US oil majors 'way behind' Europeans in energy transition

US oil and gas majors are lagging well behind their European counterparts in adapting their business models for the worldwide energy transition to net-zero, Carbon Tracker has warned

The financial think tank noted that European firms have made a string of transition announcements, such as cutting assumptions about the future oil price and setting ambitious climate targets, which is reflected in more conservative project portfolios. US companies lag behind on all three measures. ExxonMobil is among the least well-prepared companies, with 80% or more of its business-as-usual project portfolio becoming uncompetitive if climate change is limited to 1.6°C.

The analysis suggests that firms are betting on oil prices which are inconsistent with global warming targets, with 15 projects approved in 2019 worth US$60bn that risk becoming stranded assets in a low-carbon world. Italy's Eni and the UK's BP are among the companies best prepared for the energy transition, but up to 50% and 60% of their respective portfolios risk becoming stranded and losing value if they are developed.

Carbon Tracker said that COVID-19 has shown how a fall in demand leads to plunging prices and should spur companies to action. It highlighted that the CEOs of both BP and Shell have suggested that global oil demand may have peaked in 2019.

“Very few parts of fossil fuel producers' business models will be left unshaken by the energy transition,“ said Andrew Grant, head of climate, energy and industry research. “European leaders like Eni and BP are responding with an increasingly joined-up approach, but for Exxon and others, the only consistency is how completely they shy away from decarbonisation.“

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