⅔ of all venture investments by Big Energy companies go into sustainability. These include CCUS, Renewables, Hydrogen, Chemicals recycling, Grid & Utility tech, E-transport, and Digital.
As pressure mounts for corporations to reduce their environmental footprint, energy giants have ramped up investments into clean energy and partnered with other firms to diversify away from oil & gas, recently announcing a pledge to be net-zero by 2050.
Strategies for decarbonization are usually two-pronged:
- make current oil & gas operations more efficient and less carbon intensive (“core” / conventional energy)
- explore new forms of renewable energy generation (“new” / “future” energy)
Amid the record historical profits of US oil and gas corporations, let's take a look at real examples of what these companies are doing in terms of the green transition.
Hydrogen
Hydrogen is poised to be a pivotal fuel in the energy transition away from fossil fuels. This has been recognized by oil & gas companies as well as the US Department of Energy. Much of the existing oil & gas infrastructure (pipelines, gas turbine generators, refueling stations, etc.) can be easily repurposed for hydrogen uses, making this tech more appealing to oil & gas companies.
For example, TotalEnergies has established a partnership with Sunfire. This company produces renewable hydrogen and syngas, a mixture of hydrogen and carbon monoxide, from renewable electricity, water steam and captured CO2. Also, in August 2021, Chevron invested in Raven SR, which transforms biomass, mixed municipal solid waste, bio-solids, sewage, medical waste, and natural or biogas into renewable fuels.
As for the independent players, (who do not yet partner with global giants, but have the potential to compete with them through their innovative products) we can name Electric Hydrogen (EH2), which is working on supplying ‘green hydrogen’ — hydrogen produced using renewable energy — to industrial sectors. EH2 secured $198M from a group of top investors, Fifth Wall Climate Tech led the round, with participation by S2G Ventures, and lenders Silicon Valley Bank and Trinity Capital.
Carbon capture, utilization, and storage (CCUS)
Carbon Capture, Utilization, and Storage (CCUS) is a crucial field in mitigating the effects of climate change and reducing greenhouse gas emissions. CCUS involves capturing carbon dioxide (CO2) from various sources, utilizing it for various purposes, and safely storing it so that it does not escape into the atmosphere. The technology is critical in reducing the carbon footprint of industries such as power generation, oil refining, and cement manufacturing, and is seen as an essential component in achieving global carbon emissions reduction targets. With the increasing awareness of the need to tackle climate change, the CCUS industry is gaining traction, and investment in research and development is expected to increase in the coming years.
Under pressure from EU governments to reach its net-zero goal by 2050, European energy giant TotalEnergies introduces deep interest in carbon utilization. In early 2021, its venture arm invested in UK-based carbon recycling company Deep Branch. The company's technology generates clean, nutritious, and sustainable single-cell protein directly from carbon dioxide in industrial waste gas, enabling its clients in the feed industry to reduce their carbon footprint. In addition to these efforts, In 2020, Shell acquired Select Carbon, an Australia-based carbon recycling startup, which uses microbes to convert carbon dioxide from industrial emissions into usable products.
A noteworthy independent company - NET Power - developed a power plant that burns natural gas without releasing emissions into the atmosphere. The company achieves this by storing and using CO2, instead of steam, as a way to generate electricity. According to Crunchbase, the company has raised a total of $150M investments, from Oxy Low Carbon Ventures, Exelon Corporations, the Shawn Group and 8 Rivers.
Grid & utility tech
The Grid & Utility tech area refers to the technologies and systems that make up the electrical grid and its supporting infrastructure. This includes power generation, transmission, and distribution networks, as well as energy storage solutions and demand response systems. The focus of this field is to improve the reliability, resilience, and sustainability of the grid while reducing its cost and carbon footprint. With the increasing adoption of renewable energy sources and the rise of electric vehicles, Grid & Utility tech has become an increasingly important area for investment and innovation.
As renewable energy systems require a multi-pronged, digitized approach to ensure they stay online at all times, TotalEnergies has funded startup LevelTen Energy through its venture arm. Company’s platform connects corporate and industrial power buyers to the universe of power purchase agreements from utility-scale wind, solar, and storage projects. Beyond this, in August 2020 Shell, another industry giant, invested in Palmetto Clean Technologies - software that helps consumers understand their energy spend, while enabling and promoting the home-based use of clean energy solutions, such as solar.
Chemical recycling
The chemical recycling industry aims to convert waste plastic into valuable chemicals, hereby potentially reducing the release of harmful chemicals into the environment. Chemical recycling can also produce high-quality raw materials, thereby decreasing demand for fossil fuels and other natural resources. In contrast, the traditional method of recycling plastic, mechanical recycling, has its limitations and can only be applied to a limited number of plastic types and grades. As technology develops, chemical recycling could promote domestic businesses and employment, creating a market for plastic waste and a new way to reuse some plastics.
