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European vs American Oil Majors: Addressing Climate Change

Zacks Equity Research
·3 min read

Leading energy players in Europe vow to invest billions in renewable energy and are committed toward reducing emissions. This reflects the companies’ concerns related to climate change since governments and investors want the firms to accelerate production of cleaner energy. However, U.S.-based energy giants are sticking to fossil fuels and are investing insignificant amounts for capturing carbon dioxide released in the air as a result of burning of fossil fuels.

European Energy Majors Leading in Energy Transition

Global integrated energy firm Royal Dutch Shell plc RDS.A, headquartered in London, is leading the energy transition. By 2050 or before, the company plans to become a net zero emission energy player. The company also intends that by 2035, its net carbon intensity of the energy products that it will sell will get reduced by roughly 30%.

Another Europe-based energy giant with headquarters in London, BP plc BP, is striving to establish itself as a net zero emissions company by 2050. To turn this goal into reality, the energy giant has decided to lower emissions from its operations related to oil and natural gas to zero. The integrated energy firm also plans to reduce carbon intensity of the energy products it sells by half to achieve the ambitious goal.

Both Shell and BP currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

US Firms’ Commitments for Fossil Fuels

U.S.-based energy companies are, however, giving little attention toward renewables and lean toward fossil fuels. Exxon Mobil Corporation XOM and Chevron Corporation CVX believe that there are potentials in the Permian Basin — the most prolific oil shale play in the United States — and deepwater production in offshore fields. To boost its reserve base, Chevron acquired Noble Energy, having a portfolio of low-cost assets in Permian and Eagle Ford shale play.

Importantly, Daniel Droog, vice president of energy transition at Chevron, stated that the company will not follow what European energy firms are doing to combat the climate change. Notably, the company will focus on cost efficiencies to reduce carbon intensity. Moreover, Chevron will increase the utilization of renewable energy only to provide power to its operations.

Instead of having a prime focus on renewables, ExxonMobil has made investments for its working interests in 20% of the total carbon capture capacity in the world.

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
BP p.l.c. (BP) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
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Zacks Investment Research