energy cooperation. In particular, the inherent
structural conflict between energy producers and
consumers makes dialogue and collaboration
between them difficult. However, sovereign
countries will continue to play a dominant and
irreplaceable role in global energy governance,
and their input and influence will be essential
when it comes to building a new global energy
governance system and navigating the energy
technology revolution.
1.8 Global Energy Majors Accelerate
Their Transformation
into Integrated Energy
Companies
In recent years, as environmental problems have
become increasingly severe, a global consensus
has formed around the shift to low-carbon and
clean energy. In response to the need for a
change in the overall structure of energy consumption, all countries are increasing their policy
support for large-scale development of the new
energy sector. As a result, the installed capacity
of new energy is continuously increasing, the
technical costs are rapidly decreasing and the
return on investment is steadily improving.
International oil majors, including BP, Shell
and Total, began investing in new energy in the
1990s. However, the profits that were available
from continuously rising international oil prices
after 2009 meant that they reduced their new
energy investments or dropped parts of their new
energy businesses altogether. After June 2014,
the international oil price plunged and then settled at a sustained low price. At the same time,
the oil majors recognised the existential role of
climate change and the need for oil and gas
companies to respond to societal concerns on
climate change and play their part in the transition to a lower carbon world.
BP is the international oil giant with the
deepest and widest footprint in new energy. the
company has identified biofuels as a priority in
its new energy business. According to BP, by
2035, the number of vehicles worldwide will
grow to 1.8 billion units, double the current level.
By then, despite the relatively sufficient availability of oil, the pressure from climate change
and carbon emissions will increase, which BP
suggests can be mitigated by biofuels. With more
than 40 years of experience in hydrogen production and more than 10 years of experience in
operating hydrogen refuelling stations, BP has
been named the energy partner of the world’s
two largest hydrogen demonstration projects in
Europe and the USA. BP and the Ministry of
Science and Technology of the People’s
Republic of China have cooperated successfully
on hydrogen energy projects, including China’s
first hydrogen refuelling station. Wind power is
one of the largest components in BP’s renewable
energy business. BP currently operates 14 wind
farms in seven states of the USA, with
2,200 MW of capacity.
Turning to Shell, new energy technology now
accounts for a fifth of Shell’s annual R&D budget
and is expected to become an important growth
business. Raízen, a biofuels joint venture between
Shell and Cosan, has evolved into the third largest
biofuels company in Brazil, producing more than
2 billion litres of bioethanol and more than 20
billion litres of other industrial and transport fuels
annually. In hydrogen, Shell plans to build 390
hydrogen retail sites by 2023, including 230 sites
using Shell products. Shell has several wind
farms in the USA and the Netherlands, with
annual wind power output exceeding 500 MW.
In 2017, Shell acquired NewMotion, which
operates more than 30,000 eV charging stations
in western Europe. The acquisition highlights
how Shell has strong expectations that this represents the future trend in vehicle energy.
In the context of lower oil prices, Total plans
to invest $500 million annually in new energy
and expects to increase its share of the new
energy market to 15–20% by 2035. Total’s solar
energy has been listed among the world’s top
three in terms of business size. A leading biofuels
producer in Europe, Total began its development
of biofuels in 1992, including the first generation
of ethyl tert-butyl ether from ethanol and vegetable oil methyl ester. Currently, Total is
developing the second generation of biofuels. In
2011, Total paid $1.4 billion for a 66%
410
S. Yaodong and A. Gillespie
structural conflict between energy producers and
consumers makes dialogue and collaboration
between them difficult. However, sovereign
countries will continue to play a dominant and
irreplaceable role in global energy governance,
and their input and influence will be essential
when it comes to building a new global energy
governance system and navigating the energy
technology revolution.
1.8 Global Energy Majors Accelerate
Their Transformation
into Integrated Energy
Companies
In recent years, as environmental problems have
become increasingly severe, a global consensus
has formed around the shift to low-carbon and
clean energy. In response to the need for a
change in the overall structure of energy consumption, all countries are increasing their policy
support for large-scale development of the new
energy sector. As a result, the installed capacity
of new energy is continuously increasing, the
technical costs are rapidly decreasing and the
return on investment is steadily improving.
International oil majors, including BP, Shell
and Total, began investing in new energy in the
1990s. However, the profits that were available
from continuously rising international oil prices
after 2009 meant that they reduced their new
energy investments or dropped parts of their new
energy businesses altogether. After June 2014,
the international oil price plunged and then settled at a sustained low price. At the same time,
the oil majors recognised the existential role of
climate change and the need for oil and gas
companies to respond to societal concerns on
climate change and play their part in the transition to a lower carbon world.
BP is the international oil giant with the
deepest and widest footprint in new energy. the
company has identified biofuels as a priority in
its new energy business. According to BP, by
2035, the number of vehicles worldwide will
grow to 1.8 billion units, double the current level.
By then, despite the relatively sufficient availability of oil, the pressure from climate change
and carbon emissions will increase, which BP
suggests can be mitigated by biofuels. With more
than 40 years of experience in hydrogen production and more than 10 years of experience in
operating hydrogen refuelling stations, BP has
been named the energy partner of the world’s
two largest hydrogen demonstration projects in
Europe and the USA. BP and the Ministry of
Science and Technology of the People’s
Republic of China have cooperated successfully
on hydrogen energy projects, including China’s
first hydrogen refuelling station. Wind power is
one of the largest components in BP’s renewable
energy business. BP currently operates 14 wind
farms in seven states of the USA, with
2,200 MW of capacity.
Turning to Shell, new energy technology now
accounts for a fifth of Shell’s annual R&D budget
and is expected to become an important growth
business. Raízen, a biofuels joint venture between
Shell and Cosan, has evolved into the third largest
biofuels company in Brazil, producing more than
2 billion litres of bioethanol and more than 20
billion litres of other industrial and transport fuels
annually. In hydrogen, Shell plans to build 390
hydrogen retail sites by 2023, including 230 sites
using Shell products. Shell has several wind
farms in the USA and the Netherlands, with
annual wind power output exceeding 500 MW.
In 2017, Shell acquired NewMotion, which
operates more than 30,000 eV charging stations
in western Europe. The acquisition highlights
how Shell has strong expectations that this represents the future trend in vehicle energy.
In the context of lower oil prices, Total plans
to invest $500 million annually in new energy
and expects to increase its share of the new
energy market to 15–20% by 2035. Total’s solar
energy has been listed among the world’s top
three in terms of business size. A leading biofuels
producer in Europe, Total began its development
of biofuels in 1992, including the first generation
of ethyl tert-butyl ether from ethanol and vegetable oil methyl ester. Currently, Total is
developing the second generation of biofuels. In
2011, Total paid $1.4 billion for a 66%
410
S. Yaodong and A. Gillespie