Oil giants dig up $1bn for climate change fund, but renewable industry skeptical

The CEOs of ten of the world’s largest oil and gas companies have today pledged to invest $1 billion over the next ten years on low emissions technologies as part of the Oil and Gas Climate Initiative (OGCI) to tackle climate change.

While the actual sum is paltry in relation to the vast revenues the OGCI members pull in on an annual basis, the investment is an unprecedented level of clean investment from the oil and gas community, and is intended to be used to augment and complement many of the companies’ own carbon reduction programs, the OGCI says.

As reported earlier this week, chief executives from BP, Royal Dutch Shell, Total, Statoil, Repsol, Eni and Saudi Aramco are all on board, and will advise on how and where the funds are spent. An OGCI statement confirmed that the money will identify ways to cut the energy intensity of transport and industry, while also supporting breakthroughs in other low carbon technologies.

Whether this will translate into direct support for established renewable energy sources such as solar and wind power remains unlikely, but the OGCI did say that it will "work closely with manufacturers to increase energy efficiency" in energy-intensive industries, as well as accelerating the deployment and use of storage technologies.

"The creation of the OGCI Climate Investments shows our collective determination to deliver technology on a large scale that will create a step change to help tackle the climate challenge," read an OGCI statement issued jointly with the heads of 10 oil and gas companies. "We are personally committed to ensuring that by working with others, our companies play a key role in reducing the emissions of greenhouse gases, while still providing the energy the world needs."

BP CEO and OGCI chairman Bob Dudley added: "Climate change is so important for the long term that it justifies our concerted action today. OGCI is adding shared investment to shared action towards a lower carbon future, and I expect opportunities to grow and investments to prosper over time."

Smoke and mirrors

The OGCI statement revealed that funding will be steered towards carbon capture and storage (CCS) – an ostensibly clean technology. However, critics argue that investment in CCS is merely a way to prolong the continued burning of fossil fuels in a more socially palatable way. But scientists are generally in agreement that CCS plays a vital role in lowering end C02 emissions while enabling major fossil fuel-based economies to grow.

Earlier this week, Bloomberg New Energy Finance (BNEF) founder Michael Liebrich warned that investments in renewable energy were on the precipice of a five-year lull, with last year’s $349 billion total likely to be a peak that won’t be surpassed until at least 2021.

"Clean energy investment will be down 15% to 20% this year," Liebrich told Bloomberg. "As things stand, it will not bounce back to a new record in the next five years because of sluggish economic growth, moves by policymakers to reduce costs, and the falling price of wind and solar equipment."

Pitched against that $349 billion figure, the OGCI’s $1 billion pledge looks less-than-generous, but an optimist might argue that if their investments can trigger a sea-change in how fossil fuel companies approach renewable energy and climate change, the impact of even this relatively small investment could be magnified many times over.

However, there was very little optimism floating around today among the clean energy crowd. Jonathan Marshall, an energy analyst at U.K.-based Energy and Climate Intelligence Unit, said: "Investing $1 billion over 10 years averages to just $10 million per year per company involved. This figure is a drop in the ocean.

"The business models of these companies are fundamentally incompatible with the Paris climate commitments," Marshall added. "This announcement shows that oil and gas companies are contemplating no real deviation from their traditional business models."

Climate campaigner for 350.org Danni Paffard called the OGCI announcement outrageous filibustering, stressing: "Forget their smoke and mirror offerings; the fossil fuel industry’s basic business plan doesn’t stack up with global climate goals. Real climate action means leaving oil, coal and gas reserves in the ground, and until they do that nobody will be falling for this cynical PR spin."