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Oil Major Royal Dutch Shell Plans To Invest As Much As $2 Billion In Renewable Technologies

Royal Dutch Shell has become the latest European oil & gas company to commit to renewable energy spending. The Dutch major announced that it would spend up to $2 billion per year on renewable energy sources, such as wind, solar, and hydrogen power and electric car charging stations. Shell’s chief executive officer Ben Van Beurden said the pledge was just a start and that the company supported climate goals defined in the Paris accord. A New York Times article lists Shell’s involvement in numerous renewable energy projects. For example, the company is involved in developing a fleet of electric car charging stations throughout Europe in conjunction with BMW, Daimler, Ford, and Volkswagen. According to a recent press release, it plans to build 80 electric car charging stations by 2019. It also has a massive carbon capture and storage (CCS) project in Canada. 

Shell’s move follows similar commitments to renewable energy and the Paris accord by other oil majors in Europe. For example, Total S.A. released a document titled “Integrating climate into our strategy” in May this year. According to the document, Total is aiming to have low carbon businesses account for as much as 20% of its portfolio by 2035. The French company spent $1 billion on developing new energy technologies in 2016 and expects the amount to rise further this year. It has also complemented research spending with acquisitions and investments into renewable energy companies. For example, it invested $1.7 billion in solar panel company SunPower back in 2011 and acquired battery maker Saft Groupe for $1.1 billion earlier this year. Norway’s Stat Oil is another company that has ramped up its investments in renewable energy. It is slated to build the world’s first floating wind farm in Scotland with storage capability.

One consequence of the slew of announcements from European oil majors about their commitment to renewable energy technologies is that it sets up a comparison dynamic with their US counterparts, who have been reluctant to make similar commitments. In an emailed statement to the online publication Axios, Andrew Logan, director of oil and gas for Ceres, a sustainable investment company, said that Shell's announcement "draws a clear line" between the company and Exxon, which has expressed doubts about reaching the 2 degree goal defined as a target in the Paris accord. 

"So the split in the industry continues to widen, with Shell, Statoil and Total actively preparing for a low-carbon future, and Exxon et al doubling down on business as usual," he stated.   

Will It Make A Difference? 

Announcements by energy majors about their commitment to renewable energies generate headlines and positive press for the companies. Given the current state of affairs in energy markets, the vast majority of revenues for such companies will still come from oil and natural gas companies. Then there are the questions related to practical implementation of their projects. For their investments to bear fruit, renewable energy companies will require a confluence of factors, from critical mass in usage of renewable energy technologies to ensuring that these investments are financially viable. For example, CCS may sound great in theory but the jury is still out on its costs and efficacy in reducing carbon footprints. Electric car charging stations are great, if electric car sales can match the building of those stations.

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