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Page added on April 28, 2016

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Fossil Fuel Companies Need to Become Renewable Energy Companies

Alternative Energy

It seems clear that Exxon Mobil and other parts of the fossil fuel industry have tried to suppress the science of climate change. I am not surprised that these companies acted in their short-term self-interest, and I expect them to continue to advance those interests. Their deception is disappointing and may even be illegal, but blaming the fossil fuel companies for our addiction to fossil fuels is foolish. It’s a distraction from the daunting challenge of making the transition to renewable energy as quickly as possible. For some reason, a great deal of effort is being devoted to uncovering the role of Exxon Mobil in the history of climate science. As John Schwartz reported recently in the New York Times:

Pressure on Exxon Mobil and the energy industry increased on Wednesday with the release of a new cache of decades-old industry documents about climate change, even as Exxon pushed back against efforts to investigate the company over its climate claims through the years. The new documents were released by an activist research organization, the Center for International Environmental Law, which published the project on its website.

It remains unfortunate that many fossil fuel companies have not redefined themselves as energy companies that lead the effort to replace fossil fuels with renewable energy. If I had money to invest, I’d certainly look for companies that take a longer-term view than some of these companies have taken. But when I plug in my laptop, recharge my iPhone or fill up my car’s gas tank, no one from Exxon Mobil is standing there forcing me to consume energy. I do that of my own free will. These folks are just my suppliers: I am the consumer. We are all consumers, and we are all addicts. Moreover, not all fossil fuel companies are oblivious to the need to reduce greenhouse gas emissions. For example, the Italian energy company Eni continues to develop fossil fuels but attempts to reduce environmental impacts; they are trying to reduce their greenhouse gas pollution and recognize the need to address climate change. They are preparing for the transition to renewable energy.

The time and effort devoted to vilifying fossil fuel companies would be more constructively spent trying to figure out how to make our economy more energy efficient and working on the technology and institutional arrangements needed to switch from fossil fuels to alternative forms of energy.

I am a little confused about the absence of vision in some fossil fuel companies. I know they have billions of dollars invested in fuel reserves and in the infrastructure to extract it from the earth and distribute it to consumers. But they must know that they are in a doomed industry. It will take a while before we stop burning fossil fuels, but we will eventually stop using them. Their relative share in the world’s energy mix is declining and will continue to shrink throughout the 21st century.

Sometimes Exxon Mobil reminds me of Kodak, a company that once made lots of money manufacturing the film and other materials needed to print photographs. Then Kodak developed something called electronic photography. They never thought that people would be just as happy to store their photos on their smartphones as in a leather-bound album on their bookshelf. (Remember books and bookshelves?) Even though many more photos are taken now than ever before, Kodak was so slow to recognize the changing market that they nearly went under.

Our economy is built on technological innovation. Those 300,000 Tesla electric car orders taken recently are the tip of the iceberg of the demand for a car that doesn’t require gasoline. Exxon Mobil might want to see those Tesla orders as their “Kodak moment.” It won’t happen overnight, but the move toward electric cars has started. I know that most electricity is generated from fossil fuels, but it does not need to be. Electric cars open the possibility of renewable resource-based transportation. In contrast, internal combustion engines typically burn fossil fuels and motor vehicles create a huge demand for gasoline. That demand will end as soon as the electric car comes down in price and goes up in battery range. It’s only a matter of time.

But the transition to electric cars will create technological and institutional challenges. The people that repair today’s cars will need to be retrained. We will either need to build public charging stations for electric cars, or some version of an electric gas station will need to be opened based on a profitable business model. The taxes that support road repairs will need to come from something other than a tax on gasoline. The list goes on. If we are to rapidly transition off of fossil fuels it is important that we look forward rather than backward. The history of climate science is interesting and important, but belongs in academic journals, not the New York Times.

Our modern life is built on energy and most of that energy comes from fossil fuels. Fossil fuel companies did not create the demand for energy; it was created by our demand for cars, air travel, air conditioners, light, elevators, streaming video and smartphones. Fossil fuel companies benefit from our demand and they will suffer when that demand goes down. My view is that the real action and focus of our effort should be on making sure the demand for fossil fuels goes down as soon as possible.

But while fossil fuel use needs to be eliminated, the demand for energy itself will continue to increase. Billions of people in the developing world are hungering for a lifestyle that is built on technologies that require energy. The drive for that lifestyle is ferocious and will not go away. In the developed world, we will are getting more efficient in our use of energy and have begun the transition away from fossil fuels, but we will never willingly give up our addiction to technologies that use energy.

