The world’s largest publicly traded energy company is not making any bets on the environmentally friendly power sources now, and does not plan to any time soon.
Despite the growing popularity of renewable energy sources — top competitors like BP and Chevron Corp. dabble in it — Exxon Mobil Corp. has shied away from investing in solar and wind energy, arguing that the business is viable only with Uncle Sam’s help. The company says the economics of solar and wind energy don’t add up. And rather than spending on R&D to find a cost-effective solution, it plans to let others take the lead.
Exxon estimates solar and wind energy demand will grow at a 10 percent rate annually over the next 25 years, but only on the back of government subsidies and tax breaks to spur investment in cleaner, environment-friendly energy sources.
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Strip out the handouts, and investing in wind and solar energy would be nonstarters, the manager of Exxon’s energy demand and supply forecasting division told Reuters last week.
“It’s an uneconomic niche and our business is not built around the expectation of a bunch of subsidies to make a profit,” said Scott Nauman, manager of the economics and energy division at Exxon. “We want a business that is robust on its own merits.” Wind energy, for example, is constrained by several factors — wind farms can be located only in windy areas and backup coal or gas facilities must be used when it isn’t windy enough, he said.
“We spend a lot more time than you would think studying the economics of wind and the economics of solar energy,” Nauman said. “But when you go through all the economics, it is just not attractive.”
The stance has made Exxon a magnet for criticism from environmental groups, many of whom lambasted the company for its lack of investment in renewable energy sources at its annual meeting last week in Dallas.
One critic took the podium to say General Electric Co.’s recent “Ecoimagination” initiative that boosts its investment in environmentally friendly technologies had made him hope for a similar “Exxoimagination” project someday. Off-Grid will offer detailed coverage of the General Electric initiative in future.