An opinion piece in the Financial Times has suggested that large oil and gas companies that are investing heavily in low/zero-carbon forms of power will eventually split into legacy ‘fossil’ companies and separate renewables companies, as Uniper was split from E.ON in 2016.
The suggestion comes after former BP CEO Lord Browne of Madingley, who oversaw a period of consolidation in the 1990s, wrote in Time magazine that the oil and gas industry needs to be “bolder in separating low-and zero-carbon activity from their fossil fuels business”. According to this argument, as the FT puts it, the industry is “fundamentally trying to bind together two competing constituencies in a way that is inefficient, won’t survive the duration of transition and won’t produce good performance in the meantime”. The opposing view is that there is value in combining both types of power generation – for instance, carbon capture and storage might be applied both to ‘blue’ hydrogen production and (renewable) biomass firing, or excess solar and wind power might be used to create synthetic methane for combustion. Such integration between fossil businesses and renewable businesses might be performed under contracts between separate entities, but there is at least a reasonable case for their integration. In the FT’s view, however, the separation of oil and gas majors is only a matter of time.