Oil firms' renewable investments lag image http://www.reuters.com/article/reutersEdge/idUSMAR34430620070403
Tue Apr 3, 2007
By Tom Bergin - Analysis
LONDON (Reuters) - Oil majors love to boast about their renewable energy activities but the glossy advertisements showing windmills and solar panels often mask modest investments and even skepticism.
The companies say their investments show they are doing their part to help fight climate change.
Environmentalists counter that the spending is inadequate and aimed solely at deflecting criticism away from the role that burning oil and gas plays in global warming.
"The advertising campaigns that are suggesting a big green shift within these companies are misleading," said Tony Juniper, executive director at Friends of the Earth.
Juniper said oil companies' acknowledgement of climate change had been more constructive in fighting climate change than "the few wind turbines they've built".
Despite the millions spent publicizing their green credentials, none of the big international oil companies publishes figures for annual investments in renewable energy, making it hard to judge whether actions match adverts. Nonetheless, a review by Reuters of published material, figures from company spokespersons and analysts' estimates does give a good indication of investment since the end of the last decade, when the oil industry started to catch the green bug.
Royal Dutch Shell Plc says it invested over $850 million in renewables, largely wind power, in the past five years. This excludes spending on hydrogen projects, which rely on natural gas, and biofuels. Analysts estimate that biofuels investments added around another $100 million over the period and that Shell invested around $100 million per year 1999-2001 in green energy.
A spokeswoman said official figures were not available but did not dispute the estimates.
These figures suggest a total investment by Shell 1999-2006 of around $1.25 billion, making the Anglo-Dutch company the oil business's biggest investor in green energy.
This reflects Shell's aim of developing a significant business based on one renewable energy source. However, its spending is just 1 percent of its total capital budget over the period -- $121 billion.
BEYOND PUBLICITY
BP Plc, whose "Beyond Petroleum" slogan set the tone for the greening of the oil industry, is second with an investment of around $900 million in renewables since 1999, according to published figures and information from BP sources.
BP has been active in solar power since 1980 and in the past year has ramped up investment in wind, since the London-based company launched its Alternative Energy division.
This unit plans to capitalize on what BP sees as a growing demand for electricity from low carbon sources.
U.S. companies have joined BP and Shell in claiming a commitment to green energy in their advertising, although their strategic goals and cash spend are weaker.
Exxon Mobil Corp's corporate advertising heavily publicizes its commitment to contribute $100 million over 10 years to a project at Stanford University, for research into low carbon energy technologies including solar.
However, the largest fully publicly-traded oil company in the world by market value refuses to invest in renewable energy projects because it sees them as uneconomic, and opposes government incentives that could make renewables more competitive.
San Ramone-based Chevron Corp's "Will you join us" campaign, which advocated renewable energy and energy conservation, led some industry executives to suggest Chief Executive Dave O'Reilly was trying to steal BP CEO John Browne's image as the greenest oil man.
Company literature states that: "Between 2002 and 2006, Chevron spent approximately $2 billion on alternative and renewable energy technologies in such diverse areas as geothermal, hydrogen, biofuels, advanced batteries, wind and solar". However, this figure includes hydrocarbon projects. Company spokespeople declined to provide any figures for investments in renewables alone, citing "business reasons".
Nonetheless, Chevron said in its 2004 Corporate Responsibility report that "Since 1999, Chevron has invested approximately $60 million in renewable energy projects".
Statements on the oil major's website cite only two major renewable investments in 2005 and 2006 -- which suggest up to another $130 million may have been spent.
Chevron spokespeople declined to say if the company funded any other major renewable projects in 2005 and 2006. If not, Chevron's actual investment in renewables 1999-2006 would appear to be under $200 million -- a tenth the published figure.
"We need much more transparency on environmental performance so that the public and shareholders can make comparisons between Shell, BP and Chevron as to who is actually the greenest .. sadly a lot of them resist that," Juniper said.
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