On June 28, we learned of the departure of the manager of renewable energies at the oil company Shell, after a restructuring relegating this sector of activity to the geographical units of the company.
The news did not go unnoticed in the energy community. The arrival in 2021 at this major British executive from the Danish company Orsted, Thomas Brostrom, had inspired supporters of the energy transition. Because Orsted is the perfect example of a society that has voluntarily abandoned fossil fuels in favor of renewables, in particular offshore wind power, and this, in just ten years.
If this departure attracts attention, it is because it is symptomatic of the real lack of will on the part of “Big Oil” to switch to renewable energies.
Although the “Big Oil” companies are well known to the general public (the Americans ExxonMobil and Chevron, the Europeans BP, Shell, TotalEnergies, etc.), it should be remembered that they are responsible for barely 15% of production oil world. The majority is provided by the state companies of a few producing countries, such as Saudi Arabia, China, Iran, Qatar, Russia and Venezuela.
Being under the leadership of undemocratic regimes, these firms experience virtually no pressure from civil society to seriously implement decarbonization strategies and transition to low- or no-carbon energies.
It is the opposite for private companies. Established in democratic countries such as the United States, Canada, France and Great Britain, they are listed on the stock exchange, owned by various shareholders, and are more subject to pressure from financial analysts and civil society.
Change of direction ?
Among these, European companies have responded to these pressures by entering the renewable energy sector in recent years. They have done so in modest proportions, but still appreciable on the scale of the projects, given the gigantism of these companies, whose annual investments amount to tens of billions.
But the year 2022 seems to have considerably weakened this will, while the oil companies have reaped record profits. Their shareholders, after a decade of below-expected returns, demanded to be handsomely rewarded.
As a result, executives are more encouraged than ever to steadfastly pursue oil and gas production instead of reinvesting part of their profits in renewable energy. In financial parlance, they now want to remain pure players, or companies sticking to their century-old activities.
In addition to Shell, the firm BP has also indicated that it wants to scale down its decarbonization ambitions for the rest of the decade. While it had aimed to reduce its oil and gas production by 40% by 2030 compared to 2019, it has just reduced this objective to 25%.
More than ever, the point of view of “Big Oil” is to make efforts to reduce its greenhouse gas emissions linked to its own activities while opening wide the valves of oil and gas production. According to the International Energy Agency, global oil demand will increase by 2.4 million barrels per day this year, reaching a record 102.3 million barrels per day.
There were some hopes that the exceptional resources enjoyed by these companies would be put to the service of the energy transition. But everything now leads us to believe that “Big Oil” will not contribute, during this decade, to this vast project, which is nevertheless the great challenge of our time.