Back to petroleum? Oil majors aren’t buying into threat from renewables

BP logo

Two decades ago, BP set out to transcend oil, adopting a sunburst logo to convey its plans to pour $8 billion over a decade into renewable technologies, even promising to power its gas stations with the sun.

That transformation – marketed as “Beyond Petroleum” – led to manufacturing solar panels in Australia, Spain and the United States and erecting wind farms in the United States and the Netherlands.

Today, BP might be more aptly branded “Back to Petroleum” after exiting or scaling back its renewable energy investments. Lower-cost Chinese components upended its solar panel business, which the firm shed in 2011. A year later, BP tried to sell its U.S. wind power business but couldn’t get a buyer.

“We made very big bets in the past,” BP Chief Executive Bob Dudley told Reuters in an interview. “A lot of those didn’t work. We’re not sure yet what will be commercially acceptable.”

The costly lesson of the biggest foray yet by an oil major into renewable energy was not lost on rival firms.

Even as governments and environmentalists forecast a peak in oil demand within a generation – and China and India say they may eventually ban gasoline and diesel vehicles – leaders of the world’s biggest oil firms are not buying the argument that their traditional business faces any imminent threat.

A Reuters analysis of clean energy investments and forecasts by oil majors, along with exclusive interviews with top oil executives, reveal mostly token investments in alternative energy. Today, renewable power projects get about 3 percent of $100 billion in combined annual spending by the five biggest oil firms, according to energy consultancy Wood Mackenzie.

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