Investing in Greener Technologies to Keep Enterprises Afloat

Investing in Greener Technologies to Keep Enterprises Afloat

By Energy CIO Insights | Thursday, September 24, 2020

With scope for Oil and Gas majors decreasing, the companies look toward encouraging greener technologies to harvest energy and provide funding for services like EV charging. The process of transitioning of the company from old to newer, greener form is explained.

FREMONT, CA: With the Paris Agreement, the long-term goal to limit the rise in global temperature set in stone, the appetite for the oil and gas industry to invest in decarbonization has developed drastically. Decarbonization now claims the front seat in the strategic debates of the enterprises, with the fuse being lit. The threats from zero-carbon technologies like electric vehicles (EV) have reduced, and government pressurizing the ramp-up to net-zero emissions by 2050 has increased. The sense of agitation directed by the investors is an immediate issue the oil and gas sector is facing right now. The investors are urging boards to focus on carbon emissions and develop sustainable business models. With strings being pulled from all sides, the oil and gas enterprises have lost more than 50 percent of the share in global stock market indices.

The major players in oil and gas have accepted the challenge to stay relevant and investable. Companies are investing in the research and development of zero-carbon value chains, biofuels, carbon sequestration, and storage. The focus has been shifted from the past few years to renewables, battery storage, and EV charging to re-model the enterprises. The similarities in scale and complexity between the developments of the most significant projects are identified for future investments. Returns are significantly lesser than fossil fuel projects; innovative financing models can boost them and taking the risk. It is noteworthy that oil and gas returns will deplete once the energy transition gains momentum. The acceleration will result in driving up exposure to zero-carbon assets.

At present, the true renewable generator has equivalent advantages and disadvantages as to pure E&P player. Equipped with an integrated business model, focusing on generation with customers, will exhibit potential for synergies between power and gas, and goods trading could add major value. The key in this game is financing too, with major corporations using the balance sheet to its advantage to leverage customer margins by selling other products and services, including EV charging.

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