Despite big promises, recent reports suggest that international oil majors are doing little to contribute to the green transition when compared to their ongoing investments in oil and gas operations. Studies show that much of Big Oil’s investment in renewable energy operations is going towards PR efforts to promote the green work they are doing, rather than to greatly expand their clean energy portfolios. In addition, oil and gas subsidies hit record levels last year, showing the ongoing preference for fossil fuels over renewable alternatives.
An analysis commissioned by Greenpeace Central and Eastern Europe has revealed just 0.3% of production from twelve of Europe’s leading fossil fuel producers came from renewable energy sources in 2022. The report showed that around 7.3 percent, equivalent to $7.1 billion, of the 12 companies’ 2022 investments went towards renewable energy, with $88.15 billion in financing for fossil fuel operations.
The report suggests that Big Oil is undermining its climate action through investments in PR stunts rather than real action. So far, many oil and gas companies have published only partial data to skew the bigger picture of their renewable energy operations. Many continue to promote initiatives such as carbon capture and storage (CCS) and carbon offsetting in oil and gas projects, rather than demonstrating their investments in green energy sources. To date, the publication shows there is no sign of a fundamental reorientation of the industry’s core business that would allow it to play any role in the energy transition.
In addition to the lack of evidence showing any real contribution to the green transition, the report stated that BP, Equinor, Wintershall, and TotalEnergies even reduced their investments in low-carbon or renewable products in 2022, compared to the previous year. This is surprising considering the ambitious climate pledges made by all 12 oil majors in recent years. Most have committed to the target of net-zero carbon emissions by 2050, yet none has published a comprehensive strategy on how it will achieve this goal. Further, most intend to continue investing heavily in oil and gas production beyond 2030.
Many major oil and gas companies have promoted the idea of “low-carbon oil” in recent years, largely in response to international and governmental pressure to decarbonise operations. Several companies are now moving away from ageing oil and gas projects in traditional oil regions to new projects in largely untapped regions of the world, such as countries in Africa and the Caribbean. Developing new projects in these regions means companies can shape them to be less carbon-intensive than previous operations, by using more efficient production technologies and incorporating CCS activities. This may allow them to continue drilling for oil and gas for longer, as they justify low carbon production as vital to meeting the mid-term energy needs of the world’s population.
Grete Tveit, the senior vice president for low-carbon solutions at Equinor, recently said the Norwegian major is delivering an “optimised oil and gas portfolio”. She explained, “Fossil fuels will be needed in 2050 but will have to be produced with the lowest emissions possible.”
In August, Bernard Looney, the CEO of BP, stated that the world needs to invest more in oil and gas production. This is coming from a company that just two years ago wholly embraced the green energy transition, announcing plans to rapidly expand BP’s renewable energy portfolio. Following the Russian invasion of Ukraine last year and the resulting energy shortages, many governments appear to share Looney’s view that fossil fuels are needed to meet the immediate and even mid-term energy needs of the world population, which led to record global subsidies for oil and gas in 2022. The International Monetary Fund stated in a new report that global subsidies for oil and gas had hit an all-time high of $7 trillion in 2022.
Previous reports on Big Oil’s renewable energy spending have shown how many companies have prioritised their public appearance over investments in meaningful climate action. A 2022 report demonstrated that oil companies were spending hundreds of millions of dollars on marketing and PR to promote a green image that was inconsistent with their climate action. An analysis of 3,421 pieces of public communications materials from BP, Shell, Chevron, Exxon and Total by the non-profit InfluenceMap found that 60 percent of them included at least one “green” claim, with just 23 percent promoting oil and gas. Many of these communications included the promotion of efforts to transition their energy mix to include more renewable energy sources. This is highly disproportional to their investments in both fossil fuels and renewable energy, with many firms overstating their efforts to diversify their energy mix in support of a green transition.
Despite the promotion of their green investments, an analysis of the annual reports of several oil majors suggests that they are investing little in renewable energy. Although many oil firms have pledged to decarbonise and achieve ambitious climate targets, few have produced clear strategies supporting these aims. Further, most oil and gas companies appear to be spending a vast amount of their money on fossil fuel operations, including ‘low carbon’ oil projects, with little contribution to green energy projects.
By Felicity Bradstock for Oilprice.com
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