The recession has finally caused oil companies has to pull back promises of renewable energy, as Royal Dutch Shell announced that it won’t make any more large investments in wind, solar, or hydrogen technology. Tough times have sent oil prices plunging, and as a result, Shell no longer feels pressured to invest in alternatives. Short-term thinking at its finest–especially since companies like BP and Conoco have admitted that oil supplies will hit a peak in the near future.
Shell executive board member Linda Cooke seemed unfazed by the changes, saying, “On wind and solar, they’re interesting, but they continue to struggle in comparison with the other investment opportunities we have in our portfolio, even with substantial subsidies.”
The oil company won’t entirely abandon alternatives, however. Shell still plans on investing in biofuels since the company believes it meshes well with its oil and gas operations. The oil giant has already signed deals with Codexis and Virent Energy Systems to develop plant-based biofuels, with more deals likely to come.
But despite its continued investment in biofuels, alternative energies are still only a tiny sliver of the company’s investments. In the past five years, Shell has made $1.7 billion in investments in renewable energy–compared to $1.7 trillion in company sales over the same time period. Virtually ignoring renewables seems like a questionable strategy for a company that readily admits oil supplies are struggling to keep pace with demand.