With the emergence of electric vehicles and related infrastructure, the oil industry is set to deal with a major blow. We introspect, how Big Oil is propagating delay in clean energy adoption to save its own interest? An introspection.
An interesting drama is going on between Big Oil and the Electric Vehicle (EV) industry. After years of lobbying hard against EVs, the fossil fuel industry is greenwashing itself by trumpeting its efforts in advancing alternative energy. At least on paper, it is doing so. Royal Dutch Shell published its annual environmental report in April, it boasted that it was investing heavily in renewable energy. The oil giant committed to installing hundreds of thousands of charging stations for electric vehicles around the world to help offset the harm caused by burning fossil fuels.
Donating to lobby groups
On the same day, Shell issued a separate report revealing that its single largest donation to political lobby groups last year was made to the American Petroleum Institute, one of the U.S.’ most powerful trade organizations, which drives the oil industry’s relationship with the U.S. Congress. Shell donated more than $10m to API last year alone. So, in effect, it was greenwashing its balance sheet and shifting the dirty work of lobbying against EVs to API.
Let’s look at what API is doing. Contrary to Shell’s public statements in support of electric vehicles, API’s chief executive, Mike Sommers, has pledged to resist a raft of U.S. President, Joe Biden’s environmental measures, including proposals to fund new charging points in the U.S. He claims a “rushed transition” to electric vehicles is part of “government action to limit Americans’ transportation choice”.
Even Toyota lobbying to go slow on EVs
It isn’t just API, which is resisting EVs, even some automobile companies like Toyota of Japan are quietly trying to delay the transition to EVs. The Japanese automaker, which is the largest car company in the world, has been quietly lobbying policymakers in Washington, DC to resist the urge to transition to an all-electric future — partly because Toyota is lagging behind the rest of the industry in making that transition itself. Toyota is more into hybrid vehicles.
The company’s behind-the-scenes efforts to slow the momentum behind EV-friendly policies are surprising, given its status as an early adopter of battery-powered transportation. With the release of the Toyota Prius in 1997, the company helped pave the way for Tesla and others by proving that vehicles with alternative powertrains could be immensely popular. And more recently, the automaker has revealed plans to release 70 new models by 2025, including battery-electric, hydrogen fuel cell, and gas-electric hybrids.
The tide is turning
Nevertheless, the tide seems to be turning as even Big Oil is coming to terms with the inevitability of EVs. The French oil company Total quit API last year over its climate policies. It stated, “Following a detailed analysis of the climate positions of the American Petroleum Institute (API), Total announces its decision not to renew its membership for 2021.
Each year, total assesses the main industry associations of which it is a member to ensure they are aligned with the Group’s climate positions. This alignment was based on the following points:
- Our science-based position that the link between human activity and climate change is an established fact
- Our support for the objectives of the Paris Agreement,
- Our belief in the necessity to implement carbon pricing,
- Our confidence in the key role that natural gas plays in the energy transition,
- Our support for policies and initiatives that promote the development of renewable energy, and
- Our support for the development of CO2 capture and storage.”
Toyota too has shifted its stance recently and started investing in EVs. The largest automaker in the world announced that it will spend $3.4 billion on “automotive batteries” in the U.S. through 2030 — a little more than two months after it was revealed that the company was quietly lobbying elected officials in Washington, DC to slow the transition to electric vehicles.
As part of the deal, Toyota will build a new $1.29 billion factory in the U.S. to make batteries for electric and hybrid vehicles, which the company says will generate 1,750 new jobs. The automaker is the latest to announce plans to shore up battery manufacturing in the U.S., which has been a key goal of the Biden administration’s effort to speed up the switch to EVs.
Climate denial groups fund EV batteries
However, the biggest shift from virulent anti EV to investing in the technology came from Koch Industries (revenues US$115 billion) the huge financial force behind API. There’s perhaps no name more associated with climate denial. The company had spent decades on a mission to water down or destroy regulations and protect fossil fuel interests and profits at all costs. And now, Koch Industries is interested in … batteries!
The conglomerate has poured at least $750 million into U.S. batteries and electric vehicles over the past year and changed, making Koch Industries one of the biggest investors in the sector outside auto companies, according to a report by the Wall Street Journal. Those investments in companies such as Freyr Battery and Aspen Aerogels were made through Koch Strategic Platforms, a subsidiary of the company that focuses on growth in computing, industrial automation, energy transformation and health care.
The company’s investment in startups focused on sustainability and electrification seems like a head-scratcher, given the company’s CEO Charles Koch and his late brother David’s past. The EV industry has marketed itself as a green alternative to gas cars, and the Koch brothers have supported anything but.
The Koch brothers have funded Americans for Prosperity, a libertarian political advocacy group that has protested climate change legislation and fought against public transit, a surefire way to reduce carbon pollution. The group has said it just wants to give people the freedom to drive their cars, freedom that just so happens to dovetail with Koch Industries’ businesses, which include gas production, asphalt and auto parts.
Big Oil greenwashes itself with no real action
However, a recent study found that Big Oil companies like ExxonMobil, Chevron, BP and Shell are paying lip service to clean technologies and not following up their pious promises with real action. The energy products of oil and gas majors have contributed significantly to global greenhouse gas emissions (GHG) and planetary warming over the past century. Decarbonizing the global economy by mid-century to avoid dangerous climate change thus cannot occur without a profound transformation of their fossil fuel-based business models.
The research published in PLOS ONE is an inclusive journal community working together to advance science for the benefit of society, now and in the future, accuses Big Oil of greenwashing their financial and other reports. Using data collected over 2009–2020, the research comparatively examined the extent of decarbonization and clean energy transition activity from three perspectives: (1) keyword use in annual reports (discourse); (2) business strategies (pledges and actions); and (3) production, expenditures, and earnings for fossil fuels along with investments in clean energy (investments).
It found a strong increase in discourse related to “climate”, “low-carbon” and “transition”, especially by BP and Shell. Similarly, the researchers observed increasing tendencies toward strategies related to decarbonization and clean energy. But these are dominated by pledges rather than concrete actions.
Moreover, the financial analysis reveals a continuing business model dependence on fossil fuels along with insignificant and opaque spending on clean energy. “We thus conclude that the transition to clean energy business models is not occurring, since the magnitude of investments and actions does not match discourse. Until actions and investment behaviour are brought into alignment with discourse, accusations of greenwashing appear well-founded,” the report summarized.
Big Oil seems to be ultimately facing its Big Tobacco moment when after years of climate denial it is forced to reckon with the harm fossil fuel usage has done to the planet. Nevertheless, they aren’t going to give up without a last desperate fight back to delay clean energy adoption.
Also Read: Adding a dash of salt to electric vehicle battery arms race
(Abhijit Roy is a technology explainer and business journalist. He has worked with Strait Times of Singapore, Business Today, Economic Times and The Telegraph. Also worked with PwC, IBM, Wipro, Ericsson.)
(Disclaimer: The views expressed in the article above are those of the author’s and do not necessarily represent or reflect the views of Autofintechs.com. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.)