BP has announced plans to sell its wind and solar energy businesses and suspend 18 hydrogen projects. This strategic pivot aims to narrow the gap with competitors, boost stock performance, and address investor concerns about profitability. Meanwhile, Shell and Equinor are also scaling back their energy transition plans set earlier this century.
Industry analysts attribute these changes to the prolonged energy impact of the Russia-Ukraine conflict, rising costs, supply chain issues, and technical challenges that have affected the profitability of renewable projects, particularly offshore wind.
Five years ago, BP ambitiously aimed to transform into a low-carbon energy firm. However, the company is now reducing its hydrogen energy team in London from over 100 to 40 employees as part of its strategy shift. Similarly, Shell is revising its low-carbon plans, reducing offshore wind and hydrogen projects, exiting certain European markets, and seeking to sell its Australian carbon offset company, Select Carbon.
Both Shell and BP are taking decisive actions to improve financial performance. Shell's CEO, Wael Sawan, has committed to measures aimed at closing the valuation gap with American rivals ExxonMobil and Chevron. BP's CEO, Auchincloss, plans to invest billions in new oil and gas developments to enhance returns.
Despite these changes, neither company is completely abandoning low-carbon investments. They will focus on quickly profitable sectors like biofuels and continue developing ongoing offshore wind and hydrogen projects, primarily to reduce the carbon footprint of refining operations.
In contrast, TotalEnergies in France remains committed to low-carbon energy investments, significantly leading in renewable energy capacity over Shell and BP. However, analysts caution that global efforts to limit warming to 1.5 degrees Celsius, as supported by the UN, may fall short, forcing companies to reassess their emission targets.
