It wasn’t long ago that oil giants were trying to outdo one another with promises to cut carbon emissions and take on climate change. In 2020, the price for a barrel of oil briefly plunged below zero, and the world’s largest oil and gas companies portrayed themselves as getting serious about renewables. BP promised to slash its emissions, Shell pledged to go “net zero,” and ExxonMobil trumpeted its efforts to transform algae into fuel.
These quiet announcements coincided with their recent blockbuster earnings reports, which were celebrated by executives and excoriated by politicians like President Joe Biden, who called them “outrageous.” Buoyed by oil prices soaring above $100 a barrel last year, the oil giants roughly doubled their profits from the year before, with BP raking in $28 billion and Shell $40 billion. Exxon, the oil major that has been the least enthusiastic about renewables, reported even better results — $56 billion, up 143 per cent from the year before and a record for a Western oil company.
“We leaned in when others leaned out, bucking conventional wisdom,” said Darren Woods, Exxon’s CEO, in a call with investors, praising his company’s resistance to pulling back on fossil fuel production.
“You know, nothing like profits rolling in to make Big Oil show its true colours,” said Jamie Henn, the director of Fossil Free Media. “I think over the last few weeks, we’ve seen the industry take off the green mask that it has been wearing for the last few years and remind us of its true identity and its real business model, which is the continued extraction and production of fossil fuels at the expense of our climate and communities.”
So why are oil companies slowing down on renewables now, when they have plenty of cash to spend and the world is grappling with the alarming fires, floods, and droughts spurred by climate change? The ease of short-term profits when oil prices are high and the political cover provided by concern about “energy security” have played a large role. Heartened by last year’s flow of oil cash and dissuaded by the rising costs of installing wind and solar, executives are turning away from the longer-term payoffs promised by renewable investments. Climate advocates say that Big Oil’s recent moves should serve as a wake-up call for investors and regulators that oil companies plan to double down on fossil fuels for as long as it’s profitable.
“If they’re not going to invest more on the energy transition now, then when?” asked Krista Halttunen, an energy researcher at Imperial College London.*