Big Oil's Alternative Investment
May 9th 2012 2:01PM
Updated May 9th 2012 3:52PM
Despite the hubbub about government subsidizing alternative energy development, more and more of the funding for important research for our energy future is coming from big oil. Not all majors are equal in their commitment to an alternative future, however. Today I'll take a look at some of the ongoing alternative energy efforts made by oil majors.
Eni announced a partnership with Massachusetts Institute of Technology back in 2008, committing to $25 million in funding over the course of five years. The result was the Solar Frontiers Center, corroborating Eni's position that from an environmental and economic viewpoint, solar energy is one of the renewable energies with the "highest potential for large-scale sustainable use."
The partnership has produced numerous advances that may well affect solar power as we know it. In December, the Solar Frontiers Center announced that researchers had successfully printed functional, flexible solar cells on paper.
Total (NYSE: TOT )
Total is perhaps best known for its $1 billion stake in solar company SunPower (Nasdaq: SPWR ) and its recent participation in the launch of the Institut Photovoltaique in Paris. The institute will be one of the five largest solar research centers in the world, committed to researching and developing the efficiency and competitiveness of photovoltaic cells.
Aside from its solar investments, the French major has a host of other alternative energy commitments to its name. Projects include:
- Developing biofuels from microalgae.
- Researching carbon storage, energy storage, and geothermal processes.
- Research and development aimed at energy efficiency challenges in an urban setting.
All told, while Total invests in its core fossil fuel business segments, it is also preparing for an alternate energy future.
Chevron (NYSE: CVX )
America's second-biggest energy company, Chevron has a self-described "pragmatic" approach to renewable energy. The company is the largest producer of geothermal energy in the world, and has its hand in solar and biofuel projects as well.
The initiative I find the most compelling right now, however, is Chevron's energy-efficiency business. Two years ago, Chevron set out to build a landfill cogeneration project for the U.S. Navy. Burning gas from a landfill, Chevron built a facility that generates 1.9 megawatts of power. That project, combined with retrofitting lighting in 82 buildings and expanding the energy control system reduced the base's carbon emissions by 19,300 tons annually -- the equivalent of taking 16,000 cars off the road.
BP (NYSE: BP )
After almost 40 years, BP recently threw in the towel on its solar projects, opting to pursue wind and biofuels only instead.
The company's biofuel commitment is a significant one. In 2007, the company announced it would invest $500 million over the course of 10 years in the Energy Biosciences Institute. The Institute is run by the University of California Berkeley and the University of Illinois and is dedicated to researching advanced biofuels, as well as converting hydrocarbons into cleaner fuels.
Royal Dutch Shell
Shell CEO Peter Voser has taken the long view on the adoption of alternative energy, convinced it will take 20-25 years before anything other than fossil fuels really starts to meet demand in a meaningful way. That being said, Shell is still developing these alternatives, though its commitment wavers at times.
The company has three different biofuel joint ventures with Codexis and Virent. The partnerships focus primarily on ethanol development for gasoline, with hopes that more powerful fuels, like jet fuel, can be produced in the future as well.
Shell also has a partnership with Iogen, though shareholders voted in April to refocus this effort, meaning a large facility in Manitoba will not be built.
Additionally, Shell sponsors the Eco-marathon, a global student competition to develop ultra-energy-efficient vehicles.
ExxonMobil (NYSE: XOM )
The biggest of the bigs, ExxonMobil has the potential to make a world of difference in the alternative energy game. Its investment to date is meager when compared to the other majors, and recently, documentation has come to light that shows Exxon paid fees to lobbying group the American Legislative Exchange Council to write legislation repealing carbon-pollution-reduction programs across the U.S.
The company is not exactly a champion for alternative energy, but realistically, Exxon makes enough money to buy someone else's innovation down the road, should a large part of our energy future come from those alternative sources.
Our energy future is very much in question right now. Fossil fuels will dominate for at least the next decade or two, but research and development efforts by these energy giants may prove to be the difference maker. Technological advancement will change the way we produce energy, just like its changing manufacturing. For insight on the disruptive powers of three technology stocks, click here to access the Fool's special free report "The Future is Made in America."