After a profitable year, some oil companies are slowing down their transition to renewables.

Oil executives have largely gone out of climate change denial but are now arguing that the world doesn’t have to act quickly to reduce fossil fuel use. In fact, last year industry leaders slowed down plans to combat climate change.



AILSA CHANG, HOST:

Scientists say the world urgently needs to reduce its dependence on fossil fuels to reduce the catastrophic effects of climate change. But the companies extracting these fossil fuels are in no hurry to go out of business. In fact, they made huge profits last year by staying on course and sticking to oil. And some companies that planned to make the so-called “green pivots” are slowing down. NPR’s Camila Domonoske joins us to talk about what this means for the world. Hello Camila.

CAMILA DOMONOSKE, SIGNED: Hello Ailsa.

CHANG: So what’s going on with the oil companies and their so-called renewable energy investment plans?

DOMONOSKE: Yes, let’s talk about BP because it made headlines. BP had a plan to turn from an oil company into an energy company, and it did invest money in renewable energy. But last week they announced a change in strategy, at least some slowdown in the timing of oil production cuts. I mean, they’re putting more money into oil and natural gas this decade than they planned.

Now, to be sure, many oil companies never planned to switch to renewable energy. And those who did were concerned about greenwashing, or very little investment compared to oil. But where there has been interest in the oil industry, there are signs that it is declining. Consulting firm Accenture has polled oil companies several times asking, “Hey, are you planning to radically change your business model?” And last year, the number of companies that said yes was halved.

CHANG: Wait, wait, why?

DOMONOSKE: Well, one obvious point is that there is a demand for oil, right?

CHANG: Yes.

DOMONOSKE: Today, the world uses a huge amount of oil and natural gas every single day. And when oil prices are high, like last year, pumping oil is incredibly profitable. So, back to BP. Her big plan was to invest in renewable energy, but her renewable energy projects just haven’t generated as much money as oil and natural gas. So the stock market punished BP for leaving money on the table. Stocks really struggled. Dan Pickering is an energy investor and analyst.

DAN PICKERING: The market is a money-making animal. And so when they said we were going to spend a little more on oil and gas, the market applauded.

DOMONOSKE: So BP stock rose after this announcement, which investors interpreted as a commitment to oil and gas.

CHANG: Okay, I get it. Oil is profitable in the short term, but what does that mean for the future? For example, do oil companies think that the world will use oil and gas indefinitely?

DOMONOSKE: Yes. What I find really interesting is that right now, even the leaders of the oil companies are talking a lot about the energy transition, about the world moving away from oil and gas. It’s really different from just a few years ago, right? They talk a lot about climate change. But when it comes to the idea of ​​phasing out oil and gas, there is serious disagreement over the timing, with oil industry officials saying it will take a very long time.

So, on the one hand, you have the idea of ​​a very fast transition, cutting emissions as fast as possible, which is a couple more decades, but only a couple of decades, right? It would be costly and destructive. This will mean higher electricity bills for people today, but will save money and save lives in the future by reducing climate impact more. On the other hand, you have a more gradual transition, a slower change that releases much more CO2. It would be cheaper and easier. Today, this would obviously be more profitable for oil companies, but it would mean a much higher price in the future.

CHANG: Of course.

DOMONOSKE: Based on investment, right now the oil companies are betting on slow change.

CHANG: What does this mean for climate change efforts?

DOMONOSKE: It’s a bet. This may be right or wrong. It depends on how quickly demand falls. In this regard, you know, today European lawmakers are putting the finishing touches on a law banning the sale of new gasoline-powered cars in 2035. The same is true in California.

CHANG: Right.

DOMONOSKE: So sometimes things change quickly, but it’s not clear who’s going to be right about the future.

Chang: This is NPR’s Camila Domonosuke. Thank you Camila

DOMONOSKE: Thank you.

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