Is the oil barrel half-empty or half-full? To put that another way, will our refineries still be working with crude oil in 20 years, or will they be processing something like ... waste animal fats and waste vegetable oils, including used cooking oil and inedible corn oil? It sounds yucky, but investors are more interested in what their bank accounts look like.
This, of course, is what would happen in Port Arthur if plans by Valero Energy and Darling Ingredients move forward. The two companies announced the joint venture called Diamond Green Diesel. This is not your father’s refinery; it would be the first-ever renewable diesel plant in Texas.
And it’s not a small operation either, as our story this week reported. If it’s built, it would produce 400 million gallons of renewable diesel annually. Valero and Darling have already built a small renewable diesel plant outside New Orleans, and now they’re dramatically expanding its production. Renewable diesel is more chemically similar to crude oil-based diesel. Because of that, it can more easily be used in conventional engines without as many blending ingredients.
Just a few years ago, a story like this wouldn’t have made that big a splash. The combination of bio-material with petroleum products is not new; think ethanol in your car’s gas tank derived from corn grown in the Midwest. But it was always a side issue to the massive oil refineries that have been powering this nation since the start of the last century.
But something also happened last week that harkened back to the beginning of that century. For the first time since 1925, Exxon Mobil fell out of the Standard & Poor’s 500 list of the 10 most valuable American companies.
Exxon Mobil didn’t fall far; it’s now 11th, and it’s still worth $300 billion. Still, it isn’t hard to wonder if that company and the other oil giants will be like the steel and railroad behemoths that once dominated American industry. At one time, they looked invulnerable. But sweeping cultural and economic changes slowly transformed them from powerhouses to regional players.
Wind and solar will make up almost 50% of world electricity in 2050 — “50 by 50.”
By 2030, wind and solar will be cheapest across more than two-thirds of the world.
Europe will decarbonize fastest. Coal-heavy China and gas-heavy U.S. lag behind.
Consumer energy decisions such as rooftop solar and behind-the-meter batteries will help shape an increasingly decentralized grid.
Batteries, gas peakers and dynamic demand will help wind and solar reach more than 80% penetration in some markets.
Coal will continue to grow in Asia but collapse everywhere else, peaking globally in 2026.
Gas-fired power will grow just 0.6% per year to 2050, mostly supplying system back-up and flexibility.
For now, all of this is down the road. Valero and Darling won’t make a final decision until 2021 and the refinery wouldn’t open until 2024. Exxon Mobil and the other big players in the petroleum industry will be drilling for oil and refining it profitably for many years to come.
But looking ahead, it’s hard to deny a future of more renewable energy and less use of fossil fuels. And Valero’s partnership is not unique. According to The Motley Fool, other major investments by oil companies in green programs include:
ExxonMobil — A $500 million joint venture with Synthetic Genomics to genetically engineer photosynthetic algae to produce renewable crude from sunlight and carbon dioxide.
Chevron — Small investments in projects spanning wind power, solar and geothermal that can power a combined 113,000 U.S. homes; also a leader in renewable diesel infrastructure.
Total SA — Total Energy Ventures has invested roughly $160 million in 20 start-ups spanning solid-state lithium ion batteries, microbial fuel factories, and enhanced cellulosic sugar recovery. Also owns 56% of solar panel manufacturer SunPower.
BP — Owns 1.4 gigawatts of American wind power and solar leader Lightsource BP; 50-50 joint venture with DuPont (DowDuPont) in next-generation renewable fuels.
Royal Dutch Shell — Purchased a 44% stake in solar developer Silicon Ranch for $217 million, and acquired on-site power generation management company MP2 Energy.
Something is going on, and this trend seems unstoppable. More and more voters want to see green conversion in energy continue, particularly the younger ones. To them, renewable energy is not just an option but the new standard they want to live under. Some countries and U.S. states are passing laws that sharply limit — or ban — the use or production of fossil fuels.
That transition will be a challenge to places like Southeast Texas, with four major oil refineries, including the two biggest in the country. But these corporations are run by smart people, and they know what’s happening too. One of them — Valero — just announced a partnership with a green company. If we see more of that, your kids might work at a refinery here ... that has nothing to do with oil.