Big Oil Bets Against Technology and Change

May 25, 2016

Chevron Exec says his company might profit from all this hoohah about climate change, and fossil fuels aren’t going away.
Actually, he’s right about one thing, some people are going to make big money on the current transition.

Wall Street Journal via Marketwatch:

SAN RAMON, Calif. — Chevron Corp. Chief Executive John Watson has a blunt message for investors, climate activists and anyone else listening: Fossil fuels aren’t going away.
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But this stance increasingly sets him apart from his oil counterparts as they react to pressure from climate-change activists and concerned shareholders.

On Wednesday, Chevron CHV, +0.82% , like Exxon Mobil Corp. XOM, +0.08% , is facing a shareholder-proposal campaign by activists who want the company to detail the risk climate change poses to its business. Exxon is opposed to the proposal, and so is Watson: He questions its entire premise, arguing that climate change might even prove positive for Chevron, if it spurs more of the planet to shift from coal to natural gas.

“I hope to gain market share in some areas,” he said.

Where many other oil and gas executives are retreating at least in rhetoric, emphasizing common ground with environmentalists, Watson, who became CEO in 2010 after climbing the company’s ranks for three decades, has doubled down.

Watson, 59, isn’t a climate-change skeptic. But the staunch disciple of free markets believes that only a major technological breakthrough, rather than a top-down solution from government, will substantially curb climate change.

Sydney Morning Herald:

Within just 15 years conventional energy production and transport will have been rendered obsolete by the revolution taking place in batteries, solar power and electric cars.

The startling thesis by energy disruption guru and Stanford University lecturer Tony Seba has been around for a couple of years but after originally being dismissed as crazy, is now catching serious attention from investors.

“It’s the end of energy and transportation as we know it, and it’s coming very quickly,” Mr Seba said at the start of a week of investor meetings in Australia.

“It’s going to be over by 2030; it has started already.”

Mainstream forecasting bodies such as the International Energy Agency have it all wrong and are greatly underestimating the growth of solar power, says Mr Seba, who sees solar as close to a “tipping point” that will drive a super-exponential uptake in solar power similar to the experience with smartphones.

Mr Seba sees the tipping point for solar is when the cost of solar goes beyond “grid-parity”, when unsubsidised rooftop solar generation undercuts power from the grid, to what he describes as “god parity”, when it undercuts the cost of transmission and makes even zero-cost centralised generation redundant.

“At that point … it is in every consumer’s selfish consumer interest to put up solar panels on every available rooftop because for those hours of sunshine… central generation will never be able to compete with rooftop solar,” he says. “Solar is going to eat everything.”

UPDATE:

Greentechmedia:

State renewable portfolio standards have long been the top driver of U.S. utility-scale solar and wind energy growth — until now.

This year, for the first time ever, more than half of new utility-scale solar capacity will be brought on-line outside of state mandates. In fact, this year’s non-RPS solar capacity will exceed the total utility-scale solar installed in any previous year.

But that doesn’t mean policy is becoming irrelevant. It’s just evolving.

“This definitely doesn’t put government and policy out of the picture as key drivers of renewable energy growth,” said Barbara Sands, a renewable energy expert at PA Consulting. “Not by a long shot.”

For instance, in December 2015, Congress passed a three-year extension of the 30 percent federal Investment Tax Credit for solar, as well as a one-year extension of the Production Tax Credit for wind. Both of these government incentives are slated to ramp down in subsequent years — but for now, developers are hurrying to cash in on peak incentive levels.

The ITC extension has sparked a sharp increase in several types of non-RPS utility-scale solar procurement — a rush that’s expected to last until 2020, as utilities and other organizations seek to lock in low energy costs through long-term power-purchase agreements. Along with the continuing overall decline in the price of solar, the ITC extension has put prices for power-purchase agreements in the range of $30 to $60 per megawatt-hour — a substantial hedge against long-term uncertainty in natural-gas prices.

Colin Smith, a solar analyst for Greentech Media and author of the Next Wave report, noted that favorable economics are dramatically expanding the geographic diversity of utility-scale solar.

“We’re now seeing large amounts of solar in markets where we weren’t seeing it before, such as Indiana, Arkansas, Idaho, Oregon and Mississippi,” said Smith. “That was a tremendous surprise.”

In 2016, 11 percent of new solar capacity in the pipeline will come from retail procurement. Favorable economics — not necessarily sustainability efforts — are the driving force behind the sharp growth in long-term retail contracts.

Cleantechnica:

The Metro of Santiago, Chile, will be the first public transport system to run mostly on solar energy, after a new agreement signed with Total and SunPower this week.

According to an announcement from US solar manufacturer SunPower, in cooperation with Total, a global integrated energy producer and provider, the Metro of Santiago, Chile, has signed a power purchase agreement for the supply of 300 GWh annually of clean solar energy for its public transport network.

