British Petroleum Backs Away From Renewables
The following blog is distilled from an interview on CBC’s “The Eyeopener,” hosted by Loren McGinnis who interviewed Enverus Intelligence® Research’s (EIR) very own Al Salazar. Click here to listen to the full radio segment.
The tide is shifting in the energy sector. Energy companies are under pressure because of waning profit margins and mounting shareholder pressure to increase value, slowing the energy transition evolution (e.g., renewable power sources, electric vehicles). Coupled with the policy changes from the Trump administration, renewable energy faces new and big hurdles.
A Changing Landscape in Energy Transition
A tangible sign of this shift is BP’s recent decision to refocus on oil production and back away from renewables. BP is not alone in this pivot; Exxon and Shell have also restructured their strategies to prioritize traditional oil and gas over renewable ventures. So far, it appears betting on renewables has not yet yielded the expected returns compared to traditional oil and gas investments.
“Looking at Shell’s, Exxon’s and BP’s share prices, it hasn’t paid to double down on renewables.
Instead, oil and gas investment has been rewarded by shareholders.”
– Al Salazar, Director of Macro Oil & Gas, Enverus Intelligence® Research
Fossil Fuel Still Dominate
Enverus Intelligence® Research (EIR) believes demand for oil and gas will continue to grow throughout this decade. Al Salazar identifies several factors contributing to this trend:
- Oil consumption: Oil demand reached an all-time high in 2024, growing by 1 million barrels per day from 2023. Despite the drive towards electric vehicles, gasoline demand has also risen.
- Natural gas: The liquefied natural gas sector is witnessing increased trade. Global natural gas demand also likely reached an all-time high in 2024.
- Coal utilization: Particularly driven by demand in Asia, coal consumption set a record in 2023.
Despite these recent trends and demographic shifts — particularly the aging populations in Europe and China — energy demand growth will slow down materially. However, EIR remains optimistic about the future of natural gas since it serves as a bridge fuel helping balance the intermittency of renewable generation.
“The world is getting older. Europe’s and China’s working age populations are declining, so too will the growth in energy demand. Demand growth over the next 25 years will slow materially.”
-Al Salazar, Director of Macro Oil & Gas, Enverus Intelligence® Research
The Net-Zero Challenge
The goal of net-zero emissions remains highly ambitious. Salazar points out that 80% of the 77 countries analyzed by EIR are failing to meet their renewable targets. On oil specifically, for the world to be on track to meet net-zero goals, the Internal Energy Agency suggests global oil consumption must fall to around 85 million barrels per day by 2030 — a challenging feat given demand during the COVID-19 pandemic only declined to 89 million barrels a day. For context, global oil consumption averaged about 103 million barrels per day last year.
Canada’s Strategic Position
Alberta and Canada have the potential to benefit significantly from the changing energy focus. The EIR director noted Canada holds vast amounts of critical minerals as well as robust oil and gas reserves, especially in underinvested areas like the Montney play in northeastern B.C. and northwestern Alberta. Market access, however, remains an issue for Canada producers. On the other hand, U.S. operators face increasing production costs as low-cost oil reserves dwindle.
Canada’s resource quality may provide a competitive edge, but capitalizing on these resources will require better market connections. This is a significant obstacle as new pipelines are usually opposed by environmentalists, and sometimes landowners, and such projects often cost far more than estimated.
Moving Forward: A Balanced Energy Future
The energy transition, while slowing, is not dead and should regain momentum. Ambitious targets set by companies and countries may have been too optimistic given current technological and economic constraints. Investments in this sector are substantial, potentially in the billions of dollars, and guaranteed returns are far from certain. The road to a new energy era will be difficult, but with realistic goals and strategic utilization of available resources, the journey is not only about transition but also sustainability and resilience. Despite the challenges ahead, EIR maintains a bullish outlook on the oil and gas industry as it serves a critical role in meeting global energy needs.
About Enverus Intelligence® | Research
Enverus Intelligence® | Research, Inc. (EIR) is a subsidiary of Enverus that publishes energy-sector research focused on the oil, natural gas, power and renewable industries. EIR publishes reports including asset and company valuations, resource assessments, technical evaluations, and macro-economic forecasts, and helps make intelligent connections for energy industry participants, service companies and capital providers worldwide. See additional disclosures here.
