PJ Media

Green Appeasement: Oil, Gas Industry Wasting Billions on ‘Alternatives’

Some large oil and gas companies include the development of “alternative” energy (solar, wind, and biofuels) as part of their corporate goals.

Shell’s division — Shell WindEnergy — is involved with operating eleven wind farms, including eight joint ventures in the United States. Chevron’s Chevron Energy Solutions has an environmental focus on solar energy and other “renewable” forms of energy. Chevron’s “We Agree” campaign comprises about ten slogans stating what oil and gas companies should do differently, as if they are not doing enough already. It urges them to promote “renewable” energy, care for the planet, etc.

The Chevron campaign sums up the general attitude that just being an oil and gas company is no longer sufficient; instead, these companies are expected to carry the banner for every green movement goal as well. Finding alternatives to hydrocarbons themselves has become part of the hydrocarbon industry vision.

If these changes are an effort to broaden the scope of the industry by offering innovative products that energy consumers would actually benefit from, then oil and gas companies would make sure that their new divisions produce energy that is as valuable as what is already being produced. They would be sure to offer energy that is as efficient and cost effective as oil and gas are, or they would at least develop energy sources that use production expertise similar to that of oil and gas, so that it does not cost much more time or money to add them to the existing business.

The value of innovation itself is generally undisputed, but what counts as a valuable innovation?

Innovation is supposed to bring an advantage to the industry. Yet solar, for example, is far costlier than gas or coal for electricity generation. The Annual Energy Outlook 2013 Early Release Overview [Energy Information Administration AEO] specified the Estimated Levelized Cost of New Generation Resources, 2018 (total system levelized cost) of Solar PV to be $144.3/MwHr, and Solar thermal to be $261.5/MwHr, in the range of about 1.4 to nearly 4 times more than that of natural gas (conventional combined cycle: $67.1/MwHr, advanced combined cycle: $65.6/MwHr) or conventional coal ($100.1/MwHr).

The means of producing solar panels and wind turbines are significantly different processes from finding oil and gas. Furthermore, generating reliable electric power requires a source that is continually accessible and that stores well. Wind is an intermittent source that does not store its energy.

What special advantage do solar or wind or any other “green” energy sources offer oil and gas companies? Why do fossil fuel companies include these other forms of energy?

Their decisions are not based on engineering or economic principles; rather, they are based on an acceptance of environmentalist dogma, even though this threatens the industry itself by diverting its focus towards less effective and more costly forms of energy. This is a moral sacrifice to the green movement, a pressure group whose ideas are being pushed on the fossil fuel industry.

Instead of allowing this to happen, oil and gas companies need to have a single-minded focus on fossil fuels. 

The country needs cheap, plentiful energy, and oil has been providing that energy to run a modern industrialized society on a daily basis. Natural gas has increased its prominence on the energy scene largely due to the discovery and development of significant shale regions in the U.S. and around the world. Natural gas is plentiful and efficient, and it relies on exploration and production techniques that are similar to those used for oil. To continue supplying the needed energy, oil and gas companies should only include those energy forms that are either as effective and as inexpensive as what they already offer, or are extracted by similar production operations.

Everything else will detract from the company by offering inferior, more expensive products.

Any energy form that is competitive with fossil fuels is worth considering, but it needs to be accepted on its merits as an energy form, not on whether it fits in with green movement goals. Innovation creates technologies that could increase speed, production, or accuracy, or that offer some other advance. This occurs regularly in the oil and gas industry, as already efficient and practical sources that power our transportation and generate electricity are made even better. In contrast, the heralded virtues of green innovation are not that they provide a great source of cheaper, more powerful, reliable, and usable energy, but that they generate no carbon emissions.

Pollution and waste should be and is a concern to the industry, but the replacement of the oil industry as such is the goal of the green movement, not merely the containment of pollution. Meanwhile, the production of solar technologies involves an array of hazardous materials that are not often discussed, such as cadmium telluride and the explosive silane gas.

The green movement is ultimately incompatible with the oil and gas industry, and with innovation itself. Innovation requires the purposeful, logical use of our surroundings for our own benefit, whereas environmentalist ideas hold that nature is an intrinsic value that is good apart from its value to human life, that anything that interferes with nature is necessarily immoral, and that we do not have the moral right to use our environment to improve our lives. To achieve a long-term, innovative purpose, we require energy, lots of it, in forms that we can use, but the green movement seeks to limit or eliminate very important energy forms.

Finally, innovation also requires foresight and the ability to see how to achieve the kind of future we wish to live in, including the ability to overcome obstacles and to make major improvements. The green movement proposes solutions that prevent production and progress, especially among the more competitive energy industries, rather than solutions that produce a viable vision for the future.

When oil and gas companies accept and incorporate green goals, they end up with a corporate vision that is divided and self-defeating. A corporate vision is a future-oriented idea that guides the company forward. Any corrupt or contradicting element in that idea can derail the company and leave it directionless. By lending support to ideas that ultimately call for the end of hydrocarbons, the industry is acting against its own future. They jeopardize the achievement of their original goals, diluting the time, money, and effort that would otherwise go into finding and producing oil and gas. If oil and gas companies want a vision for their continued success, they need to function independently of the green movement’s ideas.