But oil companies’ balance sheets tell a different story. Investments in renewables by private oil and gas companies account for less than 10% of capital expenditures. The majority of that will come from just one firm, Norway’s state oil company Equinor. The industry as a whole still has $166 billion slated for new oil and gas projects in the next three years, according to an analysis by Rystad Energy.

Duane Dickson of Deloitte calls the industry’s commitment a “formidable investment in renewables,” given the early stages of the solar and wind that still only supplies about 10% of global electricity. The pace will accelerate as new technologies scale up. But others, such as IEEFA’s Williams-Derry, calls this new direction a facade.

“My read of the numbers is that they are not pivoting,” says Williams-Derry. “Some are making good noises, but when you look at the [capital expenditure] budgets, at best you could say they are planning to pivot.”

Yet a shift to electricity now appears inevitable. In a world ostensibly committed to zeroing-out net emissions by 2050, “any piece of energy demand that can be electrified, needs to be electrified,” said Maarten Wetselaar, who leads Shell’s “new energy” strategy, in the Financial Times.

Oil majors want to buy their way into this transition. Shell and Total have begun acquiring companies suggesting they intend to build an integrated supply chain for electricity, much like they did for oil in the 20th century. That would include EV charging, retail sales, battery manufacturing, solar developers, and energy trading. Shell has bought two clean energy utilities in the UK since 2017; this June, Total bought a 51% stake in Scotland’s largest offshore wind farm for £70 million ($88 million).

Like their renewable energy budgets, oil and gas companies’ acquisitions are still heavily slanted toward fossil fuels on the whole. Data from private equity research firm PitchBook shows less than 2% of oil majors’ mergers and acquisitions since 2007 have gone into clean tech. Most doubled down on fossil fuel infrastructure, such as Total’s natural gas power plants in Myanmar, which will lock the company into decades of new greenhouse gas emissions.

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Leading by example

A few companies, though, are willing to take the leap. One is Ørsted, formerly the Danish Oil and Natural Gas company. In 2009, the state-owned firm was one of Europe’s leading coal utilities, with 85% of its energy came from fossil fuels. Yet the looming threat of climate change change and a European carbon tax threatened the business.

So the company did what few else have: It pledged to give up fossil fuels. Its original goal in 2009 was to reduce its share of energy produced using fossil fuels from 85% to 15% by around 2040. The company sold off all its oil and gas assets in 2017. Today, Ørsted is on track to eliminate fossil fuels entirely by 2025. Coal and gas now make up just 13% of its power mix, and the company commands about a quarter of the world’s fast-growing offshore wind market.

That was a lucrative bet. The company has roughly tripled in value since its 2016 IPO, far outperforming every major oil company. Ørsted says sustainable energy systems were “the key to our growth over the past decade.”

Now, Ørsted is crossing the Atlantic. It has secured about half of the capacity awarded for offshore wind leases in the US so far. Three gigawatts of projects are due to come online from Virginia to Massachusetts. Even with delays due to Covid19, Ørsted claims it will have 10 times that ready by 2030.

Yet the Danish firm may be the exception. Ørsted was uniquely positioned. By 2000, it already possessed a deep understanding of offshore oil and gas exploration along with a willingness to bet on new sources of energy. By 2010, it was acquiring companies to design and build offshore wind farms. Fortuitously, the financial winds blew in the same direction. Ørsted’s main shareholders, the Danish government, urged the company to reduce its reliance on fossil fuels, and the collapse of natural gas prices forced it to move even faster.

It might not be too late for supermajors to catch up. The renewable energy market remains small, with decades of growth ahead. Supermajors could try turning their fossil fuel assets into cash machines, reinventing themselves as electric utilities that extract energy from the wind and sun and deliver it to your car battery and LED light bulbs

That seems unlikely, says Verleger. It’s true a few companies have managed to reinvent themselves over the centuries: Nintendo started off selling playing cards in Japan and cell-phone giant Nokia began life as a Finnish pulp mill in the 1800s. But it’s exceedingly rare.

“They’re going to fail,” he says, comparing oil firms’ efforts to Kodak’s failed leap to digital in its own industry. “Very few companies have transformed from being really good at one business to really good at another. It’s hard to see how [a company like] Shell will be really good at electricity.”

Oil companies are left scrambling to argue why they are best positioned to lead the charge into the next phase of the energy transition. They don’t appear to have many natural advantages.

Few companies are better-equipped to stand up enormous projects around the world, but renewables can typically be built more quickly and for less money than traditional oil platforms. Fossil fuel giants already employ an army of petroleum engineers, geologists, welders, and financiers, but just how applicable those skills will be to the next phase of wind, solar, and energy storage development is unclear. Nor has the industry proven particularly good at forecasting the energy future, even on its own turf.

The supermajors do have money. Their balance sheets allow oil and gas firms to invest in research and development, or acquire the companies they need in the new energy supply chain. But investors have raised a related question: If you want to invest in an all-electric future, why do it through a struggling oil company? Plenty of successful clean energy companies already exist. And they’d love to take investors’ money.

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