Oil companies pull back from green energy as fossil fuel profits rise

Investors are rewarding oil giants like Exxon Mobil for focusing on fossil fuels, as renewable energy investments show lower returns.

Rebecca F. Elliott reports for The New York Times.

In short:

• Oil and gas companies, including Exxon Mobil, are doubling down on fossil fuel operations while scaling back on renewable energy ventures.
• Companies like BP and Shell that invested heavily in renewables during the pandemic have seen lower profits and are revising their strategies.
• The energy sector's profitability now heavily favors fossil fuels, with median returns significantly outpacing renewables since 2020.

Key quote:

“If you look at the relative shareholder returns, the market’s been sending a very clear signal that it wants energy companies to focus on their core competencies.”

— Mark Viviano, managing partner at energy investment firm Kimmeridge.

Why this matters:

Fossil fuels remain a primary driver of climate change, yet their profitability discourages a transition to renewable energy. With global warming risks intensifying, the market’s preference for short-term returns complicates efforts to curb emissions and promote sustainable energy sources.