Our survey respondents reported that their companies either already had a plan in place or were developing a strategy to reduce reliance on fossil fuels: eighty-seven percent of chemical company executives, 92 percent of power and utilities executives, and 92 percent of oil and gas industry executives responded affirmatively to these statements. Across sectors, the top drivers of decarbonization included customer focus and digital technologies supporting energy efficiency and decarbonization. Notably, 56 percent of oil and gas respondents indicated that plan metrics were tied to executive compensation.
And when asked if a low-carbon future would have a positive, neutral, or negative impact on the future of their organization, more than 60 percent of oil and gas respondents answered that it would have a positive impact.
Decarbonization trends are having a mixed impact on the oil and gas sector. Increasingly, oil and gas companies are sourcing renewable energy for their needs. And while most do not have a renewables plan per se, 49 percent of respondents plan to switch to cleaner fuels or renewables in their facilities and field operations, according to our survey results. This is particularly true of the larger oil and gas companies, as 61 percent of respondents from this group noted that increasing reliance on clean fuels and renewables was core to their strategy. A similar trend has emerged in the chemical sector: fifty-seven percent of chemical executives reported that their company had invested in using renewables to reduce emissions and waste. In addition, the half of chemicals executives surveyed reported that their company had increased use of renewable energy for production, though this trend is more pronounced among larger chemical companies than at medium or small companies.
One aspect of this investment in new technology is the venture capital investments that international oil and gas companies are making in clean energy technologies.
The larger companies are building their portfolios in areas such as clean energy and EV charging; many have also formed venture capital arms and pursued partnerships and acquisitions in the clean tech space. [...] the volume of transactions in clean energy concluded by large oil and gas companies across the globe has almost doubled over the past decade.While the deal volume by these companies in the solar and wind industries has begun to decline, growth in battery storage picked up sharply in 2019. Investments in EV charging have also increased from 2017, as have investments in biofuels and hydrogen.
Customers now perceive that not all energy molecules are the same, and many are showing a growing preference for “green” energy, in power and in oil and gas. This has led many companies across various sectors to differentiate their products and change their production processes where possible. A majority of power executives polled reported their organization has committed to providing more electricity sourced from renewables to their customers. Demand for clean energy is rising fast as corporations boost renewable procurement and carbon emission reduction targets and realize cost savings on wind and solar, even with the PTC and ITC phasedown. This is evident in the 2019 increase of power purchase agreements for renewable energy signed by corporate consumers: 14 GW of bilateral renewables PPA in 2019, up from 8.5 GW in 2018 [...]
Many shareholders and investors have begun to apply pressure on companies to focus on lower-carbon operations and curtail carbon emissions by reducing their carbon footprint and reducing reliance on fossil fuels.
BlackRock’s January 2020 letter to clients emphasizing the growing impact of sustainability on investment returns and outlining initiatives to increase their focus on sustainability helped set a broader tone underlining the attractiveness of low-carbon industries and businesses. And a growing investor preference for sustainable companies and sustainability funds was already evident even before this announcement.
Oil and gas company executives are well aware of this market sentiment. Among the CEOs we surveyed, 68 percent indicated that the key component of their low-carbon strategy was a focus on low-carbon fuels (though that also includes natural gas).
Oil and gas executives surveyed identified “consumer support for reducing carbon emissions” as one of the top drivers for the industry’s transition toward a sustainable, low-carbon future.
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