*This is not financial advice. All content should be considered opinionated. We are not responsible for any of your gains and losses. I am neither a licensed or registered financial expert. Please see a financial advisor before making investment decisions.

*This is not financial advice. All content should be considered opinionated. We are not responsible for any of your gains and losses. I am neither a licensed or registered financial expert. Please see a financial advisor before making investment decisions.

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The oil industry is getting squeezed. Lower oil demand and government scrutiny are all adding pressure to oil companies. As renewable energy starts meeting most of the world's energy demand, the oil industry is going to become irrelevant. This makes investing in fossil fuels risky. At one point, California's pension fund fully divested from fossil fuels because fossil fuels were now considered to be risky investments. Before, fossil fuels were considered to be a sure bet as the world ran on oil.

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With green energy becoming cheaper, the adoption of solar panels and other green energy sources becomes easier for consumers. Some might say that subsidies are the reason why green energy technology is cheaper. In reality, green energy subsidies have been decreasing for quite some time. They were generous in the beginning in order to spur interest and growth in starting a renewable energy boom and as time passes and the technology has improved, the subsidies have decreased. The lower barrier of adoption for green energy is making society's transition into renewable energy reliance faster than many expect, evaporating the oil giants' future profits.

To find avenues of growth while meeting the demand from activists regarding environmental destruction and emissions, oil companies are looking to invest in renewable energy startups. While that move might raise some eyebrows, it does provide investors with the hope that the oil companies that they relied on for decades are going to continue to stay relevant in the future. Some fear that oil companies have bad intentions when investing in these green tech startups thinking that they might destroy the technologies in order to make fossil fuels relevant for longer. Others welcome the move as many of the oil giants have a lot of capital that can be helpful when funding green initiatives.

Carbon Engineering, a startup that has been creating technologies that suck in carbon dioxide from the atmosphere, has received a lot of capital from major oil and mining companies, particularly Chevron, Occidental Petroleum, and BHP. With CEO pay being linked to the number of emissions reduced for some oil companies, investing in a startup that removes emissions like Carbon Engineering is a clever idea. 

Some critics say that Big Oil's investment in Carbon Engineering and other green tech startups are small compared to their profits and cash balances that they feel that they aren't doing enough to reduce emissions. At the same time, those critics need to understand that having some investment in green energy by Big Oil is better than no investments. Also, many startups aren't profitable or are still figuring out ways to commercialize their technology, making those investments riskier than investing in a fracking company. 

You might be wondering, what does Carbon Engineering want to do with the carbon dioxide that they've taken in from the atmosphere. In one of their plans, they wanted to inject the carbon dioxide underground, making the carbon dioxide harmless to the world. Their other plan was to combine the carbon dioxide with hydrogen extract (from water) to make synthetic fuel. That synthetic fuel can be processed and turned into gasoline, diesel, and jet fuel. To get the hydrogen, the energy would come from wind and solar power, making the process as green as possible. 

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It's estimated that the synthetic fuel would cost $4 a gallon to produce while the average price per gallon at a gas station is around $3 a gallon, making them less attractive to consumers and businesses in America. Meanwhile, synthetic fuels could be attractive to consumers and businesses overseas that live in nations that spend billions of dollars on importing oil from the Middle East. Also, if nations imposed a tax on carbon emissions, synthetic fuels would become more attractive for many because the fuels can act like normal fossil fuels but emit less carbon dioxide. Plus, those carbon dioxide particles would probably be sucked back in by Carbon Engineering's facilities. 

But, there are some issues with using synthetic fuels for transportation. Because of the way synthetic fuels are made and because of its chemical composition, the energy density for those fuels will be lower. That is why many experts prefer cars and other smaller vehicles to be powered by batteries than synthetic fuels. For the trucks, ships, and planes, because they are larger and are able to hold larger tanks of fuel, it's preferred that they be the consumers of synthetic fuels. 

Many businesses that contribute a lot of emissions to the atmosphere seem fascinated with the technology and have found opportunities from it. Occidental wants to use carbon capture technology to find a sustainable supply of carbon dioxide that it can use to inject in its oil fields to increase pressure and extract more oil while also sequestering the carbon. Meanwhile, Chevron has two big refineries in the state that could produce synthetic fuel. Many materials companies find that carbon could also be used to make cement and other building materials. 

Overall, a new trend has emerged in the energy space where fossil fuel companies are now investing in green tech startups in order to gain profits from investing in companies with high potential but to also reduce emissions and stay relevant in a time where the world is moving away from fossil fuels. With CEO pay being linked to the number of emissions reduced, the new trend will accelerate and there will be an abundance of capital for green energy startups. 

It would be interesting to see how many of the oil giants will turn out in the future. With their investing being really small compared to their profits, I'm curious to see how much those oil companies will benefit from seeing their investments grow. There is a chance that startups like Carbon Engineering will grow to become a lot bigger than Chevron and the other oil giants and there is a chance that one of the oil giants will buyout Carbon Engineering as a way to fully reap the benefits of the startup's technology and maybe become an atmospheric cleaning giant. 

As an investor, while I find that these investments will make the big oil investments a bit safer than many other oil companies, I'm skeptical of whether those returns will save the big energy giants from a declining industry. In the meantime, with space becoming a new big industry and many rocket ships run on fossil fuel, maybe the space industry could help spur demand for oil since many of those spaceships use a lot of fuel when launching. 

Invest wisely!