European Big Oil doubles down on fossil fuels, slows climate transition in 2024.

Big Oil major European companies are shifting focus to near-term profits and slowing down climate commitments in 2024 and 2025. This move comes after governments delayed clean energy policies and soaring energy costs following Russia's invasion of Ukraine. Companies like BP and Shell have doubled down on oil and gas investments, slowing spending on renewables. The shift is expected to continue in 2025 amidst geopolitical tensions and a weak climate agenda.

Europe's leading oil and gas companies, including BP and Shell, are reallocating their investments towards near-term profits and slowing down their commitments to climate action in response to government delays in clean energy policies and soaring energy costs following Russia's invasion of Ukraine [1]. This shift in strategy is expected to persist in 2025 amidst geopolitical tensions and a weak climate agenda.

According to a report by S&P Global Market Intelligence, these companies are under pressure from investors to reduce their emissions and align with the goals of the Paris Agreement on climate change [1]. In response, they have been expanding their investments in cleaner energy, including electricity, liquefied natural gas (LNG), and renewables. However, recent events have led them to prioritize short-term profits over long-term climate commitments.

For instance, Royal Dutch Shell, the largest oil producer in Europe, plans to invest $1 billion to $2 billion per year into new energies, with the aim of becoming the world's largest power company by 2035 [1]. However, this investment will not come at the expense of its oil and gas business. Shell's director of gas and new energies, Maarten Wetselaar, expects retail and business customers to be using only electricity 20 years from now, but the electricity business will be "radically different" if electrification takes place on a large scale [1].

Similarly, Norway's Equinor, which changed its name from Statoil in 2018 to reflect its growing expansion into the global power and renewable energy sector, is currently exploring solar investments but remains a significant player in offshore wind production [1]. The company's CEO and President, Eldar Sætre, emphasized that its strategy is to develop as a broad energy company while still producing oil and gas with the lowest possible carbon footprint [1].

The delay in government policies and the geopolitical tensions following Russia's invasion of Ukraine have forced these companies to reevaluate their priorities. However, this shift towards near-term profits and a slower pace of climate action is not sustainable in the long run. Investors and regulators are likely to continue to pressure these companies to take action to reduce their emissions and transition to a low-carbon economy.

References:
[1] S&P Global Market Intelligence. European oil majors shifting focus to power, 160 renewables, as climate concerns grow. https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/european-oil-majors-shifting-focus-to-power-160-renewables-as-climate-concerns-grow-50699249