Amid rising concerns about the climate and the current energy crisis, European oil companies are attempting to shift from fossil fuels to renewable energy – and spending huge amounts in the process.
Most recently, British/Shell agreed to buy Europe’s largest biogas producer, based in Denmark Nature Energy, for €1.9 billion. As part of the deal, the oil giant will acquire Nature Energy’s 14 industrial plants and an international development pipeline of approximately 30 plants in Europe and North America.
This comes a month after rival BP announced its $4.1 billion plan to buy Archaea Energy, a US-listed biogas producer.
What is Biogas?
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Biogas – also known as renewable natural gas (RNG) – is mainly produced using waste from crops, animal manure and industrial activity through a special “digestion” process in which bacteria break down organic matter in an oxygen-free environment.
It is then purified into biomethane by extracting carbon dioxide and hydrogen sulfide, and can be treated in the same way as natural gas in the pipeline network – requiring no new infrastructure.
As such, biogas is considered a renewable energy source, which can be stored or fed into the grid.
Why Shell’s investment in biogas is great, but worrying
At first glance, Shell’s investment definitely sounds like a good thing. The optimistic reasoning goes as follows: Fossil fuel players are increasingly feeling the pressure to present themselves as legitimate partners in the energy transition.
“We will use this acquisition to build an integrated RNG value chain on a global scale, at a time when energy transition policies and customer preferences signal strong growth in demand in the coming years,” the company notes in the press release.
Shell also adds: “Nature Energy is cash generating and the acquisition is expected to both contribute to Shell’s revenues upon completion and generate double-digit returns.”
But whether this money generated by renewable energy will indeed go to the development of renewable energy is open to question.
After all, oil is still much more profitable than renewables. According to the company Update Note Q3 2022renewables and energy solutions are expected to earn about $300 million — compared to adjusted revenues from upstream oil production of between $3 and $3.4 billion.
And while Shell aims to be a net zero emissions energy company by 2050, this is not guaranteed. [net zero by 2050 and Net Carbon Footprint by 2035] are currently outside our 10-year planning window,” the fine print reads is reading.
“Going forward,” it continues, “as society moves towards net-zero emissions, we expect Shell’s operational plans to reflect this move. However, if society is not net zero by 2050, there is a significant risk that Shell will not meet this target.”
Green investments finance the fossil fuel industry
Take, for example, Equinor’s floating offshore wind farm in Norway. Two weeks ago, the so-called Hywind Tampen started producing electricity from its first wind turbine. But while wind is a renewable energy source, the wind farm will be used to supply energy to oil and gas fields in the North Sea.
Even more alarming, The Big Green Investment Surveya pan-European investigative journalism collective, has exposed the dark side of sustainable investing.
The team examined the European funds that classify themselves as ‘dark green’, ie very sustainable, according to the EU’s sustainability index.
They found that over €8.5 billion of “grey” investments were in Europe’s dark green funds – with gray meaning “unsustainable”. Their research yielded another worrying result: nearly half of the dark green funds were investments in aviation and the fossil fuel industry.
That said, we need energy suppliers like Shell to continue to invest in renewables as it is a critical step towards our transition to greener forms of energy – and perhaps these investments are indeed a signal for a more sustainable future.
Nevertheless, regulatory authorities must take further action to ensure that renewable energy sources are used to save the planet rather than increasing our dependence on fossil fuels.