Climate Agenda of the Leading US Oil Companies

Abstract

The authors investigate characteristics of the fourth energy transition from fossil fuel to renewables that is currently underway on the global scale and its impact on the oil and gas sector. They study evolution of the climate agenda of oil companies and its main drivers. The article explores specifics of the American model of oil majors’ decarbonization and analyzes key differences between the American and European models. The authors assess the main reasons for the high climate responsibility of the European oil companies. They study the key drivers of climate policy of the US majors, e.g. greening of financial institutions and investors, consumers’ preferences, etc. A special focus is made on the evolution of the US government climate strategy. Recently, the US majors have been demonstrating greater climate awareness and began to announce their net zero commitments. The authors study specific decarbonization measures taken by the main US oil companies (ExxonMobil, Chevron, ConocoPhillips, and Occidental Petroleum), such as R&D in the sphere of biofuels, carbon capture, utilization and storage, control of methane leakages, production of hydrogen, etc. The article emphasizes that the US oil companies, in contrast to their European counterparts, are reluctant to diversify their asset portfolio by expanding the share of renewables. Their reluctance might stem from the fact that oil companies that possess considerable proved reserves of hydrocarbons and that made significant investments in upstream are not eager to focus on renewables. Currently, the American majors continue to bet on the long-term future of oil and gas, remain loyal to their core oil and gas business and pursue climate agenda mainly by enhancing their energy efficiency through the use of their competitive advantages, primarily technological supremacy. The authors believe that under Joe Biden’s administration the climate agenda of the leading US oil companies will be strengthened further.