The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

BP: Too Big to Fail?

BP issued its Energy Outlook for 2030, and the coverage and commentary it generated suggests it's an authoritative voice on medium-term energy trends, and as such will have some influence on policy and investment decisions. Leaving aside that one of the world's major fossil fuel incumbents cannot realistically be an impartial arbiter, there was something to like whether your view leans toward the inevitability of renewable energy or necessity of fossil fuels.

To the former, the share of non-fossil fuels will more than treble, providing 18 percent of energy supply globally from its current 5 percent. For the carbonista, there’s pleasure in reading that primary energy use is set to grow by 40 percent and that fossil fuels will continue to play the dominant role in energy supply. One of its key conclusions, however, ought to make no one happy: surging demand coupled with entrenched reliance on carbon-based energy means that global CO2 emissions will rise to levels "well above" what science says is needed to avoid runaway climate change.

Governments globally have affirmed the scientific consensus on anthropogenic carbon emissions and climate change risks, and committed to a two degree maximum temperature rise. Many in the business community show similar concern, and, while uneven, significant societal shifts toward that view are also apparent. This should not be mistaken for serious action by all the aforementioned, because it is woefully inadequate. What’s so striking about the BP report, however, is the complacency which greets these linked conclusions on energy demand and carbon emissions. BP and its industry brethren are some of the wealthiest, globally diffuse, politically connected and expertly managed corporations on the planet. And yet, they seemingly have no internal or imposed obligation to be part of the solution to a threat laid bare by BP in black and white. The disconnect is stunning. It’s as if we went to the doctor and were told we have a slow-developing but potentially terminal disease, but the doctor declined to prescribe anything that might arrest it and we didn’t even bother to ask.

Also last week, the Chairman of the Bank of England (the equivalent of the U.S. Federal Reserve) received an open letter from 20 financial, academic and NGO sector leaders warning of an U.K. "asset-bubble" in carbon-intensive firms. The letter notes that some of the highest rated individual equities and/or funds are skewed toward corporations highly vested in fossil fuel reserves, extraction and delivery. These are precisely the types of investment options that long-termers, like pension funds, seek as safe havens for steady appreciation. Yet again, if governmental pledges of a two degree maximum are taken as real, these firms must be overvalued because they cannot utilize anywhere near their asset base. A similar report last year issued by the Carbon Tracker Initiative noted that the top 100 listed coal and 100 oil and gas companies can only emit 20 percent of their stated reserves if emissions are kept under the two degree threshold.

The world saw what happened when the financial industry ignored sound fiduciary practices and engaged in incomprehensibly risky activities. Governments, faced with a stricken but vital commercial sector and vested and powerful incumbents that were too big to fail, had no choice but to step into the breach and save the firms from themselves. Is a similar rescue in the cards for the energy sector? At risk are the fortunes of massive corporates and myriad investors — including governments themselves.

The energy industry is structured for the long-term: huge capital investments in long-life assets that have a sense of permanence and financial predictability. But at some future point, the political and societal will for massive cuts in carbon emissions will align with the accepted science and fossil-based energy will be an anachronism — though one littered with leveraged firms and stranded assets.  Cost trends might force the issue anyway: the price of renewable power is falling year on year due to innovation and scale while carbon energy marches inexorably upwards. Fracking may have pushed back the trajectory on natural gas prices, but the inevitable regulation of the environmental and societal externalities suggest the interruption will be fleeting. As Fatih Birol, Chief Economist at the International Energy Agency has stated, these effects can be managed, but production costs will rise. Throw in OECD pledges to cut the massive market-distorting subsidies to the fossil fuel industry — globally in excess of $400 billion in 2010, larger by a factor of six than for the far less mature renewables sector — and the cost curves can only widen.

Long-gone are the days when BP was "Beyond Petroleum" as their advertising campaign of years ago wanted us to believe. The industry seems more intent on shrugging its collective shoulders to the conundrum of too much carbon to burn. Perhaps they’ve been too busy studying the banks to be serious about charting a new course. Taxpayers, beware.

Untitled Document


Energy Storage and Geothermal Markets Look To Team Up in the Hunt for Lithium

Meg Cichon In today's fast-paced tech environment, no one can make a splash quite like Elon Musk. So when he decided to enter the energy storage game in 2014, he did it with gusto. Musk is now in the process of building what he coined...

Regional News from the July/August 2015 Digital Edition of Renewable Energy World

Renewable Energy World Editors EcoFasten Solar announced that it launched a new mounting "Rock-It System" that it would be displaying during Intersolar. Product compliance was determined through testing per UL Subject 2703, which reviews integr...

UK Government Proposes Solar and Biomass Subsidy Cuts

Alex Morales, Bloomberg The U.K. proposed to reduce support for the solar and biomass-power industries to help consumers who fund the subsidies through their energy bills. Ministers plan to end a government aid program for small solar projects a y...

Some Hope for US Renewable Energy Tax Credits As Extension Bill Passes Committee

Vince Font In a lopsided 23-3 vote, the U.S. Senate Finance Committee voted yesterday to extend a number of renewable energy production tax credits through the end of 2016. The vote allows developers of wind, geothermal, biomass, land...
Matthew Ulterino is an urban planning consultant based in London. He advises government and private clients on strategies and programs for reducing carbon emissions and risks from climate change in the built environment.


Volume 18, Issue 4


To register for our free
e-Newsletters, subscribe today:


Tweet the Editors! @megcichon @jennrunyon



Doing Business in South Africa – in partnership with GWEC, the Glob...

Wind Energy in South Africa has been expanding dramatically, growing fro...

Presenting at Infocast's Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...

Utility Scale Solar Summit 2015

Oct. 21, 2015 4:30-5:15pm Albie Fong, National Director, Solar Frontier ...


Behind Every Good Decision

When something about your business isn’t working, you set out to c...

Clean Energy Patents Maintain High Levels in First Quarter, Solar L...

U.S. patents for Clean Energy technologies from the first quarter of 201...

An Overwhelming Paradox

I’m sure we’re all very familiar with the feeling of being o...


Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now