Profits over planet: How are the energy giants approaching the net-zero transition?

Energy giants like BP, Shell and ExxonMobil have announced record profit margins in face of the energy price crisis, a move that has been labelled as “grotesque greed”. But how do these profit margins line up with current spending plans on the net-zero transition?

Profits over planet: How are the energy giants approaching the net-zero transition?

Renewable power rose by 14% in 2022, slightly below the growth rate of 16% in 2021

Household energy bills are predicted to reach more than £3,600 later on this year. Some houses are having to use between food or fuel and the UK Government’s response has focused on long-term resiliency plans, rather than addressing the immediate issue.

This huge surge in energy prices has delivered massive profits for the world’s biggest energy firms, which have been buoyed by high prices for oil and gas, largely due to the war in Ukraine.

Energy firms have passed the prices of gas and oil supply onto the consumers, yet have this week announced combined profits of £82bn across a collection of the world’s largest energy firms.

UN secretary general Antonio Guterres labeled the profits “grotesque greed”. With the prices of fossil fuels looking set to drive further profits for energy companies, a concern emerges that these energy firms, all of which have committed to net-zero in some way or form, may ignore the green transition and blow past carbon budgets.

The oil and gas sector is already set to burn through some 80% of the total global carbon budget the world will need to stick to if the Paris Agreement’s 1.5C trajectory is to be realised according to reports. A collaborative effort between the World Benchmarking Alliance (WBA), CDP and ADEME, the benchmark report assesses the emissions and climate plans of publicly listed and state-owned energy companies against the Assessing Low-Carbon Transmission (ACT) methodology. It then compares these results to alignment with a 1.5C temperature pathway.

The report analyses the emissions associated with 100 of the world’s largest energy companies, revealing that, if they do not change their business models, they will consume the sector’s carbon budget for 2019-2050 by 2037. All of the state-owned businesses and major corporates analysed have increased either oil or gas production, or both, since 2014.

Independent companies are set to account for a further 12% of the carbon budget and the seven biggest oil majors a further 13%. This cohort includes BP, Chevron, ConocoPhillips, Eni, ExxonMobil, Royal Dutch Shell and Total Energies.

So, with the energy giants announcing bumper profit margins this week, are these likely to be spent on the low-carbon transition, or will the short-term profits continue to pull these firms away from controversial net-zero plans?



BP boss Bernard Looney has described the energy market as a “cash machine” and with BP recording its biggest quarterly profit for 14 years, its hard to disagree.

The energy giant’s underlying profit reached £6.9bn between April and June, it’s second highest ever, and more than triple the amount that it made during the same period the year prior.

Climate targets

Last year, BP unveiled plans to transition away from being an oil company and to become an integrated energy company instead, headlined by a commitment to decrease fossil-based hydrocarbon production within a decade, as part of a wider net-zero ambition for 2050.

Last year, however, more than one-fifth of BP shareholders supported a resolution from climate activists calling on the energy giant to set tougher emission reduction targets for its net-zero transition, but ultimately the filing was rejected.

BP has gradually increased its emissions targets for the fossil fuels that its sells, now targeting up to a 20% reduction by 2030, compared to a previous target of 15%. However, this target is still only in relation to the carbon intensity of its sellable energy, rather than absolute emissions from the extraction and creation of fossil fuels.

Greenpeace had notably criticised BP’s net-zero target for lacking detail and credibility.

Spending plans

The net-zero target includes a commitment to increase annual investment in low-carbon projects to $4bn by 2025 and $5bn by 2030 – up from around $0.5bn at present. BP will reduce its fossil-based hydrocarbon production by 40%. Assets remaining after this phase-out will be “more cost and carbon resilient” than their predecessors, the energy major said in a statement. Meeting the target will require BP to halt all oil and gas exploration initiatives in countries where it is not yet operating.

While the company’s renewables pipeline has more than tripled from 6GW in 2019 to around 25GW, research from equity analysts Bernstein found that BP has spent around $3.2bn on clean energy since 206, a figure that is dwarfed by the $84bn funnelled into gas exploration over the same period.



Shell has also announced a profit bonanza over the past few days. The energy giant’s second-quarter profits reached $11.5bn and the company also announced a $6bn share buyback.

Climate targets

First announced in April 2020, Shell’s 2050 net-zero strategy has been the subject of much scrutiny.

Unlike many other energy majors, Shell has time-bound, numerical targets to reduce Scope 3 (indirect) emissions from the end-use of energy products by customers. Shell is targeting a 65% reduction in emissions across those products by 2050, with an interim target of 30% set for 2035.

The strategy is also headlined by an assertion that Shell’s total annual emissions will never be higher than they were in 2018 and that its total oil production will never be higher than 2019 levels. All in all, it is hoping to reduce the production of what it calls “traditional fuels” by 55% by 2030. Oil production will decline by around 1-2% each year.

Nonetheless, Shell has been told by bodies including the Hague District Court that the plans are not – as it claims – aligned with a 1.5C temperature pathway.

Spending plans notes that Shell is still not reporting how much the company is investing in renewable energy, but that around 66% of the firm’s expected capital expenditure moving forward will likely be at odds with scenarios required to reach the Paris Agreement.

