Insights

Fossil fuels vs renewables: What’s ahead for ASX energy shares?

Does the world need more fossil fuels… or less? The outcome of this growing debate could help or hinder these ASX energy shares.
The post Fossil fuels vs renewables: What’s ahead for ASX energy shares? appeared first on The Motley Fool Australia. –

Two hands raised against eachother with lightning flashes between them, indicating and energy clash between fossil fuels and renewables

If you were running a successful, multi-billion company and someone asked what your plans were to wind it down, what would you say?

This isn’t a rhetorical question.

In fact, it is the gist of the demand Market Forces, an environmental activist investor group, is making to some of Australia’s biggest energy shares.

As the Australian Financial Review (AFR) reports, Market Forces is asking “ASX-listed fossil fuel companies to plan for their own demise in order to align with Paris climate goals”.

Their first target is the $14 billion ASX oil and gas giant, Santos Ltd (ASX: STO), part of the S&P/ASX 200 Index (ASX: XJO).

Santos’ management, as you might expect, indicated they had no plans to shutter operations, replying:

Santos does not intend to close down its oil and gas operations, as doing so would be against the interests of shareholders and would not be consistent with global climate and human development goals, particularly reducing air pollution and poverty.

According to Santos, 80% of the world’s primary energy needs are still derived from oil and gas. A figure that’s unchanged since 1975. Rather than eliminating its fossil fuel production, the company is working on reducing emissions via novel technologies in carbon capture and storage. Santos is also involved in developing hydrogen energy sources with no carbon footprint.

Other ASX energy shares in Market Forces’ crosshairs this year are Woodside Petroleum Limited (ASX: WPL) with a market cap of $24 billion; Oil Search Ltd (ASX: OSH) with a market cap of $8.5 billion; Whitehaven Coal Ltd (ASX: WHC) with a market cap of $1.6 billion; and New Hope Corporation Limited (ASX: NHC) with a market cap of just over $1 billion.

Market Forces is working under the assumption that Australia, and the rest of the world, can quickly transition away from fossil fuels, replacing the energy sources with renewables.

But how close is Australia really to switching off all the gas in favour of solar and wind?

Has the demise of gas been greatly exaggerated?

Consultancy firm Wood Mackenzie estimates that Australia will require 10 times more gas to generate power than what the Australian Energy Market Operator (AEMO) has forecast.

According to the AFR, WoodMac forecasts that gas will still provide some 10% of Australia’s power in 2030, as opposed to AEMO’s 1% estimate.

WoodMac senior analyst Rishab Shrestha said:

You need a balanced portfolio to avoid extreme price spikes. We need to manage the speed of this transition, and perhaps the transition blueprint that has been laid out does not necessarily capture all the risks that are associated with that.

The ongoing debates could offer headwinds or tailwinds to the share prices of the biggest ASX energy companies, depending on the outcome.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Fossil fuels vs renewables: What’s ahead for ASX energy shares? appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!