Putting profits first, European oil companies ignore the disastrous consequences for our global climate trajectory

In an article on the Le Monde website, Nabil Wakim discusses the quiet transition European oil giants are making. After making commitments in support of environmental transition, European companies are abandoning their promises in favor of short-term profits in the sector.

Oil giants are quietly stepping back on climate promises

History may well forget the brief moment in time when those most responsible for the climate disaster pretended to be part of the solution. After pledging to reduce their responsibility for global warming, the European oil giants – particularly BP, Shell and TotalEnergies – are making a quiet but significant U-turn, betting on fossil fuels in defiance of the scientific consensus.

In 2020, as the Covid-19 pandemic brought the world to a standstill, oil prices plummeted. Soon, Europe’s major oil players were committing to a shift to carbon neutrality. “The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero,” said Bernard Looney, the newly-appointed BP boss whose plan was – unusually – welcomed by some in the UK climate movement.

“The question of the sustainability of oil companies is being raised,” the CEO of Total – since renamed “TotalEnergies” – Patrick Pouyanné told Le Monde. British-Dutch Shell and Italy’s ENI promised to achieve carbon neutrality by 2050 and committed to investing massively in renewable energies. In contrast, their American competitors Exxon and Chevron took the opposite approach, ignoring the climate challenge and devoting most of their investments to oil and gas.

Three years on, what remains of these commitments? Shell’s new boss, Wael Sawan, announced in mid-June that the company had no intention of meeting its climate targets. He has even taken a 180-degree turn by planning to compete with American giant Exxon, whose new-found profitability is being held up as a model by the industry’s traders. He’s following in the footsteps of BP, which in February abandoned its plan to massively reduce carbon emissions by 2050. The head of TotalEnergies repeated without batting an eyelid that the company – like its two competitors – would continue to invest in new oil wells until at least 2030. As for ENI, it has just acquired producer Neptune Energy to boost its oil and gas production – one of the biggest takeovers in the sector in Europe, valued at €4.5 billion.

Record consumption

It’s a turnaround that has not escaped the notice of some players who were hoping for a serious effort. In the UK, for example, the Anglican Church has decided to withdraw from BP and Shell, believing that the groups were “a long way from meeting” the targets set out in the Paris climate agreement.

Yet the scientific consensus is clear. The reports of the Intergovernmental Panel on Climate Change have explained that any new fossil fuel project hampers the possibility of maintaining habitable living conditions on the planet. In 2021, it was the International Energy Agency (IEA) – historically close to the oil industry – which specified that no new oil or gas projects should be launched if the Paris Agreement was to be kept on track.

After admitting that these warnings were necessary, the oil giants have made a U-turn. Rather than giving lessons, “the IEA would be better off convincing its members [oil-consuming countries] to reduce their needs,” thundered Patrick Pouyanné in Le Journal du Dimanche on June 18. The argument given by the oil companies is always the same: We are responding to a demand that is only increasing. It’s true that the world is heading toward record oil consumption in 2023, with more than 102 million barrels a day consumed on average. After many years of funding publications denying climate science, the oil giants are now taking up the historic refrain of the tobacco multinationals. Companies should have no responsibility and the subject should be solely in the hands of public authorities.

The reality is quite different: The energy crisis and the consequences of the Russian army’s invasion of Ukraine caused oil and gas prices to skyrocket. The five largest private oil companies were forecasting profits of $153 billion (€140 billion) for 2022 alone – illustrating the extent to which their business model is entirely dependent on the price per barrel. Hence the recurring question among industry players: Why change your business model when it’s so profitable in the short term? Investments in electricity or renewable energies are less profitable, and communication on climate commitments is always described as “greenwashing” by NGOs.

Radical strategy

At TotalEnergies, more than 70% of investments are devoted to oil and gas, much of this in new projects. In a Le Monde op-ed in May, nearly 200 scientists called on shareholders to speak out against the company’s strategy before the annual general meeting. This effort was in vain. The group’s management and shareholders chose to commit headlong to a radical strategy aimed at profiting from high oil and gas prices, rather than attempting to take the path of transition.

In 2012, the New Yorker published a drawing by Tom Toro depicting a man in a ruined world, explaining to incredulous children, “Yes, the planet got destroyed. But for a beautiful moment in time we created a lot of value for shareholders.” There’s no doubt that in the short term, the strategy of betting on oil will be particularly profitable. But its consequences are disastrous for our global climate trajectory.

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