The price of oil has reached a historically high level, perhaps the highest in the past 15 years. According to market signals, the high price per barrel of oil will continue to grow or remain high in the next period. Why is this important for the energy transition and the greater representation of renewable energy sources and achieving the current global target of CO2 emissions in 2050?
The world’s largest oil giants have slowly but surely begun their energy transition. If so far the first association for Shell, Chevron Texaco, BP, Total, and others was oil, now they have built a strong strategy and are working on their green energy transition. The onset of the energy crisis has fueled market suspicions that this will be the reason for the slowdown in the energy transition of large oil companies. The thesis was that fossil fuel profits would be the focus, at the expense of the energy transition.
This thesis is legitimate but the trend of reducing the cost of investing in renewable energy has created a balance. Of course, the profit from the high price of oil is still a target, but it seems that the big oil giants do not give up even investing in green energy. Despite the great challenges to the energy transition that have arisen as a result of the war in Ukraine, it is becoming increasingly clear that global oil giants continue to invest in this process. As companies with strong resources and a clear vision, they recognize the trend.
There is no doubt that in this contradictory process, such as green energy, they invest in their repositioning and clearly signal that they want to play a leading role in the new green energy market. With specific targets, clear budgets, and projects, they are already defining their place in the market. Some even went a step further, wanting at least perceptually to open a new chapter in their work, distancing themselves from their fossil history. French oil giant Total even changed its name last year from Total to TotalEnergies. The company plans to reduce CO 2 emissions by 40 million tons by 2025.
The big giant Shell has a similar strategy, with which it is committed to helping and contributing to reducing CO 2 emissions and providing clean energy. By 2030, the company plans to provide renewable energy to 50 million households, produce fuels with eight times less carbon, and increase the share of biofuels and transport hydrogen by 10%. The company will reduce oil production by 1-2% by 2030 and will invest $ 1 billion annually in renewable energy, hydrogen, biofuels, and electric chargers. In order to realize the planned plan for 0 emissions by 2050 through partnerships, it is planned to double the investments in these segments, i.e. 2 billion annually.
Almost all large companies have similar strategies, creating excessive expectations in the already dynamic market of renewable energy sources. The dilemma remains whether these plans, even for 2030, will be realistically fulfilled and whether fossil fuels will be completely abandoned. There is a risk that such ambitious programs are part of the strategy for attracting fresh capital to the financial markets, although there is a risk that they will be realized in reality. The challenge will be to fully develop the announced green portfolio in the time frame, which is certainly not impossible.
The European oil giants are completely transformed in this direction, following the solid green agenda and the energy transition. On the other hand, American oil companies are following the energy transition, but at the same time, they are relying on the development of new technologies, which makes it possible to maintain the current business model. These companies are building their technology strategy by capturing coal and storing it underground, extracting even more crude oil. Occidental Petroleum has chosen this model as its business strategy with which it will be able to provide 0 CO 2 emissions by 2050.