Oil price news, oil and gas analysis, energy supply & demand, oil technology, gas and oil reserves, alternative energy Oil price news, oil and gas analysis, energy supply & demand, oil technology

Energy Insights: Energy News: At least one major oil company will turn its back on fossil fuels, says scientist

 Energy News

<% if 0 then %> <% end if %>
old news articles

At least one major oil company will turn its back on fossil fuels, says scientist



Jeremy Leggett founder and chairman of Solarcentury

Jeremy Leggett, former industry adviser, warns over plunging commodity prices and soaring costs of risky energy projects

By Terry Macalister, the Guardian

Jeremy Leggett founder and chairman of Solarcentury

The oil price crash coupled with growing concerns about global warming will encourage at least one of the major oil companies to turn its back on fossil fuels in the near future, predicts an award-winning scientist and former industry adviser.

Dr Jeremy Leggett, who has had consultations on climate change with senior oil company executives over 25 years, says it will not be a rerun of the BP story when the company launched its "beyond petroleum" strategy and then did a U-turn.

"One of the oil companies will break ranks and this time it is going to stick," he said. "The industry is facing plunging commodity prices and soaring costs at risky projects in the Arctic, deepwater Brazil and elsewhere.

"Oil companies are also realising it is no long morally defensible to ignore the consequences of climate change."

Leggett, now a solar energy entrepreneur and climate campaigner, points to Total of France as the kind of group that could abandon carbon fuels in the same way that E.ON, the German utility, announced plans before Christmas to spin off coal and gas interests and concentrate its future growth on renewables.

Pressure on the energy industry to pull out of fossil fuels has grown in recent months with a campaign for pension funds to disinvest from coal, oil and gas.

A new report published last week by researchers at University College London deepened the message that vast amounts of oil in the Middle East, coal in the US and gas in Russia cannot be exploited if the global temperature rise is to be held at the 2C level safety limit agreed by countries.

Leggett, who once conducted research into shale funded by BP and Shell, chairs Carbon Tracker Initiative, a thinktank which aims to raise awareness among key decision-makers about the risks that fossil fuel investments pose to wider financial stability. He believes the current 50% slump in the price of Brent crude will cause the US shale boom to go bust with potentially alarming consequences for the financial system.

"Many of the shale drillers have been feasting on junk bond finance, which was so easy when oil prices were above $100 (£66) but with prices at $50 confidence is going to collapse," he said. "Should the shale narrative evaporate then it is going to be very embarrassing for all sorts of political promoters of the industry, including George Osborne."

Leggett said that despite the price collapse due to oversupply, he remained convinced the "peak oil" theory that supplies will eventually be unable to meet demand remains intact.

This is not because there are not the oil or gas reserves in the ground to meet future growth, but because they are too costly and environmentally dangerous to produce, he argues.

"I would say to both the utility industry and the oil and gas industry: its game over, guys," he said. "You have got to identify the point at which it's all going to be thoroughly changed and you have got to map back from it.

"You have to think strategically. The point to map back from is zero carbon in the energy system, not the electricity system, by 2050, because more than 100 governments want that in the [next UN climate change] treaty being prepared for signing in Paris."

But he also believes the energy industry is privately aware of the problems as it watches its own costs of fossil fuel extraction going up while the costs of solar and other new technologies are coming down.

Leggett, who plans to stands down as chairman of the highly successful Solarcentury renewable business he founded to focus on climate change campaigning, holds what he calls "friendly critic" sessions with the fossil fuel sector these days. The tone of the meetings has changed significantly over the past two years, he said.

"Before it was know your enemy. Now it's: ‘Crikey. A lot of this may be coming true on our watch. What shall we do about it?' There are top-to-bottom strategic reviews going on in E.ON but in other companies as well, utility and oil and gas. So it will be really interesting to see which is the first of the oil and gas companies to break from the pack, although I fear BP and Shell are going backwards not forwards on carbon."

This article first appeared at the Guardian

BusinessGreen is part of the Guardian Environment Network

Printer Friendly version...

Site Map | Privacy Policy | Terms & Conditions | Contact Us | ©2004