Azernews.Az

By Alimat Aliyeva

British companies BP and Shell have decided to scale back their ambitious goals to become major players in the electric power industry, following weak progress and growing skepticism about renewable energy sources, Azernews reports.

Over the past five years, the oil giants have invested a combined $18 billion in these efforts.

A few years ago, Shell set the goal of becoming the world's largest electric power company, with its representatives predicting that electricity revenue would match profits from oil and gas by 2030.

Similarly, BP pledged to increase its spending on green energy tenfold to $5 billion per year by the end of the decade and expand its renewable energy portfolio twentyfold to approximately 50 GW.

However, BP and Shell are now planning to reduce investments as their shares dropped by more than 16% and 2%, respectively, this year. According to one industry leader, the companies find themselves stuck in the "valley of death" – torn between traditional shareholders who support fossil fuels and a new generation of investors focused on climate change action.

Shell, which, according to the Accela research group, has invested $11.8 billion in energy transition projects since 2019, has sold its electricity retail businesses in the UK, the Netherlands, and Germany, exited the Chinese electricity market, and last week announced it would not pursue new offshore wind energy projects.

BP, which has invested $6.8 billion in low-carbon energy, has placed its offshore wind assets into a joint venture with Japanese partner Jera. The company had planned to allocate $3-5 billion toward green energy by 2025.

Both Shell and BP’s decision to scale back their investments in renewables highlights the challenges energy giants face in balancing their traditional fossil fuel operations with the growing pressure to invest in cleaner energy. This shift may also indicate a broader trend of oil companies reassessing their strategies amidst economic uncertainty and evolving investor priorities. With increasing concerns about climate change, these companies are finding it difficult to transition quickly enough to appease both environmentalists and shareholders, pointing to the complex dynamics of the energy transition.