jilipark Why Oil Companies Are Walking Back From Green Energy
When oil and gas companies made ambitious commitments four years ago to curb emissions and transition to renewable energy, their businesses were in free fall.
Demand for the fuels was drying up as the pandemic took hold. Prices plunged. And large Western oil companies were hemorrhaging money, with losses topping $100 billion, according to the energy consulting firm Wood Mackenzie.
Renewable energy, it seemed to many companies and investors at the time, was not just cleaner — it was a better business than oil and gas.
“Investors were focused on what I would say was the prevailing narrative around it’s all moving to wind and solar,” Darren Woods, Exxon Mobil’s chief executive, said in an interview with The New York Times last week at a United Nations climate conference in Baku, Azerbaijan. “I had a lot of pressure to get into the wind and solar business,” he added.
Mr. Woods resisted, reasoning that Exxon did not have expertise in those areas. Instead, the company invested in areas like hydrogen and lithium extraction that are more akin to its traditional business.
Wall Street has rewarded the company for those bets. The company’s stock price has climbed more than 70 percent since the end of 2019, lifting its market valuation to a record of nearly $560 billion in October, though it has since fallen to about $524 billion.
Where the Money Is for Energy CompaniesInvestors pushed oil and gas companies toward renewable energy around the pandemic. But Wall Street changed its tune when oil and gas profits rebounded.
Median return on invested capital by year for:Notes: The group of renewables developers and owners only includes those valued above $1 billion. The group of oil and gas producers includes seven integrated, investor-owned companies.
Source: S&P Global Commodity Insights
By The New York Times
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