Shell has reportedly merged its renewables and energy solutions spending data with marketing. The company has outlined investment plans in this area at around $3bn, but investments in oil and gas production look set to reach $8bn this year, up from $6bn the year prior.



As noted by the Financial Times, Exxon experienced a second-quarter net profit of $17.9bn, surpassing analysts’ expectations by more than $1bn, according to S&P Capital IQ. This is a record boon for Exxon, with the firm’s previous quarterly profit record sitting at  $15.9bn back in 2012.

Climate targets

At the Exxon AGM last year, shareholders were given the choice to add up to four independent director candidates from climate action group Engine No. 1 to the board. The energy major reportedly did not want any of these candidates to be voted in but, ultimately, two were appointed.

Before January 2021, Exxon was only publishing and setting targets for Scope 1 (direct) and Scope 2 (power-related) emissions in its environmental disclosures. Emissions from these sources have been falling steadily but gradually, with a 3.2% reduction recorded between 2019 and 2020.

But green groups and shareholders then successfully pressed the business into disclosing Scope 3 (indirect) emissions and have continued to request stronger climate targets. Exxon is striving to ensure that every barrel of oil produced in 2025 generates one-fifth fewer emissions over its life cycle than in 2016. Supporting targets to decrease methane intensity by 40-50% and flaring intensity by 35%-45% have been set. Many want targets in absolute terms, plus a long-term commitment to net-zero.

In January this year, Exxon finally relented and set a net-zero target for 2050, covering Scope 1 and 2 emissions.

Spending plans

As highlighted by ClientEarth, between 2010 and 2018, Exxon spent just 0.2% of its capital allocation and expenditure on low-carbon solutions and generation.

The company has also outlined plans to spend between $20-25bn in fossil fuel exploration annually through to 2025. Research also found that more than $10.4bn of Exxon’s 2019 capital expenditure was spent on ‘upstream’ fossil fuel extraction and production in 2019, with 88% of the company’s future capital expenditure expected to breach the alignment of the Paris Agreement.



Chevron announced that its second-quarters profits sat at $11.6bn this year, by far its highest recorded profit margin and surpassing estimates from analysts of under $10bn.

Climate Targets

At last year’s AGM, shareholders approved a proposal for new carbon targets from Dutch campaign group Follow This passed with 61% of the vote. The resolution requires Chevron to prove its climate targets are aligned with the Paris Agreement and to cover emissions in absolute terms.

While Chevron has insisted that it is “helping to advance a lower-carbon future” by expanding its forays into sectors like bioenergy, CCS and renewables, it has been repeatedly criticised for overstating its climate ambitions in the past. BlackRock took voting action against Chevron on climate grounds last year as Carbon Tracker analysis claimed the business is not aligned with the Paris Agreement.

Following the AGM, Chevron unveiled a net-zero target for 2050, covering equity upstream Scope 1 and 2 emissions. The company states that its “greater than” 5% reduction target set for 2028 against a 2016 baseline allows “flexibility to grow its traditional business, provided it remains increasingly carbon-efficient”.

Spending plans

Chevron has publicly committed to tripling its investments in solutions that will reduce emissions to $10bn through to 2028. Around half of its intended spending will go on initiatives to reduce emissions from fossil fuel projects, however.

A total of $3bn is expected to be used for carbon capture and offsetting solutions, with a further $2bn for emissions reductions. Chevron will also spend $3bn on renewable fuels and $2bn on hydrogen solutions.

However, using ClientEarth information, it is clear that this is less than what is being spent on fossil fuel production. Data found that, in 2020 alone, Chevron spent $13.5bn on capital and exploration expenditure, of which 81% was funnelled into fossil fuels. In the same year, the company also issued $1.5bn in exploration expenses for fossil fuel reserves.


France’s Total Energies revealed that its profits for the quarter almost reached $10bn, which is triple compared to recorded profits the same time last year.

Climate Targets

In 2020, Total committed to reaching net-zero emissions by 2050 across its operations and products –  covering Scope 1, 2 and 3 emissions. It has said it will move the target date forward if possible.

The company had been facing criticisms from green groups and heated questions from Climate Action 100+ – a coalition consisting of more than 450 investors with more than $40trn in assets under management.

Indeed, analysis from the Transition Pathway Initiative (TPI) found that Total’s commitments are aligned with the Paris Agreement’s 2C trajectory, but not with its 1.5C trajectory or net-zero. A separate study by Carbon Tracker concluded that Total’s commitments will enable it to shirk responsibility for all or some of their Scope 3 (indirect) emissions.

Spending Plans

In 2020, Total pledged to increase its annual investments in renewables by 50% by 2030, against the $2bn allocated in 2019.

By increasing its annual investment in the coming years, the company said, it will bring 35GW of new renewable energy production capacity online by 2025. This is up from the previous target of 25GW.

Total said in a statement that it is hoping to become one of the world’s top five renewable energy companies within a decade, adding that it already has 24.5GW of renewable generation projects under construction globally. But it is only foreseeing low-carbon electricity accounting for 15-20% of its sales by 2040.

Nonetheless, ClientEarth notes that the “bulk of Total’s capital expenditure (around $10bn per year) continues to be directed to oil and gas projects”.

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