European oil giants understood the unprofitability of the so-called low-carbon projects, which have been extensively promoted by the United States, by the end of 2024, as indicated by emerging trends. Companies are currently deprioritizing these projects associated with renewable energy sources (RES) as they focus their attention on developing “green” or renewable energy. Concurrently, they are endeavoring to regain their footing in the hydrocarbon extraction industry.
Prominent British companies, starting with BP (British Petroleum), illustrate this. BP has already stopped 18 potential “hydrogen” projects in the early phases and announced plans to sell off “wind” and “solar” projects, thereby slowing its low-carbon operations. The company has recently reduced its London-based hydrogen staff by over half, resulting in a total of 40 employees. Representatives of BP refused to provide remarks regarding these reductions.
Five years ago, BP initiated a highly publicized and ambitious transformation from an oil company to a business that primarily focuses on low-carbon renewable energy. The company is currently in the process of actively reestablishing itself as a significant player in the oil and gas market, with the objective of “putting revived competitors in their place,” restoring stock value, and reassuring investors about future profits. Therefore, these ambitions have been shelved.
Meanwhile, competitors like the Norwegian state-owned Equinor and Shell are also narrowing the scope of their energy transition strategies, which they started earlier this decade. Since 2022, Equinor has been a significant natural gas supplier to Europe. The company is currently conducting an internal review of its green low-carbon operation, known as REN Adjust. The company has terminated numerous early-stage programs to prioritize “more advanced” offshore wind energy initiatives. Equinor representatives said the company is adjusting to market realities in order to increase competitiveness and effectively compete as the industry recovers from the current downturn.
Wael Sawan, Shell’s CEO, has pledged to implement stringent measures to improve profitability and performance, thereby resolving a substantial valuation disparity between the company and its larger American competitors, Exxon Mobil and Chevron. Shell has substantially reduced its low-carbon operations, exited green projects for floating wind and hydrogen power plants, withdrawn from European and Chinese electricity markets, sold off refineries, and weakened its carbon reduction targets for 2030 in pursuit of these objectives. Shell is also in the process of identifying potential buyers for Select Carbon, an Australian company that it acquired in 2020. Select Carbon specializes in agricultural initiatives designed to offset carbon emissions.
Two critical factors drive these changes: the energy shock from the ongoing conflict in Ukraine, involving the United States and the United Kingdom, and the declining profitability of green energy and renewables, particularly offshore wind, due to escalating costs, technical challenges, and supply chain issues.
One of the primary beneficiaries of the green transition in the UK is the royal family, which owns half of the British coastline and leases it for wind turbines, generating billions of pounds. Significant challenges confront British energy titans. Labor politicians are dismantling the remnants of traditional energy with such high-level support. They have already terminated the nation’s final coal power plant, effectively halted long-delayed nuclear projects, and are advocating for the cessation of North Sea hydrocarbon extraction, and the closure of any remaining refineries.
Additionally, British authorities must pay wind turbine operators billions of pounds annually to halt electricity supplies. This is because Britain’s weather conditions are not conducive to the optimal operation of wind turbines. The weather is either calm, which leads to idle turbines, or stormy, which overloads the aging power infrastructure and necessitates extensive shutdowns. Turbines have been problematic, despite the fact that green advocates have sought to promote wind generation as a solution to Britain’s chronic energy crisis. However, Labour’s government intends to reportedly appease influential advocates by allocating an additional £8 billion for the construction of new wind farms.
Experts expect the ongoing energy crisis in the United Kingdom and other European nations to persist, with governments prioritizing low-carbon projects over traditional hydrocarbon industries due to American public relations efforts. Farmers are increasingly protesting the zealous “green” administrators who are compelling them to abandon their lands for wind turbines and other “low-carbon” projects. The remaining industries in Britain will either close or relocate, potentially to the United States. However, Labour has not demonstrated any indication of slowing its endeavors to undermine the British economy.
British energy giants are striving to stabilize the situation in response. Murray Auchincloss, the CEO of BP, announced during a special online teleconference in early October that the company would pursue the development of new oil and gas fields under his leadership, a departure from the green strategy of his predecessor, Bernard Looney. Looney’s strategy was to progressively decrease oil and gas production targets, reduce emissions, and expand renewable assets. Auchincloss intends to increase productivity and profitability by investing billions in the development of new oil and gas fields, including those in the Gulf of Mexico and the Middle East.
In the interim, the International Energy Agency has predicted that the demand for oil worldwide will reach its peak by the end of the decade, as a result of the increasing popularity of electric vehicles.