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A Lewis and Clark Expedition for Energy Innovation

The views expressed are those of the author and are not necessarily those of Scientific American.


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John McDonald believes that technological innovation is a key piece of a strong future for the energy sector. This is an industry with a history of impressive engineering feats. And, as Chevron’s Vice President and Chief Technology Office, McDonald speaks with passion and excitement about the technological breakthroughs that are still to come (1).

Similar conversations can be heard within the walls of energy giants like General Electric (GE) and Shell. At the former, you can find imagination at work within an internal venture capital group that focuses on fueling technology startups. At Shell Canada, the Quest Carbon Capture and Storage (CCS) project is hoping to make major technological advances in storing CO2 emissions deep underground through a commercial-scale demonstration project.

But, according to a Boston Consulting Group (BCG), these companies are not representative of the entire energy industry. In a recent BCG survey, only 64% of energy companies ranked innovation as a priority. Overall, the Breakthrough Institute estimates that US energy firms reinvest less than 1% of total revenues into research, development and demonstration (RD&D) projects, compared to 15-20% in the IT, semiconductor, and pharmaceutical industries. According to Alex Trembath at the Breakthrough Institute, this low level of reinvestment could be explained with the culture of the industry where “stability and reliability have traditionally been favoured over technological change.”

In the United States, energy firms reinvest a large amount of money (in absolute dollar figures) into technology development. But, all told, less than 1 percent of U.S. energy company revenues are reinvested into research, development, and demonstration (RD&D), compared to the 15-20% level seen in IT, semiconductor, and pharmaceutical companies.

The industry’s profile and the nature of energy projects could shed some light on this relatively low number and (arguably) more conservative investment approach. Briefly stated, the energy industry is primarily comprised of capital-intensive and long-lived projects. For example, more than half of coal plants operating in the U.S. were built before 1967, with an average age of 43 years. And building a new scrubbed coal power plant would cost upwards of $3.5 billion and require at least a 4-year lead-time.

But, despite these factors, many groups and energy leaders believe that innovation and risk-taking are vital steps in a move toward a more sustainable energy future. They are key tenants in Bill Gates’s vision for an energy future. In his 2010 TED talk, Gates discussed the need for innovation to bring the world’s energy systems into a more sustainable (defined as zero-emissions) future.

Perhaps as a result of this acknowledged need for continued innovation in the industry, one is seeing a rise of what Fortune Magazine recently termed the “innovation partner.”

Here, big corporations partner with cleantech startups. These partnerships allow big energy companies to tap into the potential within these smaller pockets of innovation, while helping startups survive long enough to bring their product successfully to market.

One example of a modern “innovation partner” can be seen in McDonald’s company. Chevron is currently home to three groups that specifically support technological improvements and innovation: the Information Technology Company (ITC), Energy Technology Company (ETC), and Chevron Technology Ventures (CTV). The last, in particular, focuses on fostering innovation outside of the big energy company’s own internal efforts. And, if you are able to chat for a moment with CTV President Desmond (Des) King, you will quickly find out why (2).

Bottom line – innovation supports Chevron’s base business.

Chevron Technology Ventures (CTV) currently has approximately 70 employees and is divided into three groups:

  1. Venture Capital – dubbed “the scouts” because their role is to go out and find technologies that CTV should invest in. Sometimes this investment is a direct monetary one.
  2. Emerging Energy – Sometimes, CTV uses existing resources to help startups in the critical demonstration phase.  This is where project management folks take new technologies and test them in real world situations. For example, in Coalinga, California solar-to-steam technologies are being trialed using process water to enhance oil recovery from wells.
  3. Advanced Biofuels – Specifically in response to federal biofuels mandates, this group investigates how to meet mandates in the most economical way without threatening reliability.

In King’s own words, “CTV is almost like a Lewis and Clark of energy technology companies…out there surveying the landscape, saying what are the emerging technologies outside [of Chevron] that could benefit Chevron’s base business.” And this approach appears to be working for this energy giant. Operating successfully since 1999, CTV has seen more than two dozen of the companies that it has partnered with be acquired by other companies or had successful public offerings.

For energy companies including GE, Shell, and Chevron, these types of partnerships have become a part of their long-term business strategy. One where innovation is a key to continued success.

Reference:

  1. Interview with John McDonald conducted by Melissa C. Lott in Fall 2012 in San Ramon, California.
  2. Interview with Des King conducted by Melissa C. Lott in Fall 2012 in San Ramon, California.

Photo Credit: Chevron Solar to Steam operation – video.

