Big oil R&D in clean tech is hard to pin down
How much research and development big oil companies are putting into cleantech is one of the few concrete metrics to gauge the industry’s varying shifts toward cleaner energy.
Between the lines: Pinning that figure down is tricky because many companies don’t disclose and even those that do use definitions that vary widely for what constitutes cleaner energy or low-carbon.
The big picture: Just 2 out of 8 of the world’s biggest publicly traded oil companies (ExxonMobil and Total) are spending more on overall research and development today than nearly a decade ago, according to BloombergNEF analysis of companies’ recent financial reports, as the accompanying chart shows.
- The R&D spending of all 8 companies analyzed (the 5 companies shown plus Equinor, Repsol and Eni) dropped in 2015, likely due to the drop in global oil prices that squeezed the entire industry.
- Exxon consistently spends the most on R&D, surpassing an annual $1 billion spend most years.
One level deeper: The Oil and Gas Climate Initiative, an industry-led coalition of 13 of the world’s biggest oil companies, says in a new report that R&D spending on lower carbon energy rose by 38% in 2018, reaching $1 billion, though that figure represents only 9 companies that disclosed (OGCI doesn’t disclose which companies disclosed).
- As for what constitutes low carbon, OGCI writes that “low carbon energy technologies include but are not limited to: energy efficiency, wind, solar and other renewables [carbon capture], hydrogen, biofuels, energy storage and sustainable mobility.”
- The caveat “but are not limited to” leaves room for companies to consider an array of other tech and sources as lower carbon. It does appear that natural gas, the cleanest fossil fuel that is nonetheless facing increasing opposition from environmentalists and Democratic politicians, is excluded from this definition.
The intrigue: I just spoke with Bill Farris, an associate laboratory director at the U.S. Energy Department’s National Renewable Energy Laboratory for my recent column on Exxon’s expanding external research funding, including with NREL. He said NREL works with other oil companies too, albeit with distinct focuses, illustrating the different strategies big oil companies are pursuing when it comes to clean tech.
“Whether it’s biofuels for Exxon or smart grids for Shell or offshore wind for Equinor, we try to make the R&D capabilities available.”— Bill Farris, National Renewable Energy Laboratory
What I’m watching: David Doherty, an oil analyst at BloombergNEF, says he expects R&D toward low-carbon to increase alongside what he has seen to be an increase in external investments so far this year.