Oil companies which have reaped profits year after year are now finding themselves in a shifting energy market, where climate change and related advances in other energy sources have made them less dominant, said a TIME.com report.
In recent energy outlooks released this year, BP said that it expected oil demand to peak in the next two decades as renewable energy grows and consumers purchase more electric vehicles. Meanwhile, ExxonMobil too projected a peak in demand for gasoline in the coming decades and acknowledged that some of its assets may not be attractive investments.
While these changes sound subtle, they signify a marked shift in direction an industry that for years fought government climate regulation and in many cases sought to blur the science that pointed to a need for action on global warming and also undercut policy attempts to address it, noted the TIME report. The oil and gas companies are acknowledging global warming, the energy transition and the impact on their own portfolio.
The foremost change is the declining need for oil in vehicles, as electric ones become more prevalent and the remaining gas-powered ones get more efficient. Another threat is increased competition from renewable energy sources such as wind and solar power, which make up around 7% of the US’ electricity supply
But despite the enormous challenges oil and gas companies insist they have an integral role in the future of energy. Natural gas, along with renewables, will continue to replace coal in the power sector while oil remains an essential product for refined petrochemical products. In some cases, oil companies will shift some of their refineries from making gasoline to making other petroleum products.
As the science of climate change has become increasingly undeniable and countries across the globe push the energy sector away from fossil fuels, most large oil and gas companies acknowledge climate change and try to push for policy solutions that still leave them a significant role in the energy future, said the TIME report. President Donald’s Trump scepticism is eclipsed by the global trend and marketplace for the companies.
But the growing acknowledgment of climate change and the coming evolution of the energy sector is a business decision, thus the companies may not necessarily work to address the issue beyond stabilising their bottomline. A recent report from the 50/50 Climate Project, a non-profit that pushes big business to address climate change, showed that of the initiatives undertaken by these firms to slow progress on climate change, over 20 of the country’s biggest utilities and oil and gas companies lack measured consideration of the risks of climate change.
Thus ultimately, while the oil and gas industry’s vision of a low-carbon future may have shifted closer to the scientists and policymakers concerned about climate change, the two opposing forces still remain miles apart, concluded the TIME report.