Some people find it comforting when they can find someone to blame for climate change. The fossil fuel companies make convenient villains. In this case some appear to have been willfully deceptive. But I don’t buy the argument that earlier knowledge of the science of climate change would have led to a faster solution to the problem. There has been a scientific consensus on this issue for decades and progress has still been slow. This is because greenhouse gas pollution is the most difficult environmental problem we have ever faced. The use of fossil fuels is central to our modern economy, our way of life, and our political and social order. Getting off of fossil fuels will take time and massive global effort. Denying proven science is an old trick once pioneered by the tobacco companies, but in the end, reality prevails.

No one should underestimate the scale of the challenge that confronts humanity. It will require new technologies and changes in infrastructure, organizational capacity, economic incentives and public policy. In the slow, cumbersome way that massive change takes place, the transition to a sustainable economy has begun. But it is a matter of two steps forward and one step back. Oil prices drop, and SUV sales increase. Still, young people are not as addicted to autos as older people are. Solar water heaters are common in Israel, parts of China and parts of California. Greenhouse gas growth has been decoupled from GDP growth. People have rolled up their sleeves and gotten to work.

The transition to renewable energy would be easier to accomplish if the fossil fuel companies played a leadership role. They have the organizational capacity, marketing skills, research labs, distribution networks and global reach required. They are well positioned to do this work, but seem so overinvested in fossil fuels that they’ll probably go broke before they build a renewable energy business. When renewable energy becomes less expensive, more convenient, and at least as reliable as fossil fuels, it will replace those fuels. It doesn’t matter what role the oil companies used to play or are playing today. If they hope to survive the current century they will need to adapt their strategy to the need to dramatically reduce greenhouse gas emissions. Fossil fuel companies will need to become renewable energy companies if they hope to survive in the energy business.

energy collective



71 Comments on "Fossil Fuel Companies Need to Become Renewable Energy Companies"

  1. Practicalmaina on Thu, 28th Apr 2016 9:31 pm 

    Go China invest more in solar than we do

  2. makati1 on Thu, 28th Apr 2016 9:42 pm 

    Practical, not only do they invest more, but they get more for their Yuan than Americans get for their dollar. If you are paying your factory workers $2/hr to make solar panels it is a lot different than if you are paying them $20+/hr.

    Construction labor in the US is $100/day plus plus. Comparative construction labor here in the Ps is less than $10/day. Same quality. same work accomplished. Needless to say, you can build a nice house with finishes here for less than half the US cost. (Material costs are similar both places) Perspective, always perspective.

  3. apneaman on Thu, 28th Apr 2016 10:54 pm 

    Fracking the cancer that keeps on giving.

    “I’m a cancer voter!”

    One oil field a key culprit in global ethane gas increase

    “ANN ARBOR—A single U.S. shale oil field is responsible for much of the past decade’s increase in global atmospheric levels of ethane, a gas that can damage air quality and impact climate, according to new study led by the University of Michigan.

    The researchers found that the Bakken Formation, an oil and gas field in North Dakota and Montana, is emitting roughly 2 percent of the globe’s ethane. That’s about 250,000 tons per year.”

    http://ns.umich.edu/new/multimedia/videos/23735-one-oil-field-a-key-culprit-in-global-ethane-gas-increase

  4. dooma on Fri, 29th Apr 2016 2:05 am 

    Come on ape, water that you can light on fire…the earth belching out toxic chemicals from fracking.

    What could possibly go wrong!

  5. PracticalMaina on Fri, 29th Apr 2016 8:01 am 

    Makati, definitely, especially when considering that it is the American DOD he was talking about who would spend more on one shoulder fired munition than the soldier firing it makes in a year. China is by far the largest consumer of solar generated hot water, I am sure they lead production or soon will in many other areas of renewables. Look at 3 Gorges damn, no other superpower can get away with moving that many people these days.
    Apneaman, many people wont get too excited about that, if it starts with an e most people assume its a good thing…

  6. Kenz300 on Fri, 29th Apr 2016 8:34 am 

    The oil companies and the auto companies need to get their collective heads out of the sand and realize that the world is changing with or without them. Climate Change is real….. it will impact all of us…

    It is time to move away from fossil fuels and embrace alternative energy sources like wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste. They need to change their business models and move from being OIL companies to ENERGY companies. The auto industry needs to move from just building compliance vehicles to embracing electric vehicles and start putting development and advertising behind them..

