16 June 2019, Sunday | 06:01am

Looking beyond oil

2018-12-10

ALTHOUGH expected for some time, the recent establishment by Petronas of a “New Energy” team to look at renewables for possible future sources of energy is a far-sighted and welcome development.

Petronas has expressed interest over the last year to diversify into renewables amid low oil prices. In March, its chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said Petronas would explore new business areas including new energy, citing opportunities in solar power in particular.

Petronas joins a number of large global oil and gas firms looking into renewables, including ExxonMobil, Royal Dutch Shell, BP and Total — all of which are raising investment in cleaner energy.

Why the interest in renewable energy (RE)?

It’s reliable, plentiful and will continue to decrease in cost as technology and infrastructure improve. In addition to solar and wind, the RE portfolio includes geothermal, hydropower and tidal energy, and biofuels from algae. And, of course, these energy sources produce few emissions of carbon dioxide which cause the greenhouse effect and global warming.

With respect to electricity generation, the latest United Nations figures show that the world last year installed a record 98 gigawatts of new solar capacity, far more than the net additions of any other technology — renewable, fossil fuel or nuclear.

Solar power last year attracted far more investment, at RM699 billion, up 18 per cent, than any other technology. According to the annual Global Trends in Renewable Energy Investment 2018 report, produced by UN Environment, the Frankfurt School-UNEP Collaborating Centre, and Bloomberg New Energy Finance, investments in solar power made up 57 per cent of the 2017 total for all renewables (excluding large hydro) of RM1.15 trillion, “and it towered above new investment in coal and gas generation capacity”, estimated at RM428 billion.

A driving power behind last year’s surge in solar was China, where an unprecedented boom saw some 53 gigawatts added — more than half the global total — and RM359 billion invested, up 58 per cent.

Driving the trend are falling costs for solar electricity, and to some extent wind power. Global investment in renewables has exceeded RM830 billion for eight consecutive years. Since 2004, the world has invested RM12.2 trillion in these green energy sources.

That said, renewables generated just 12.1 per cent of world electricity in 2017. That’s up from 5.2 per cent a decade earlier, but still a small fraction of total world energy needs.

The writing is on the wall, nonetheless. With growing evidence of the impacts and rising cost of climate change, pressure is building to reduce CO2 emissions. On Dec 2, negotiators from around the world opened the United Nations’ annual climate change conference, now three years after a landmark deal in Paris set a goal to keep global warming well below 2° Celsius.

Displacing and replacing fossil fuels won’t be easy and the world’s big oil companies, with their global infrastructure networks, are among the most important allies in this effort.

And as one commentator recently observed, the big energy firms have the most to lose if they fall behind the technology curve. They need to lead the march towards clean energy sources.

ExxonMobil is spending RM4.2 billion per year on basic research in low-carbon technologies, with a major focus on genetically engineered algae being farmed with an aim to produce an initial 10,000 barrels per day of renewable crude, which can then be upscaled to larger levels. Among other efforts, ExxonMobil is also partnering with America’s largest biodiesel producer, Renewable Energy Group, to create microbes that could turn waste biomass into biodiesel fuel.

BP, meanwhile, produces about 200 million gallons of low-carbon ethanol each year in Brazil. Its three facilities there also burn leftover agricultural wastes to power themselves and add 850 gigawatt-hours of electricity to the grid.

Meanwhile, BP and DuPont have formed a joint venture to use genetically engineered microbes to manufacture butanol, an alcohol that can be blended into gasoline, much like ethanol is added in the US. The annual US market opportunity for butanol is estimated at more than 20 billion gallons.

Royal Dutch Shell is focused on solar power and energy efficiency. It also recently acquired a firm specialising in power management solutions.

It is the giant French company Total that leads all the world’s energy firms in green energy investments. Its goal is to generate 20 per cent of its business from low-carbon products within 20 years. Its venture capital fund has invested RM667 million in about 20 projects and it owns over half of a global solar company starting to turn sustainable profits.

The International Renewable Energy Agency (IRENA) recently cited Southeast Asia as a potential RE hotspot. Unfortunately, the agency said, the region lacks policy frameworks that would encourage investment. That needs to change.

Asean has plans to generate 23 per cent of its primary energy needs from renewables by 2025, up from just over 10 per cent now. Petronas is well placed to tap into this potentially huge market.

Zakri Abdul Hamid, is a Distinguished Fellow of the Washington D.C.-based Global Federation of Competitiveness Council (GFCC), is the 2017 recipient of the GFCC’s Global Competitiveness Award

 

Source: NST

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