November 12, 2018, London: European oil & gas majors including BP, Eni, Equinor, Total and Shell are investing the most in low carbon but the industry’s spend as a whole remains relatively low at only 1.3% of total capital expenditure (CAPEX) in 2018. The figure is revealed in a new report ‘Beyond the cycle’, from environmental non-profit and investment research provider CDP today. The report ranks 24 of the largest and highest-impact publicly listed oil & gas companies on business readiness for a low carbon transition.

Production and use of oil & gas accounts for over half of global greenhouse gas emissions associated with energy consumption, representing more than 17 billion tonnes of carbon dioxide equivalent per year¹. The analysis reveals a regional split in the industry’s approach. Across the 24 companies, European Majors account for 70% of current renewable capacity and nearly all capacity under development. However, with less domestic pressure to diversify, US-based companies have not embraced renewables in the same way.

In Russia, state-owned oil companies Gazprom and Rosneft have less capital flexibility, which means they may be less agile and slower to mobilize in response to future disruption such as climate regulation. This is also a trend across Chinese national oil companies including Petrochina, while a lack of disclosure on emissions data remains a key issue for Chinese companies in our analysis.

The oil & gas sector is under increasing investor pressure, with votes for climate shareholder resolutions more than doubling from 2014 to 2018 at company AGMs. Following the findings of the recent report from the UN’s Intergovernmental Panel on Climate Change (IPCC), the urgency of the company response to climate change is more important now than ever before.

Despite the small total spend on low carbon assets by CAPEX, the last few years have seen a wave of new energy investments by oil & gas companies. Since the start of 2016, 148 deals have been made in alternative energy and Carbon Capture, Utilization, and Storage (CCUS), and US$22 billion invested in alternative energies since 2010.