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Overview and key findings

This report is the third in a series analysing the activities of a sample of 15 global oil and gas companies and assessing their strategies regarding the energy transition to a lower carbon future. It is an update to work last published in 2021.

To read Energy Transition Report 2021 click here.

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In the aftermath of the global pandemic and the ongoing Russian invasion of Ukraine, the need for a secure and affordable supply of oil and gas throughout the duration of the energy transition has been at centre stage. Companies are now committing their capital expenditures to both ongoing oil and gas activities, as well as progressing their own path along the energy transition. Transparency around their intent has increased.

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Though there is no specific global energy transition plan, the need to limit climate change to less than 2-degrees C remains. The concept of “net zero emissions by 2050” has emerged as a goal that can achieve the limit to the change in global temperature.

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The companies in our analysis have responded to this relatively recent global aim. Thirteen of the companies in our analysis have embraced a net zero emissions ambition by 2050, up from nine in 2021.

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All companies are working towards methane reduction in their operations, with eleven having pledged near zero methane emissions by 2030.

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Company strategies toward the energy transition are coalescing around three trajectories which are still evolving. They are largely using the same strategies for carbon removal and developing low carbon solutions. Development of hydrogen as a clean fuel is progressing both on the demand and supply side.

“Diverse portfolio” companies include the six European majors in our analysis. The key differentiator of this strategy is a strong commitment to renewable power generation beyond their own oil and gas operations. These companies are also actively supporting their national energy strategies, which are relatively well articulated compared to their non-European peers. In some cases, the companies are also national utilities, which explains the high commitment to renewable electricity.

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Oil and gas companies are still assessing and evaluating their strategies to the energy transition. A clear model for the future of oil and gas companies has yet to emerge.

The “core focus” trajectory is encapsulated in the activities of the three US-domiciled firms in our analysis. None of these companies has ambitions to become an electric utility, so renewable power generation is something supporting their existing operations. Their activities, instead, are focused on developing lower carbon energy and industrial solutions which will be prominent for their customers in the future. These companies are also primarily driven by the demands of their shareholders and have taken significant steps in recent years to be seen as responsive towards emissions reduction.  Nevertheless, the distance between European and US majors on their energy transition strategies has closed considerably.

We identify the other six companies in our analysis as “national champions” because their overall strategy and activities reflect how their home countries are evolving along the net zero pathway. The companies are more focused on the individual potential within their own economies to progress the climate-related policies of their home country.