April 8, 2013
The decision by BP to sell off 4.6 GW capacity of wind power plants and projects in North America puts an end to an expensive dream to combine renewable with fossil energies that has cost BP some $ 6.5 billion since 2005. Through their investment in 16 wind farms across nine US States, BP had become one of the big investors in wind energy world-wide.
No other oil company had followed BP with a comparable zeal; Royal Dutch has already disposed of its wind parks,while TOTAL keeps no more than tiny investments in solar power. None of the US oil majors nor any of the state owned companies in Russia, China, Brazil or the Gulf have ever thought of undertaking major investments in renewable sources of energy.
From a business point of view the sell-out is perfectly understandable and even overdue:
Like most investors in wind and solar energy BP has lost a lot of money, which demonstrates that renewable energy continues to be dependent on subsidies. Especially after the discovery of non-conventional gas energy companies find it much more thrilling to explore and drill new gas or oil fields, however expensive and risky this may be. That is what all oil companies, big or small, public or private have been doing during the last few years.
Oil and gas production does not marry ideally with power generation, whether from fossil or renewable sources, as they offer hardly any synergies.
Contrary to received views, oil and gas have a very long life time ahead. By the middle of the century the industry will continue to flourish, even if peak oil will long have been reached. More worrying, the industry seems determined to bet on “dirty” oil shale/sands in Venezuela, Canada or Kazakhstan,whatever the higher C02 emissions they generate.
Policy makers have to accept these realities. They cannot force investors to go for solar or wind.
But they can make fossil energy less attractive by imposing high excise taxes on gas, fuel and gasoline, while making wind and solar more attractive by generous, but degressive subsidies
So far, almost all countries are doing the opposite by not taxing fuels at least $ 25 per ton of C02 emissions, the cost of climate change.
Eberhard Rhein, BrusselsAuthor : Eberhard Rhein