Is Shell or BP Investing in Green Energy?

A recent shareholder resolution, coordinated by the Environment Agency pension fund, has recommended that BP and Royal Dutch Shell invest more heavily in renewable energy. With a growing preoccupation about the state of our environment and the dwindling supplies of fossil fuels, these companies are being pressurised into seeking innovative methods of generating power.

But is such a petition likely to be heard? Is it realistic? Should companies like BP and Shell, traditional heavyweights in the fossil fuel industry, even be requested to change their ways and investigate green energy? Or should such change come from other sources?

The Case for Green Energy

The dubious amounts of crude oil remaining in the Earth (as well as the controversial methods of extracting it, such as hydraulic fracturing, or fracking) have caused a general shift in the way fossil fuels are viewed. Whereas once they were seen as the answer to all our energy needs and a healthy shot in the arm for the economies of many countries, now they are increasingly being seen as an antiquated and potentially deadly dinosaur which is on its last legs.

In contrast, green energy has been enjoying a significant increase in popularity. Its renewable nature means that we are never in danger of running out of it – as long as the sun shines, the wind blows and the waves ebb and flow, we will have power. Furthermore, it is clean and harmless to the atmosphere, which is becoming a major concern due to the elephant in every room, climate change.

Even more than environmental concerns, green energy is also making a strong case for the economy, too. The article Green Energy vs Fossil Fuels looks in detail at the unique advantages that pursuing renewables could offer in contrast to fossils, as well as their increasing attractiveness due to technological breakthroughs and falling prices.

Oil Companies and Green Energy

Therefore, it might seem like a no-brainer to make the gradual switch to renewables. But is placing our faith in fossil fuel specialists like BP and Shell the right strategy? These companies have experience and know-how in locating, extracting, refining, transporting and marketing crude oil and natural gas. They know very little about harvesting renewable energy.

Indeed, BP is the owner of a substantial amount of wind farms in the US… but only because they couldn't find a buyer for the business. They basically admitting to not knowing enough about running wind farms around two years and putting them up for sale, only to U-turn due to the lack of interest in their floundering enterprise.

This insightful blog from Tim Worstall of Forbes magazine likens expecting BP and Shell to pioneer green energy to expecting manufacturers of horse-drawn carriages to spearhead the automotive industry. Instead, he calls upon shareholders of the companies to sell up and invest in other businesses which are more equipped to deal with the rigours that green energy development demands.

However, there is one thing on which even Mr Worstall agrees – if BP and Shell don’t adapt, they are likely to sink without a trace. It will be up to burgeoning renewable companies to replace them.