ROI on fantasy energy not enough to temp majors

NY Times:

The Obama administration wants to reduce oil consumption, increase renewable energy supplies and cut carbon dioxide emissions in the most ambitious transformation of energy policy in a generation.

But the world’s oil giants are not convinced that it will work. Even as Washington goes into a frenzy over energy, many of the oil companies are staying on the sidelines, balking at investing in new technologies favored by the president, or even straying from commitments they had already made.

Royal Dutch Shell said last month that it would freeze its research and investments in wind, solar and hydrogen power, and focus its alternative energy efforts on biofuels. The company had already sold much of its solar business and pulled out of a project last year to build the largest offshore wind farm, near London.

BP, a company that has spent nine years claiming it was moving “beyond petroleum,” has been getting back to petroleum since 2007, paring back its renewable program. And American oil companies, which all along have been more skeptical of alternative energy than their European counterparts, are studiously ignoring the new messages coming from Washington.

“In my view, nothing has really changed,” Rex W. Tillerson, the chief executive of Exxon Mobil, said after the election of President Obama. “We don’t oppose alternative energy sources and the development of those. But to hang the future of the country’s energy on those alternatives alone belies reality of their size and scale.”

The administration wants to spend $150 billion over the next decade to create what it calls “a clean energy future.” Its plan would aim to diversify the nation’s energy sources by encouraging more renewables, and it would reduce oil consumption and cut carbon emissions from fossil fuels.

...

In the last 15 years, the top five oil companies have spent around $5 billion to develop sources of renewable energy, according to Michael Eckhart, president of the American Council on Renewable Energy, an industry trade group. This represents only 10 percent of the roughly $50 billion funneled into the clean-energy sector by venture capital funds and corporate investors during that period, he said.

“Big Oil does not consider renewable energy to be a mainstream business,” Mr. Eckhart said. “It’s a side business for them.”

Shell, for example, said it spent $1.7 billion since 2004 on alternative projects. That amount is dwarfed by the $87 billion it spent over the same period on its oil and gas projects around the world. This year, the company’s overall capital spending is set at $31 billion, most of it for the development of fossil fuels.

Industry executives contend that comparing investments in oil and gas projects with their research efforts in the renewable field is misleading. They say that while renewable fuels are needed, they are still at an early stage of development, and petroleum will remain the dominant source of energy for decades.

In its long-term forecast, Exxon says that by 2050, hydrocarbons — including oil, gas, and coal — will account for 80 percent of the world’s energy supplies, about the same as today.

“Renewable energy is very real,” David J. O’Reilly, the chief executive of Chevron, said in a speech in New York last November. “We need it. It will be an essential part of the future I envision. But it’s not realistic to suppose we can replace conventional energy in a timeframe that some suggest.”

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The return on investment (ROI) in so called renewables is not enough to make a larger investment worthwhile. If these guys thought they could make money with it they would be all in. Current solar technology requires over a 100 year payback period for its so called "free" energy. Wind energy is not dependable enough to make the kind of investment Obama is pushing. When you consider the marginal profits and the fact that you still have to deal with objections from environmental wackos, it makes more sense to invest in something that will me more profitable and more useful to consumers.

These are smart guys and they are looking at the anti energy policies of the Democrats and deciding were to place their investments. The carbon phobe alternatives just aren't worth it right now.