According to a report from the research group Wood Mackenzie, the analysis of how worldwide changes in demands for energy will transform the sector in the next decade proves that the largest oil and gas companies should place at least one-fifth of their investments in wind and solar power. Dwindling demand for oil and other fossil fuels and rising demand for renewable energy will drive this change in the sector, which will, in turn, necessitate new investment strategies.
The biggest energy companies today now enjoy a market share in oil and gas of about 12%. To maintain that share, analysts say, the companies will need to spend more than $350 billion (£275 billion) on wind and solar power by 2035. Even if they don’t spend enough to maintain that market share, Wood Mackenzie forecasts that renewables may account for one-fifth, or more, of their capital allocation from 2030 onward.
This level of investment arises from a recognition, even by fossil fuel companies, that demand, availability, climate change, and policies designed to cope with climate change are all permanently changing the industry. “The momentum behind these [renewable] technologies is unstoppable now,” Wood Mackenzie director of research Valentina Kretzschmar told The Guardian. “They [the oil companies] are recognizing it is a megatrend; it’s not a fad, it’s not going away. There is definitely a risk to their core business.”