How Covid-19 may have accelerated the green energy transition

The global oil and gas market began to weaken before the COVID-19 outbreak crashed the economy, providing bottom-line motivation for BP and other industry leaders to satisfy investors by shedding assets. That maneuvering has continued into 2020, and BP illustrates why renewable energy is poised to fill the vacuum.

BP is among the oil and gas giants pivoting to renewable energy. In some ways it appears that the corporate is running before schedule, whilst the COVID-19 crisis continues to mount.

On Monday, for instance , BP announced that it'll sell practically all of its petrochemical business to the industry leader Ineos. The sale involves 14 plants within the U.S., Asia and Europe. BP will retain only one facility in Germany, as a part of a refinery operation.

BP describes the sale because the “next strategic step in reinventing BP.” It comes a year before BP’s divestment plan involves , though the particular transaction won't be finalized until the top of this year.

Petrochemicals don't quit BP

Selling off an asset doesn't make it disappear, however. BP notes that global demand for plastics will still support the 14 petrochemical plants, particularly in Asia.

To the extent that BP continues to provide oil and gas to those 14 plants and its remaining facility in Germany, the sale won't have an impression on the quantity of carbon that BP contributes to the worldwide load.

So, is that this yet one more case of greenwashing?

In some ways, yes. BP enabled additional growth within the petrochemicals field earlier this year when it licensed its petrochemical technology to the firm Weilian Chemical for the development of a replacement petrochemical facility in China.

That puts the sale of these 14 other facilities during a different light. For the sake of comparison, consider what happens when a big-box retailer removes guns from its stores. there's a substantial amount of positive media attention, but the guns are still purchasable elsewhere. Making an actual difference would involve destroying guns available , not enabling somebody else to sell them.

Still, BP CEO Bernard Looney attempted to spin Monday’s announcement as a net gain for a more sustainable, circular economy.

“These businesses are leaders in their sectors, with world-class technologies, plants and other people . In recent years they need improved performance to supply highly competitive returns and now have the potential for growth and expansion into the circular economy,” he said.

Kickstarting the circular economy

On the opposite hand, Ineos does position itself as a contributor to the circular economy. the corporate initially focused its recycling efforts on the waste-to-energy field, but it's currently exploring more sustainable and complicated pathways, like converting plastics at the molecular level and blending more recycled plastic into virgin sources. Ineos is additionally working with the packaging industry to shift into plastics that are more easily recycled.

If all goes consistent with plan, the long-term impact of the BP sale would be to enhance economies of scale for Ineos’ plastic recycling efforts. That seems to be within the cards, because the sale includes BP’s new Infinia recycling technology among other research assets.

The sale could also provide Ineos with additional bottom-line leverage to prod its value chain toward the utilization of products that are more amenable to the circular economy.

All in all, the effect within the end of the day would be to tamp growth in demand for virgin oil and gas.

Focusing on renewable energy

On BP’s end, the sale relieves the corporate from pressure to form its petrochemical business more sustainable, enabling it to consider its core business of manufacturing energy and fuel products more sustainably.

In that regard, BP is preparing for the longer term . the corporate launched an ambitious plan for renewable energy almost 20 years ago with its “Beyond Petroleum” campaign, only to ascertain it taper off . More recently, though, BP plunged back to the renewable energy field in partnership with California-based Lightsource bp, a number one solar company.

With Lightsource, the corporate plans on developing 10 gigawatts in renewable energy within subsequent three years.

BP is additionally exploring a renewable energy plan in Australia, which might leverage solar and wind generation to get green hydrogen for export. If that plan works out, it might resolve one major bottleneck within the global renewable energy marketplace and foster a huge impact on global decarbonization.

Currently, wind and solar energy can't be shipped overseas like coal, oil or gas . within the sort of green hydrogen, though, wind and solar energy are both storable and portable . Australia has many both, and access to the lucrative Asian markets also .