“To shift from a global economy that relies on 80 percent of its energy to fossil fuels to something else is a very, very big job,” said Daniel Yergin, the energy historian who has an upcoming book, “The new map,” about the transition that is now occurring in energy. But he remarked, “These companies are really good at large, complex engineering management that requires a transition of that scale.”
Financial analysts say the gruesome changes are already underway.
“They do it because management believes it’s the right thing to do and also because shareholders are putting a lot of pressure on them,” said Michele Della Vigna, chief natural resources researcher at Goldman Sachs.
Already, he said, investments by the big oil companies in low-carbon energy have risen to 15 percent of capital expenditure, on average, for 2020 and 2021 and about 50 percent if natural gas is included.
Oswald Clint, an analyst at Bernstein, predicted that the major oil companies would expand their businesses for sustainable energy such as wind, solar and hydrogen by about 25 percent or more each year over the next decade.
Shares in oil companies, once shares on the stock exchange, have been marked in part by investors because of the risk that concerns about climate change will reduce the demand for their products. European electric companies are seen as doing more than the oil industry to embrace the new energy era.
“It’s very difficult for an investor to have confidence that they can pull this off,” Clint said, referring to the oil industry’s efforts to change.
But, he said, he expects funds to flow back into oil stocks as new businesses gain momentum.
