In 2024, major European energy companies scaled back their climate commitments, prioritizing near-term profitability by doubling down on oil and gas investments. That marked a significant shift in strategy, driven by geopolitical and economic factors, and is likely to continue into 2025.
The retreat from aggressive clean energy investments follows a global slowdown in the implementation of renewable energy policies. Governments, struggling with sky-high energy costs in the wake of Russia’s 2022 invasion of Ukraine, delayed ambitious climate targets. This recalibration of priorities left energy giants with dwindling incentives to maintain their earlier momentum in transitioning to greener energy sources.
European companies such as BP and Shell, once leaders in renewable energy transformation, felt the pinch of shareholders after investing in wind and solar projects that did not fetch the expected returns. Meanwhile their domestic competitors Exxon and Chevron stuck to conventional oil and gas business, performing much better on the stock market. The gap in financial performance made the European companies more convinced about their need to redefine strategies toward oil and gas as more attractive for the near term.
BP changed its approach regarding renewable energy, from where it had initially aspirated, and opted for a major strategic shift. The company, which had targeted raising renewable energy production twentyfold to 50 gigawatts by the end of the decade, said last month it would sell most of its offshore wind projects. It is transferring those assets into a joint venture with JERA, one of the world’s largest power generators, based in Japan.
Similarly, Shell cut back on its investments in wind and solar projects and redirected the funds to high-margin oil and gas developments. These moves reflect a broader industry trend where short-term profitability and shareholder satisfaction have taken precedence over long-term climate goals.
The shift highlights the dilemmas energy companies face while trying to balance financial performance with environmental responsibility. Indeed, even though most promise to remain committed to decarbonization, recent industry actions hint at how difficult it may be for corporate strategies to align with global climate targets in a world of economic and political uncertainty.
This recalibration would raise questions about the rhythm and feasibility of the energy transition, especially in light of the ambitious European Union climate targets. Also, it reflects broader tension in the global energy landscape, where the urgency for addressing climate change often hits against the realities of economic pressures and fluctuating geopolitics.
As the energy industry approaches 2025, an increased focus on traditional fossil fuels by major players like BP and Shell suggests the clean energy transition may be slowing. Implications for global emissions, renewable energy innovation, and climate policy remain unclear, leaving stakeholders to chart their way through a rising complexity in the energy landscape.