Green-Energy Flops Revive Bets on Natural Gas

European energy giants Shell and BP are sticking to their core business as clean-energy investments make slow progress

By Carol Ryan of The WSJ. Excerpts:

"Biofuels are the latest green-energy investment to disappoint. That leaves the hopes of Europe’s oil and gas giants pinned on an old standby of the energy transition: liquefied natural gas.

Shell and BP had high expectations of biofuels such as renewable diesel and sustainable aviation fuel, pouring billions of dollars into the market. But things have hit a rough patch. 

Last week, Shell took a $780 million impairment after pausing construction on a Dutch plant that was meant to become one of Europe’s biggest biofuel facilities. BP abandoned plans for two out of five potential biofuel refineries, although it also bought out its joint-venture partner in Brazil-based BP Bunge Bioenergia in June.

A glut of biofuels, particularly cheap Chinese imports, is squeezing profit margins. Finland and Sweden have also watered down rules about the minimum amounts of renewable fuels that must be blended into petroleum-based transport fuel or heating oil as they try to bring down energy costs. Producers rely on these government mandates to generate demand."

"Shell Chief Executive Officer Wael Sawan said on the company’s latest earnings call that liquefied natural gas is currently “the only credible solution that gives you both energy security and decarbonizes the energy system.”"

"Switching [to natural gas] has helped the U.S. to reduce emissions from electricity generation by almost 40% over the last two decades, data from the Energy Information Administration shows."