The big American and European oil and gas companies publicly agree that climate change is a threat and that they must play a role in the kind of energy transition the world last saw during the industrial revolution. But the urgency with which the companies are planning to transform their businesses could not be more different.
“Despite rising emissions and societal demand for climate action, U.S. oil majors are betting on a long-term future for oil and gas, while the European majors are gambling on a future as electricity providers,” said David Goldwyn, a top State Department energy official in the Obama administration. “The way the market reacts to their strategies and the 2020 election results will determine whether either strategy works.”
To environmentalists and even some Wall Street investors, the American oil giants are clearly making the wrong call. In August, for example, Storebrand Asset Management, Norway’s largest private money manager, divested from Exxon Mobil and Chevron. And Larry Fink, who leads the world’s largest investment manager, BlackRock, has called climate change “a defining factor in companies’ long-term prospects.”
European oil executives, by contrast, have said that the age of fossil fuels is dimming and that they are planning to leave many of their reserves buried forever. They also argue that they must protect their shareholders by preparing for a future in which governments enact tougher environmental policies.
BP is the standard-bearer for the hurry-up-and-change strategy. The company has announced that over the next decade it will increase investments in low-emission businesses tenfold, to $5 billion a year, while shrinking its oil and gas production by 40 percent. Royal Dutch Shell, Eni of Italy, Total of France, Repsol of Spain and Equinor of Norway have set similar targets. Several of those companies have cut their dividends to invest in new energy.