    The world is moving to embrace alternative energy sources…….. the fossil fuel companies can transform themselves into “energy” companies or they can die a slow death. As Climate Change impacts more people there will be a bigger backlash against fossil fuels.

  7. Anonymous on Fri, 29th Apr 2016 2:22 pm 

    WTG Kenz, you want the same corrupt, monopolistic american terrorist oilcos that have done incalculable damage to the earth and its peoples, to be the ones providing all that clean and green energy you want us all to enjoy. What could possible go wrong with giving those guys total control over ‘green’ energy production and distribution?

    I see you have given the matter a great deal of thought, as usual.

  8. dave thompson on Fri, 29th Apr 2016 5:43 pm 

    ‘It is time to move away from fossil fuels and embrace alternative energy sources like wind, solar, wave energy, geothermal and second generation biofuels made from algae, cellulose and waste.’ every single one of the above listed “alternative energy sources” are FF derivatives, not a one exists without FF inputs. None can be brought up to scale to run our FF driven industrial civilization.

  9. GregT on Fri, 29th Apr 2016 5:54 pm 

    At least Kenz300 has stopped calling alternative energy sources ‘renewable’. A small step in the right direction. Don’t expect him to digest too much all at once. Could blow a memory module.

  10. GregT on Fri, 29th Apr 2016 6:04 pm 

    Oops, my bad. I just called the Kenz300 ‘him’.

  11. Kenz300 on Fri, 29th Apr 2016 9:24 pm 

    The world is changing….and moving away from fossil fuels……..it can not come fast enough…..

    U.S. Coal Use Falls 29 Percent

    http://ecowatch.com/2016/04/29/coal-use-falls-29-percent/

  12. Anonymous on Sat, 30th Apr 2016 5:38 am 

    LoL

  13. tita on Sat, 30th Apr 2016 7:46 am 

    Why should a company who has expertise in a domain move elsewhere where they know nothing? Especially when they generate so much revenue with their core activity. It’s not Exxon who has to move out of FF, it’s the consumers. If you want them to buy less FF, the only leverage is to tax FF.

  14. Davy on Sat, 30th Apr 2016 8:24 am 

    Great point Tita. It is us that are the problem not oil in all its evil. We have to change our lifestyles and attitudes. Instead we chose to blame and complain and point fingers. If you take our hypocrisy to the true level it should be we need to take all those weapons we have in every shape and form and use them in a collective suicide to get our population levels to where we should be instead we complain about oil. My point is there is reality and there is denial. Let’s acknowledge both.

  15. geopressure on Sat, 30th Apr 2016 8:31 am 

    Interestingly, Exxon did try & enter the computer industry back in the 1980’s… They started making printers, but had a lot of quality control issues & it did not work out…

    On another note: Iraq is falling apart this morning…

  16. tita on Sat, 30th Apr 2016 9:16 am 

    Why should a company who has expertise in a domain move elsewhere where they know nothing? Especially when they generate so much revenue with their core activity. It’s not Exxon who has to move out of FF, it’s the consumers. If you want them to buy less FF, the only leverage is to tax FF or having companies who sell renewable energy cheaper than FF.

  17. geopressure on Sat, 30th Apr 2016 9:27 am 

    Maybe one day there will be reasonable alternatives to fossil fuels for all our power & transportation needs, but as for right now we don’t really have any options…

  18. Boat on Sat, 30th Apr 2016 10:34 am 

    tita,

    Demand follows the lowest cost producer. For example when electric cars are cheaper over the life of the cars, demand will explode. Not until then.

  19. Davy on Sat, 30th Apr 2016 10:41 am 

    Da boat, demand will explode with what? Where is all the stuff that powers demand coming from? Your problem is needing to learn how to reality test what you spout off randomly and redundantly.

  20. Kenz300 on Sun, 1st May 2016 4:48 am 

    The world is in transition away from fossil fuels…….

    Just like we went from riding horses to driving cars….
    or from land lines to cell phones………

    We will move away from fossil fuels to safer, cleaner and cheaper alternative energy sources………

    100% electric transportation and 100% solar by 2030

    https://www.youtube.com/watch?v=RBkND76J91k

  21. Kenz300 on Sun, 1st May 2016 4:51 am 

    Water and droughts seem to be more of a problem every year………….

    Generating electricity using fossil fuels requires a lot of water……………. generating electricity from wind and solar require little or no water…………

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