The oil industry is facing the challenge of dealing with a renewable energy revolution

The oil majors will have to contend with falling electricity prices, political pressures and the expansion of the renewable energy industry.

Trying to manage this transition will be a major challenge for the oil companies, which will need to adapt quickly if they wish to survive.

Crucially, the transition will involve a business model no longer based on exploration and development but on investment in  solar farms, wind energy and improvements in fuel cells and storage technology.

A key cultural transition will also need to take place in which sustainability and environmental considerations are also taken into account as part of the long term decision planning process.

This would also involve replanning some of the major projects currently being undertaken in areas such as the North Sea and offshore drilling near the cost of Mexico.

This would involve not only a major redeployment of assets but a considerable retraining programme in which large parts of the oil and gas industry move to sectors such as wind and solar energy.

Clearly, this is a considerable undertaking. The transition of billions of pounds worth of investment into exploration programmes in both the developing and developed world and moving towards a technology-focused approach where the emphasis is on the development of improvements in efficiencies in renewable energy.

A key problem is convincing some of the world’s largest energy companies that it is in their best interests to take leadership on this transition, with companies such as Statoil among those that are most receptive to the importance of changing their business model.

Despite the fact that considerable suspicion exists regarding the intentions of the oil majors and their commitment to widespread change, their cooperation and leadership is essential if we are to help mitigate the effects of a 2°C rise in temperatures.