, as shown by Morocco. This type of energy is both inexhaustible and affordable, making it a viable and large scale alternative to fossil fuels. The downside, however, is that there are a number of environmental impacts associated with wind power including land use complications and challenges to wildlife and natural habitats.

BP’s approach is perhaps the most unique in terms of its coherency with targets being in place for the short-term, medium-term and long term with the aim of achieving 20 GW of renewable energy capacity by 2025 and 50GW by 2030.

None of these impacts, however, have the same effect on the environment as our current production of fossil fuels does and, as the major oil companies begin to invest and plan investment and projects around renewables, we find ourselves at a very important crossroads towards a greener and more sustainable future.

If the pandemic has shown us anything, it is that when governments, industries and institutions pull together resources and intelligence then goals can be achieved, the vaccine discovery and rollout being a prime example of this. We have not yet seen this same level of cohesion from governments and companies in the energy sector but, if we do, the results could be massive.


Furthermore, to achieve a net zero economy, innovation is required across all sectors globally – not just in energy. While those ‘headline’ industries such as electric cars are arguably low hanging fruit, it is industries such as cement and steel manufacturing that also need to address their environmental impact and encompass long term sustainable green energy use – not just a select fashionable few.