As the world turns to more eco-friendly solutions, an intriguing dilemma arises: oil companies are distancing themselves from green energy. Amid an economic storm triggered by the pandemic, these businesses felt the icy breath of declining demand, leading to a collapse in prices. In the eyes of many companies, betting on wind and solar energy, once applauded for their promising and sustainable potential, no longer seems as lucrative. Paradoxically, fossil fuels and traditional energy sources continue to attract investors, neglecting projects that are nonetheless synonymous with the future.
Oil companies are gradually turning away from renewable energies due to the commercial and economic challenges they face. In the wake of the pandemic, oil demand has collapsed, leading to a drop in prices and massive financial losses. Initially, many had considered a transition to solutions such as wind and solar, hoping for a more viable and sustainable operation. However, significant profits continue to arise from the extraction of oil and gas, surpassing the potential benefits of green energy. Consequently, companies like Exxon Mobil favor investments in areas closer to their traditional expertise, such as hydrogen and lithium extraction, earning them rewards in financial markets.
economic pressure and oil profits
The business world is in constant evolution, and companies evolve according to economic pressures. The difference between profits generated by the extraction of fossil fuels and those derived from the exploitation of wind and solar energy is now clearly in favor of hydrocarbons. It is important to understand why investors choose to support oil giants who, like ExxonMobil, have not embraced wind and solar energy enthusiastically. Since 2019, Exxon’s market value has increased by more than 70%, illustrating the significant return on investment associated with the oil and gas sectors (source).
limits of renewable alternatives
As the planet desperately seeks sustainable solutions, the limitations of renewable energy hinder their adoption. Oil companies, despite the growing awareness of environmental impacts, face inevitable technical challenges in the large-scale application of solutions such as solar and wind energy. The limited potential of these sources leads ExxonMobil and others to explore other avenues, notably lithium extraction and hydrogen, which are closer to their traditional competencies. This strategy has allowed them to ensure a transition while maintaining their financial dominance in the global market .
challenges of the energy transition
The energy transition is a complex concept that requires more than just a change in sources. A major factor of reluctance lies in the massive investments needed to adapt existing infrastructures for alternative energies. The financial losses of major oil companies during the pandemic, exceeding 100 billion dollars, have further exacerbated this lack of investment in green energies. Major players, however, are aware that to remain competitive in the long term, a diversification of their energy portfolio is crucial. This cautious approach partly explains their apparent withdrawal from short-term green initiatives and highlights the importance of balanced strategies for a successful transition to renewable energies .
