As governments worldwide put increasing pressure on oil and gas companies to decarbonize, many have responded by pledging to expand their renewable energy portfolios and cut emissions in fossil fuel operations.
However, despite big promises, little progress is being seen by most oil and gas majors, which suggests some might have so far overstated their commitment to a green transition.
In 2020, during the COVID-19 pandemic, when the global demand for oil sunk to a record low, several oil and gas companies turned their attention to renewable energy. Companies increasingly looked to diversify their energy portfolios to avoid the economic hit of such as major shift in demand in future years.
Losses totalled over $100 billion according to estimates. The CEO of Exxon Mobil, Darren Woods, recently explained, “Investors were focused on what I would say was the prevailing narrative around it’s all moving to wind and solar. I had a lot of pressure to get into the wind and solar business”.
Instead of venturing into an area in which the company had little experience, Exxon eventually invested in hydrogen projects and lithium extraction. Some companies did invest in solar and wind projects, such as U.K.-based BP and Shell.
However, the post-pandemic period has been a time of renewed demand for fossil fuels, as commercial activities, trade, and leisure and business travel resumed.
The shift in market demand has encouraged many oil and gas companies to double down on their fossil fuel investments, as well as boost output by developing operations in new oil regions of the world, such as Africa and The Caribbean.
Many of the world’s biggest oil and gas companies have diversified their energy mix to include renewable energy, mineral mining, and clean tech projects.
Nevertheless, most have returned to focus primarily on their oil and gas business while the global demand remains strong. Viviano, a managing partner at the energy investment firm Kimmeridge, stated, “If you look at the relative shareholder returns, the market’s been sending a very clear signal that it wants energy companies to focus on their core competencies… That doesn’t mean abandoning the energy transition, but it just means being more pragmatic about it”.
Despite big promises to support a global green transition from several state and private actors at last year’s COP28 climate summit, global carbon dioxide emissions from fossil fuels are on track to reach a record 37.4 billion metric tonnes this year, marking a 0.8 percent increase on 2023 levels, according to the Global Carbon Project – although emissions are expected to fall this year in the United States and Europe.
At present, China contributes around 32 percent of global emissions, while the U.S. accounts for 13 percent, India 8 percent, and the European Union 6 percent.
While the increase in the global renewable energy capacity is expected to support a decrease in emissions across several countries, emissions from fossil fuel projects are not decreasing at the rate required to meet Paris Agreement targets in the coming years.
The text of the global stocktake that many oil companies agreed upon at COP28 “calls on parties to contribute…in a nationally determined manner” to transition “away from fossil fuels in energy systems”.
However, it does not establish any targets or progress milestones to meet between now and 2050. It also encourages the incorporation of carbon capture and storage (CCS) technologies into fossil fuel operations, rather than calling for a move away from fossil fuels.
While many oil and gas companies are investing heavily in decarbonization efforts, the International Energy Agency (IEA) believes this will not be enough to advance the fight against climate change.
The IEA said the oil and gas companies had to let go of “the illusion that implausibly large amounts of carbon capture are the solution”.
With 1,700 coal, oil, and gas lobbyists invited to attend COP29 this month, many environmentalists worry that these actors will dominate the conference with vague pledges that will likely not translate into action if experiences from the past are repeated.
The lobbyists outnumber the delegations of nearly every country at the summit. Meanwhile, just days before COP29 commenced, Azerbaijan’s Deputy Energy Minister and Chief Executive of the summit, Elnur Soltanov, was caught on camera agreeing to facilitate oil deals at the negotiations.
An activist with the environmental group U.K. Youth Climate Coalition, Sarah McArthur, stated, “Cop29 kicked off with the revelation that fossil fuel deals were on the agenda, laying bare the ways that industry’s constant presence has delayed and weakened progress for years.
“The fossil fuel industry is driven by their financial bottom line, which is fundamentally opposed to what is needed to stop the climate crisis, namely, the urgent and just phaseout of fossil fuels”.
Some of the world’s biggest oil and gas companies have invested in decarbonization efforts as well as green energy and clean tech projects in recent years, largely in response to pressure to support a global green transition.
However, most oil majors continue to view fossil fuel operations as their main economic activity, with several expecting to maintain high oil and gas output for decades to come.
Meanwhile, the heavy involvement of the oil and gas industry in the recent COP climate summits suggests that fossil fuels continue to dominate global energy, despite efforts by several governments and environmental actors to decarbonize, increase their green energy capacity, and tackle climate change.

By: Felicity Bradstock