This should make the Metro of Santiago the world’s first public transport system to run mostly on solar energy, which is good news for the system’s 2.2 million daily passengers.

“SunPower is proud to serve Metro of Santiago’s growing energy demand with cost-competitive, renewable solar power,” said Eduardo Medina, executive vice president, global power plants, SunPower. “Solar is an ideal energy source for Chile because of the country’s high solar resource and transparent energy policies. In partnership with Total, SunPower is committed to the continued growth of our business in Chile.”

 

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8 Responses to “Big Oil Bets Against Technology and Change”

  1. Gingerbaker Says:

    “the staunch disciple of free markets….. “

    free markets my keister!

    What a web is being spun here, fractally ironical amidst the very discussion of the market manipulations, lobbying, propaganda funding, and influence peddling actions of the fossil-fuel industry.

    And then this diligent, valiant reporter egests this NewSpeak vomitus which not only passes editorial muster, but is no doubt deemed sacramental mannah by the readers of the vile Wall Street Journal.

    Jeezum Crow it’s like reading the script from V for Vendetta.

  2. indy222 Says:

    The need and thirst for energy will insure that, while renewables gain, oil and nat gas will too, even if they have to sell at lower prices – it’s better than nothing, leaving it in the ground. NO one is yet feeling enough pain to consider negative economic growth as the only path to any sort of climate future. Have cake/eat too – sorry; but the historical data does not back that up. The unstated assumption that renewables will merely REPLACE fossil fuels is not born out by the data. Energy is demanded by civilization merely to keep running in place, and more so to fight against the limits imposed by losing topsoil, arable land, uncertainty in how to replant crops and technology in a now rapidly changing environment. Those who think, like Jacobson, that we can simply and easily leave FF’s in the ground and replace with renewables, with little energy cost in transforming global energy systems, will find the world population clamoring against that with both barrels (of oil). It’ll be a horrific tragedy, but that’s the blunt truth of it.

    • Gingerbaker Says:

      Renewables already often deliver at lower prices than fossil fuels, so I have difficulty accepting that negative economic growth is inevitable. I see the opposite to be more likely, and therefore RE as a huge opportunity for social progress.

      Renewables will replace FF’s, because there will come a tipping point when FF’s will be functionally obsolete, even if they remain for sale. Also, I can not see how FF’s can be marketed below a certain price – it costs more and more money to produce them every day.

  3. indy222 Says:

    Saudi’s can produce oil for profit down below $20/barrel or so. They’re not going to leave it in the ground. Asia is desperate for energy. You seem to be thinking only of the local environment here in the US. There’s huge world out there far different than you may think. oil and gas are incredibly energy dense and we already have an infrastructure built around them. Renewables will gain, but oil and gas will be very grudging in going away. The rate of decarbonization of energy is very very slow GLOBALLY. And the misleading figures of the US and California and Denmark etc neglect that they have all OUTsourced their CO2 emissions to Asia. Sure, renewables will grow, but oil, nat gas are growing on a much larger base. Doubling renewables when they only make up 5% of your base, vs a slower growth on a huge base for nat gas (for example), pencils out to rising CO2. Just look at the Keeling Curve and I challenge you to find one tiny increment of good change in the acceleration of that curve.

  4. indy222 Says:

    Negative economic growth is inevitable, and is already heading in that direction globally, because the Earth has maxed out its carrying capacity, and in the US, the Boomers are retiring. And because we’ve financed the “growth” with obscene levels of debt whose servicing is approaching levels that really hurt. The consumption of materials and land and soil is far above replacement by nature. We may yet pedal-to-metal on renewables, but Nature will be ever more wrecked in the process, and we’ll pay dearly for our hubris. Yeah, Malthus was wrong on the timing, and so was Ehrlich, but not on the concept. Humans are wired by evolution for Growth Uber Alles, and we’ll follow the curve of all bubbles – overshoot and crash (check the studies from the Netherlands on that). We can’t help it – we follow our genes, and this is the first generation that has had to face the fact we’ve filled and overfilled the planet. I don’t think we’ll adapt to it well, or quickly enough. Look at all the work of Vaks, Lawrence, Hansen, Rahmstorf, Anderson, Garrett… it’s already too late to prevent disaster. (not human extinction, but disaster nonsetheless).


    • I’m inclined to agree with you at least on the population side of things. Its basic boom and bust population ecology. We’re just another animal subject to the same selection pressures as other living things. We aren’t so god-like yet that we can magic ourselves out of the inevitable crash…sure those with the means to survive will survive, but I wonder if their (our) consciences will cope, with what is essentially their (our) doing? Twenty years ago, I used to think preppers were all crazy. I still do, but not as much as before.

  5. Greg Wellman Says:

    “But the staunch disciple of free markets believes that only a major technological breakthrough, rather than a top-down solution from government, will substantially curb climate change.”

    If nothing else substantially curbs climate change, then the effects of climate change eventually will. That’s not a direction we want to go.


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