Melissa C. Lott About the Author: An engineer and researcher who works at the intersection of energy, environment, technology, and policy. Follow on Twitter @mclott.

The views expressed are those of the author and are not necessarily those of Scientific American.





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  1. 1. dwbd 10:26 am 03/12/2013

    Would this be the same Chevron that was given the NiMH battery patent by GM over ten years ago, after trashing & destroying all NiMH powered EV1s? And then Chevron suppressed the manufacture, licensing & sales of all large format NiMH batteries for what they stated were ” storage or transportation applications “. And promptly sued any manufacturer that produced large format NiMH batteries, including Panasonic which was making the wonderful EV95 95ah battery for the Toyota Rav4 EV, and was forced by Chevron to cease manufacturing the battery. Those same EV95 NiMH batteries are still going strong in >10 yr old Rav4 EVs on the road today.

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  2. 2. MoEnergySci 10:34 am 03/12/2013

    It is interesting to read about which companies are investing in developing new technologies and which are not. In the long run, I suspect that the better bets for success are with those that are actively innovating and keeping an eye on what other companies (start-ups, etc) are doing at the same time. It does not pay to be stagnant in any industry – even when you have a stronghold.

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  3. 3. phalaris 1:33 pm 03/12/2013

    This is greenwashing to the power 2. Every oil company has something similar running for the purposes of public relations.
    And for the public, it feeds the cargo-cultism in energy matters that many people who should know better do everything to foster.

    The options for future energy supplies are well-known, and just wishing they would change is not going to work.

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  4. 4. 13inches 6:24 pm 03/14/2013

    Chevron is now Lewis and Clark ? Pah-leese. Chevron gets involved in these startups only to get early patents and then squash any real breakthroughs in clean energy technology and prevent new devices from reaching the market place. Chevron’s Golden Goose is petroleum and Chevron will be selling petroleum at inflated prices for the next 50 years or more. Enough of this Lewis and Clark propaganda.

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  5. 5. jerryd 8:24 pm 03/14/2013

    This isn’t about energy but about big energy and them keeping, growing sales.

    Sorry guys but party time is over. You only have 7-10 yrs before you flatline when everything else costs less than oil.

    Amazingly I completely agree with DWBD for once.

    Facts are soon big energy and big auto unless they completely change are going to be hurting like coal is now. US people just won’t pay $10/gal when you can do EV for 10% of that.

    Renewable Energy/RE is already dispite big energy’s massive socialized corporate welfare is hitting parity and once real mass production of the rather simple machines needed to catch, convert RE into useable fuels.

    While innovation is nice what we need is mass production in solar combined power and heat with wood pellet, etc back up, CHP’s for any fuel making power first and using the wasted heat for that, decent low cost wind generators, plastic to fuel units, biomass to fuel in home, building local sizes.

    These along with eff/conservation/insulation, etc mean utility demand is going to drop, not increase, just as it has for the last few decades just like in oil, coal use.

    Anyone who bets against this long term is going to lose.

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  6. 6. priddseren 11:02 pm 03/16/2013

    A reasonable article finally. Yes, energy companies and many others are going to be the ones who figure out better ways to create energy. There is no way to predict who or when but as long as the government keeps monopolizing research in alternative fuels and funding nonsense projects with unknown university professors with bad ideas, the private industry has no incentive to do anything. Why would they, anything they invent will either be blocked by the government through regulation or simply taken from them. The political do not not anyone but them in control of energy and they are including the innovation to new fuels as part of it.

    Now I will be flamed by others with claims of evil oil companies wanting to purposely only sell oil and ruin the planet all in the name of greed. Sorry whoever is thinking that but it is only government who acts this way. Take the state of California where I live, they have a monopoly on the sale of energy. If you are a utility and need more power, you must go through government brokers to obtain that power. Do you really think the state politicians want to give up their monopoly? They don’t, It is they who make money off energy as it is. The private energy companies are capitalist companies. Their goal in life is to make as much money as they can from a product they sell people want. They will charge a price people are willing to pay. Well guess what, the market of consumers is ready to go with any alternative fuel that can actually be used successfully. Consumers will buy it and likely pay a premium price higher than oil. Any company would want to get in on this market. The fact they have not is because there is no alternative fuel. The reason there is no alternative is these private companies cant put dollars in research they know the government is likely to regulate or fine away and bury forever.

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  7. 7. thevillagegeek 10:08 pm 03/17/2013

    Note that @priddersen (#6) likes a Sciam story (“A reasonable article finally”) when it favors a large petrochemical-based company, though he keeps reading and commenting on stories here while stating they are no good.

    Link to this

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