When Oil Companies Say They're Going Green, Should We Believe Them?

Oil companies pledge to invest billions in renewable energy and nascent carbon capture technology. That sounds like a lot of money, but it's practically pocket change for the biggest of companies.

Transcript

LEILA FADEL, HOST:

When oil companies say they're going green, people don't tend to believe them. But these days, some oil and gas companies are starting to actually put some money on the line. That's a major development. But as NPR's Camila Domonoske reports, let's not get carried away.

CAMILA DOMONOSKE, BYLINE: Last month, a huge oil and gas company announced it was buying up a pipeline - not that kind of pipeline, a pipeline of future solar energy projects - basically, ideas for where to build solar panels.

DEV SANYAL: It's a big step forward, lots of work to be done. But it's what we believe is a massive business opportunity.

DOMONOSKE: Dev Sanyal is an executive at BP, formerly known as British Petroleum, which has pledged to cut its contribution to climate change to zero by 2050. BP has made similar promises before and didn't follow through. But investors are taking these plans seriously because BP says it can actually make money this way - not as much money as oil, but with a long-term payoff.

SANYAL: Once you build a solar facility, it's kind of there for the next 40 years.

DOMONOSKE: This one investment from one company points to a much bigger trend in the industry. Huge oil companies - like Shell in Denmark, Total in France, Equinor in Norway - they're all looking beyond oil for future profits [see POST-BROADCAST CORRECTION below]. They're getting into solar panels and wind farms and electric vehicle charging. Entering new industries like that is risky, but Sanyal believes there's a huge growth opportunity.

SANYAL: Will the market grow fantastically? Yes. Will there be competition fantastically? Yes.

DOMONOSKE: Whether or not it pays off fantastically, this shift is really noticeable. But not every company is expanding into green energy. American oil companies are not on board. And even in Europe, these new investments are still totally dwarfed by the money spent on oil and gas.

GERO FARRUGGIO: So typically, oil and gas companies have been investing around about a billion dollars a year, collectively, in renewables.

DOMONOSKE: That's Gero Farruggio with the research firm Rystad Energy. To meet their new renewable targets, companies will need to invest 20 times that much, and that would still be way less than the industry spends on highly profitable, highly polluting oil. Now, renewables aren't the only way for an oil company to pivot.

MUQSIT ASHRAF: We are seeing a lot of ambitions and a lot of talk.

DOMONOSKE: Muqsit Ashraf is with the consulting group Accenture, which surveyed companies to find out how ambitious those ambitions really are. And?

ASHRAF: Only a very small fraction of companies are truly thinking of a radical reinvention.

DOMONOSKE: For now, the oil industry as a whole is not on the brink of transformation. Meanwhile, it hit 121 degrees in Canada last week. The world is feeling mounting urgency to fight climate change. So what does it mean that most oil companies are sticking with the status quo? Ashraf says it shows that they think the world won't change that quickly.

ASHRAF: This change is not going to happen just by oil and gas companies changing their ways and changing their business models. This change will require, equally, us - you know, the broader us, which is consumers of energy, to change how we are willing to consume, transport and pay for energy.

DOMONOSKE: As long as the world is buying oil, someone will keep selling it. To actually shift away from oil quickly enough to stop climate change would require dramatic collective action, and for now, the world is not on track for that to happen.

Camila Domonoske, NPR News.

[POST-BROADCAST CORRECTION: In this report, we incorrectly refer to Shell as being from Denmark. The company is headquartered in the Netherlands.] Transcript provided by NPR, Copyright NPR.