COP 28 Expectations: Time for greater commitment from the oil and gas industry

If not now, when? COP28 is a moment of truth for the oil & gas industry.

FacebooktwitterlinkedinmailFacebooktwitterlinkedinmail   by Johnny Bowie, 30th November 2023

With this year’s COP taking place in Dubai and the President-Designate being the Abu Dhabi National Oil Company’s CEO, we hope to see greater climate commitment from the oil & gas industry.

The International Energy Agency (IEA) has stated in recent reports that the development of new oil & gas projects must stop if we want to limit global warming to 1.5 degrees. However, all oil majors continue developing new fields; the table below shows oil majors by current and upcoming oil & gas operations reserves, measured in billions of barrels of oil equivalent (bboe).

You can see there is a clear misalignment with the companies’ net-zero targets, shown by the expansion plans. The reserves of the upcoming fields would add 122 billion barrels to the existing 299 billion barrels from fields the companies are already running. The table shows companies are investing in exploration as profits trump climate concerns.

Company Remaining reserves in operating fields (bboe) Reserves in upcoming fields (bboe)
ExxonMobil 72 26.7
Shell 53.9 34.2
Total 76.9 43.3
Chevron 41.7 5.1
BP 54.8 13


In addition to the above, Reclaim Finance (a non-governmental organisation that focuses on challenging and advocating against financial support for environmentally harmful projects) found that 60% to 90% of oil major’s investments are still in oil & gas production. In 2021 and 2022, major global oil corporations allocated a significant portion of their capital expenditures -approximately 15%- towards renewable energy initiatives.

Meanwhile, 85% went into oil and gas projects. Repsol stood out in 2021, as it led the pack by dedicating 28% of its capital expenditure to renewable energy, even though this still represents a small segment. In contrast, American giants Exxon Mobil, ConocoPhillips, and Chevron made no investments in renewable energy during 2022.

Oil majors concealing true renewable energy capital expenditure

It’s often unclear how much of oil companies’ investments are truly allocated to renewables, as companies often include gas and other activities in their ‘renewable’ or ‘low carbon’ capital expenditure segment.

For example, in 2022, Shell spent 14% of its capital expenditure on “Renewables and Energy Solutions”. This category includes “renewable power generation, the marketing and trading of power and pipeline gas, carbon credits, and digitally enabled customer solutions. Renewables and Energy Solutions also includes the production and marketing of hydrogen, development of commercial carbon capture and storage hubs, investment in nature-based projects that avoid or reduce carbon emissions (Nature-based solutions), and Shell Ventures, which invests in companies that work to accelerate the energy and mobility transformation.”  This type of categorising is seen across the board form oil companies, so it’s still unclear how much is being spent on renewables alone.

Hitting the Headlines for the wrong reasons

Some recent headlines show the misalignment of oil companies with the transition. In October, ExxonMobil announced the purchase of shale group Pioneer, another example of capital expenditure reinforcing fossil fuels. In addition, Shell and BP (both widely considered oil & gas transition leaders) have reduced the ambition of their respective climate targets this year.

Energy majors fall short

In absolute terms, oil companies do contribute to the energy transition, but only roughly 2% of the annual investment in renewables (based on EQ’s analysis). If you look at the overall impact of the oil companies, the bad overwhelmingly outweighs the good.

Investing in utility companies that have either transitioned or are transitioning to renewable utilities will have a more significant impact on the energy transition. Whilst oil majors continue to under contribute to the energy transition, from a sustainability perspective, we don’t see them as investable businesses.