Greentech Media | By: Julia Pyper | GPE – July 12, 2017:
Oil companies have realized that renewables aren’t going away—and they want to get in on the action.
Originally published – June 13, 2017: Wind and solar have reached a point where they’re impossible for the world’s largest oil and gas companies to ignore. But it’s not yet clear how the majors will choose to capitalize on this growing market, having wavered on clean energy in the past.
A new report from Wood Mackenzie examines the threat that renewable energy poses to legacy oil and gas operations, as well as the opportunity for wind and solar to diversify and future-proof fossil-fuel-heavy portfolios.
The global market for wind and solar is currently just 4 percent that of oil and gas; however, renewables are set to grow “much faster than oil demand,” the report states. By 2035, annual revenues from wind and solar will represent one-twelfth of the revenues in oil and gas under Wood Mackenzie’s base-case scenario. In a carbon-constrained scenario — which assumes negative growth for coal and oil demand, and positive growth for natural gas and other zero-carbon fuels out to 2035 — revenues from wind and solar would be much higher.
“The majors are faced with a mega trend of cost reductions and continuous growth in renewables that started slow but is gaining momentum,” said Valentina Kretschmar, director of corporate research at Wood Mackenzie and co-author of the report. “It’s driven by technology innovation that seems absolutely unstoppable right now, and there is a realization among the majors that it’s a trend that’s not going away — and that it’s a threat to their core business.”
Renewables will satisfy only 1 percent of the world’s energy needs this year, but even in Wood Mackenzie’s base-case scenario, renewables will be the fastest-growing primary energy source worldwide over the next 20 years
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