TotalEnergies has built partnerships with Citeo, chemical recycler Recycling Technologies, Nestlé, and Mars to examine the technical and economic feasibility of recycling complex plastic waste, such as small, flexible and multilayered food-grade packaging. Like other oil & gas players, In September 2021, Chevron also invested in gr3n startup. Company supplies a reliable chemical recycling solution that closes the polyethylene terephthalate (PET) lifecycle, offers polymer grade material, treats waste, lowers carbon footprints, and provides cost savings for players throughout the value chain.
Renewable Energy
Renewable energy sources, such as solar, wind, hydro, and bioenergy, are becoming increasingly cost-competitive with traditional fossil fuels and are expected to play a major role in meeting the world's growing energy needs in the future. According to the Renewables 2022 report, Renewables will become the largest source of global electricity generation by early 2025, surpassing coal. In addition, renewable energy technologies are making great strides in terms of cost-effectiveness and efficiency, with continued innovation expected to drive even greater progress in the years to come.
Chevron’s renewable energy investment strategy has been broad, ranging from offshore wind and solar to nuclear fusion and geothermal. So, in August 2020, the industry witnessed investment from CTV to Zap Energy. It is a Seattle-based start-up company that develops and commercializes fusion energy technology using the sheared-flow stabilized (SFS) Z-pinch. As part of this, in November 2020, Shell built a partnership with Renewi and Nordsol. They will construct a bio-LNG plant in Amsterdam, where Renewi will collect organic waste, Nordsol will process it into bio-LNG, and Shell will make it available at its gas stations. ExxonMobil recently acquired a minority interest in Norway-based biofuels company Biojet, which converts forestry and wood-based construction waste into biofuels and biofuel components
E-transport
The transportation sector is one of the largest contributors to global greenhouse gas emissions, accounting for approximately 15% of total emissions. The adoption of EVs, which emit far less greenhouse gases than internal combustion engines, can help reduce the carbon footprint of the transportation sector and contribute to the fight against climate change. In addition to reducing emissions, EVs also offer numerous other benefits, such as improved energy efficiency, lower operating costs, and a reduced dependence on oil. The electrification of the transportation industry has also spurred innovation in battery technology and charging infrastructure, which will be crucial to making EVs a practical and convenient option for consumers.
Powering cars with electricity is a growing priority for Shell. It has established partnerships with Porsche, Hyundai, and Singapore-based Energy Market Authority to develop EV tech in 2021. They will implement Southeast Asia’ first cross-border high performance charging network with 12 charge points at 6 Shell stations strategically located along Malaysia’s North-South highway. It will offer the possibility of convenient travel between Singapore, Kuala Lumpur, and Penang in the future. Similarly, TotalEnergies backed Chargetrip in 2020. The company’s platform and proprietary algorithms use multiple variables and predictive models to calculate the range of any electric vehicle, compute the best route to a destination, including the optimal charge stations in between, optimize for total travel time and travel costs. On top of that, in 2019, Chevron teamed up with EVgo. This company owns and operates a public direct current fast charging network in the U.S.
Digital
The digital industry has emerged as a powerful tool in promoting sustainable development, by leveraging technology to address social, economic and environmental challenges. In recent years, businesses have increasingly adopted digital solutions to enhance their operations and reduce their carbon footprint, while also improving access to information, goods and services for communities worldwide. As the digital sector continues to grow and evolve, it presents exciting opportunities for companies to develop innovative solutions and play a vital role in shaping a sustainable future.
In this focus area, TotalEnergies has started partnership with supply chain and CO2 traceability startup Circulor and Recycling Technologies. Project TRACKCYCLE will embed blockchain technology into the advanced recycling value chain, with the aim of providing a fully traceable and accurately labeled record of recycled materials. In February 2022, Shell acquired Powershop, an operator of an online power company aimed to incentivize consumers in the Australian market to change their energy usage habits.It is also worth looking into an independent company WellAware. This company's technology offers end-to-end data to capture, monitor, and analyze datasets for oilfield intelligence from data collection to decision analytics. Raised $75M from investors like Activant Capital, Carlos Slim, and Dick Cheney.
In conclusion, we can say that, despite some active participation from BigEnergy companies in recent years in funding the green transition (at least with venture money), we understand that still 92% of CO2 in the world is produced from the use of fossil fuels. Therefore, we can expect even more proactive actions from those companies, especially given the recent new rules of the Net Zero Asset Owner Alliance.
