After 27 rounds of global climate negotiations, the world still can’t seem to break its fossil fuel addiction.
Finding consensus on language to “phase out” oil and gas among nearly 200 parties with vastly different political and economic interests was always going to be a tall ask. But COP27 brought hope. The world had agreed to similar “phase out” language around coal just a year earlier. With high oil prices fanning the flames of global inflation and war throughout 2022; many held out hopes that fossil fuels would be next.
But as climate delegations boarded their planes home, it was clear that any formal phase-out of petroleum remained a pipe dream.
Instead, 2022 will mark one of the most profitable years in history for oil companies. So much so that President Joe Biden has threatened big oil with a “windfall tax” on their profits if they fail to adequately invest in new production that could lower gas prices, rather than return capital to shareholders in the form of dividends and stock buybacks. If implemented, America would then effectively be phasing up our own oil production, deepening our dependence on fossil fuels.
It seems that the debate on “phasing out” fossils will remain — at least for now — somewhat philosophical. But it doesn’t have to be this way. There is a clear and immediate path forward. Immense technological breakthroughs offer a more pragmatic, and immediate, solution to the world’s climate crisis.
That solution depends not on phasing out existing fuels, but phasing in new ones. In doing so, we can help tame inflation, reduce pain at the pump, and strengthen America’s energy independence. Best of all, we can use existing infrastructure and start today.
Big oil has been investing in marketing campaigns and targeted brand campaigns to highlight their renewable bona fides and commitment to a low-carbon future. But do they mean it? To actually get there, they must act. After a year of windfall profits, they can afford to do so proactively — without the need for a UN referendum or government mandate, and in a way that prepares their industry for a de-fossilised future.
My proposal to “phasing in” biofuels: Oil companies mark off roughly one-half of the capital they plan to distribute in dividends and share buybacks. Instead, they commit that amount to the development of alternative green liquid fuels that can serve as feedstock for their existing downstream refinery infrastructure.
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Here’s a snapshot: ExxonMobil has said it will invest around $15 billion in renewables over the next five years. A rough estimate of my proposal would yield from big oil profits about $18 billion this year alone. That’s more than twice the global investment in biofuel technologies made in 2021. It would amount to an unprecedented capital infusion into an industry that has the promise to make real, tangible progress in the climate crisis where government-led negotiations have come up short.
Energy economists call this ‘incentive-compatible’, but it’s really just a proposal to pivot away from fossil fuels as the key input to our global liquid fuels system –– and the engines that have to use them for the foreseeable future. Instead of starting with other fossil fuels like liquified natural gas, a rapid infusion into R&D will allow us to phase in biofuels to existing oil and gas refinery infrastructure.
Most promising for the planet: those biofuels can be derived from things that humans today treat as waste products; like forest residue and agricultural leftovers. My company — a startup born from biofuels R&D — is now yielding liquid biofuel that can phase into existing airplane engines. Depending on what sustainable raw materials we use, this “green crude” technology can reduce carbon emissions by 80% — or even go carbon-negative.
Truly sustainable, scalable biofuel is within reach. It can phase into existing airplane engines. It can phase into other applications where electrification simply isn’t practical. It can phase into chemical processes that make products from essential plastics, which, for example, form the foundation of the critical healthcare products we need to survive. That’s the beauty of a “phase in” approach; it’s less disruptive to global economies, making it more universally palatable, even when vested interests are at the table.
We’ll be just one player in the fight to “phase in” — there are firms around the world who are making significant advances in other carbon-reducing biofuel technologies. We view them as allies. The market is much larger than any of us could serve and there is room for all of us to grow rapidly. In fact, the planet needs all of us to grow much faster than our shareholders and customers could possibly imagine.
By investing in a pragmatic and fit-for-purpose approach, big oil would be injecting more than just capital and R&D into America’s biofuels industry. They’d be sending a powerful and substantive message to markets, governments, and people around the globe. Not marketing, real action. Most importantly, it would supercharge the growing commitment of engineers, communities, and countries to move faster toward practical and implementable solutions — solutions that can truly help save the planet.
