The ambitious green revolutions launched by British energy giants BP and Shell, once hailed as bold steps towards a sustainable future, have dramatically scaled back after years of multi-billion dollar investments and strategic upheaval. An analysis reveals how internal discord, investor pressure, and challenging economics led to a profound retreat from their initial net-zero visions.
The Looney Leap: A "Big Bang" Beginning
The transformation at BP PLC began on February 12, 2020, merely in the second week of new chief executive Bernard Looney's tenure. A company lifer who previously oversaw its oil and gas operations, Looney embraced the energy transition with unexpected zeal. In a landmark London speech, he declared, "We have got to change, and change profoundly," a message underscored weeks later by a global pandemic and a historic oil price crash.
Looney's strategy was sweeping. BP would accelerate its clean energy businesses, slash spending on fossil fuels, and commit to net-zero emissions by 2050. Crucially, this target included not just BP's own operations but also the massive volume of carbon dioxide released when customers burned its products—emissions comparable to those of the entire United Kingdom. He issued an internal warning: "If anyone sees BP acting counter to what I say today, then I want to hear about it."
This "big bang" approach stunned BP's own senior leadership. According to two former executives, Looney had developed the plan with consultants from McKinsey for months without sharing it with the other 11 members of the executive team. One described the CEO's mindset as: "'I will actually destroy my current business because it is doomed and I am going to build a brand new business on the ashes of that.'" A rival oil company boss observed that tying net-zero targets to production was a perilous path, thinking, "You are going to be toast. The only way you are going to get to zero is to get to zero production." Looney declined to comment for this story.
Shell's Earlier, Cautious Pivot
While BP's shift was sudden, Shell PLC had begun its own transformation six years earlier under then-CEO Ben van Beurden. Both companies were initially cheered on by the UK government, media, and major investors like BlackRock, which had adopted new climate-focused frameworks. The market mood was optimistic; by early 2021, Danish renewable pioneer Ørsted reached a valuation of US$82 billion, making it about a third more valuable than either BP or Shell.
Van Beurden believed that for Shell's long-term survival, it had to define its role in a future energy system that would not be dominated by oil and gas. "For the long-term survival of the business, you have to think about the future of the energy system, which is not going to be oil and gas, let's be honest," he stated.
The Unraveling and Billions in Retreat
Despite heavy spending, hiring thousands of new staff, and pledging to be part of the climate solution, the grand plans of both giants ultimately faltered. Investors grew increasingly skeptical, expressing concerns over the proposed project prices, timelines, and returns from renewable energy ventures compared to the traditional, cash-generating fossil fuel business.
The embrace of renewables was seen as the fastest route to reduce the companies' overall carbon footprints. However, the financial markets were less impressed. Facing pressure to maintain dividends and share prices, both companies have since dramatically scaled back their transition plans, writing off billions of dollars in investments and refocusing more attention on their core oil and gas operations.
The story of BP and Shell's green ambitions serves as a stark case study in the immense challenges facing legacy energy companies. It highlights the tension between long-term existential threats, shareholder expectations, and the practical difficulties of pivoting trillion-dollar industries within a few short years.
