Forbes Piece: Is the Energy Transition Narrative Losing its Luster?

Wael Sawan, chief executive officer of Shell Plc, speaks during the 2023 CERAWeek by S&P Global conference in Houston, Texas, US, on Thursday, March 9, 2023.

[Note: This story was also published at Forbes.com]

Is the energy transition narrative losing its dominant position in the energy debate? It’s a question I’ve been asking myself and others increasingly over the course of this year, one that arose again Wednesday, when Shell CEO Wael Sawan announced his company will be joining its fellow integrated majors in refocusing on its core business of producing, refining and selling oil and gas.

In the wake of a punitive Dutch court decision two years ago, former Shell CEO Ben van Beurden announced a plan that would see the company not just limit the increase in its equity production to curb emissions, but to actively reduce production in real terms by 1-2% per year through 2030. Mr. van Beurden said the cuts would be accomplished through divestments in non-core properties and via natural decline in existing reserves. The announcement came as the energy transition narrative was being pushed out as a dominant messaging theme by governments, ESG investor groups and cooperative media in the wake of the Joe Biden election victory in 2020, placing tremendous pressure on management teams in corporate C suites to toe the line.

Shell certainly wasn’t the only major to move in the direction of de-emphasizing its core business operations in favor of making less profitable investments in “green” projects to send the correct virtue signals to the markets and governments. Until this year, BP, led by CEO Bernard Looney, had moved even more aggressively in the same direction, ExxonMobil took the step of establishing a major new business unit called Low Carbon Solutions in 2021 to manage its green ventures, and Chevron has also invested significant capital in non-oil and gas ventures.