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Some major oil companies, like Shell and BP, have shifted focus from clean energy investments to oil and gas production. Others, such as ExxonMobil and Chevron, have concentrated on fossil fuels but recently invested in carbon capture projects and other renewable resources like lithium and graphite for electric vehicle batteries.
National oil companies also invest in renewables. For instance, Saudi Aramco has invested in clean energy while asserting that it’s unrealistic to phase out oil and gas entirely.
The primary question is why oil companies would invest in green energy at a time when federal incentives are being eliminated and climate science dismantled. Different stakeholders give varying reasons:
Traditional followers of the petroleum industry advocate for core fossil fuel businesses to meet growing demand and shareholder returns. Others, concerned about sustainability and the climate—including many with sustainability goals—see business opportunities in clean energy.
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The specific company also influences decisions. Very small producers have different plans than large private or public companies. Geography and regional policies play key roles. Government-owned companies like Saudi Aramco control most global oil resources, supporting national economies through their revenues.
Despite modest investments so far, there are several business reasons for increasing clean energy investments over time:
1. **Diversification**: Oil markets are cyclical, making investments in clean energy a hedge against volatility.
2. **New Revenue Opportunities**: Many customers want clean energy, providing new revenue streams.
3. **Cost Reduction**: Clean energy can reduce costs and provide alternative power sources for oil wells.
Public pressure also drives companies to address climate change. Campaigns seeking reduced fossil fuel investment are increasing along with climate lawsuits. Government policies focused on reducing carbon emissions and enhancing energy independence are also driving changes.
Some companies, like BP and Equinor, have rebranded themselves as clean energy leaders but faced criticism for greenwashing—taking actions primarily for public relations rather than real results.
It’s possible for fossil fuel companies to reinvent themselves as clean energy operations. Denmark’s Orsted transitioned from oil and gas to global offshore wind leadership with significant public support.
However, most large oil companies aren’t likely to completely transform soon. This requires leadership, investor pressure, customer demand, and shifts in government policy, such as carbon pricing.
A sustainability simulation shows that short-term profits can lead to long-term disaster for businesses and the environment. Yet, when teams cooperate voluntarily, they achieve sustainable outcomes without regulatory threats or shareholder complaints.
This shared understanding suggests potential for similar leadership in real companies and the energy system. However, the urgency of climate change remains a significant challenge.
