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Why Are Oil Giants Backing Away from Green Energy: Exxon Mobil, BP, Shell and more

Where Is the Money for Energy Companies?

As world leaders gather at the COP29 climate summit, a surprising trend is emerging: some of the biggest oil companies are scaling back their renewable energy efforts. Why? The answer is simple—profits. Fossil fuels deliver higher returns than renewables, reshaping priorities across the energy industry.

Exxon Mobil: Staying in Its Lane

Exxon Mobil has avoided large-scale investments in wind and solar, even during the pandemic when many rivals jumped into renewables. CEO Darren Woods said the company didn’t have expertise in those areas and instead focused on hydrogen and lithium, areas closer to its traditional oil business.

That decision paid off. Exxon’s stock has soared more than 70% since 2019, hitting a record market value of $560 billion in October. In contrast, companies that leaned heavily into renewables have struggled to deliver similar financial results.

BP: Green Ambitions on Pause

BP made headlines in 2020 with a bold promise to cut oil and gas production by 40% by 2030. But rising costs and lower-than-expected returns in renewables have forced a shift.

Last year, BP wrote off $1.1 billion from its offshore wind business and is now selling parts of its renewable portfolio. CEO Murray Auchincloss recently emphasized that BP would prioritize returns over green targets, refocusing on oil and gas investments.

Shell: Recalibrating Its Strategy

Shell, once a strong advocate for renewables, has softened its stance. The company has cut back growth plans for its renewable power business, with CEO Wael Sawan saying Shell doesn’t see a competitive advantage in renewables compared to other players.

“We’re stepping back,” Sawan said while reaffirming the company’s commitment to focusing on higher-return projects in oil and gas.

Equinor: Balancing Act

Norwegian energy giant Equinor has pursued renewable projects, particularly offshore wind, but profitability has been challenging. CEO Anders Opedal has called for a more selective approach, ensuring investments in renewables align with financial goals.

Equinor’s cautious optimism reflects the delicate balance many companies face as they transition to cleaner energy.

TotalEnergies: Sticking to the Plan

French company TotalEnergies is pressing forward with ambitious renewable energy projects, including solar and wind farms. However, CEO Patrick Pouyanné acknowledged the financial hurdles, stating renewables must eventually deliver strong returns.

Despite setbacks, TotalEnergies remains one of the more committed oil majors to green energy, aiming to generate 100 gigawatts of renewable power by 2030.

Why Renewables Are Losing Out

The math is straightforward: Fossil fuels are more profitable. Last year, the median return on capital for oil companies was 11%, compared to just 2% for renewable energy firms, according to S&P Global. Investors who once championed the energy transition have shifted focus back to what makes money.

At the same time, renewables like wind and solar face steep costs, regulatory hurdles, and extended payback periods, making them less appealing to oil companies under pressure to deliver short-term gains.

What’s Next?

Despite the retreat by some oil giants, the renewable energy sector is far from dead. According to the International Energy Agency, companies like Iberdrola, Orsted, and NextEra Energy remain focused entirely on clean energy, supported by nearly double the global investment in renewables compared to fossil fuels.

However, for oil majors, the transition may depend on better financial incentives or stricter climate policies. Until then, the industry seems content to stick with what it knows best.

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