CategoryClimate-Energy
Study: Oil and gas firms committed $59bn to transition-exposed projects in 2025
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Oil and gas majors allocated $59bn to transition-exposed projects in 2025, according to new analysis. These investments sit in direct conflict with net-zero commitments and climate policy trajectories – essentially betting billions on assets that face material risk of premature write-downs as energy systems decarbonise.
The finding exposes a structural tension in the fossil fuel sector. Companies publish net-zero pledges and transition strategies; simultaneously, they fund infrastructure locked into carbon-intensive operations for decades. A power station, pipeline, or refinery built today runs for 30–50 years. Commit $59bn now to such assets, and you've committed $59bn to future stranded asset risk.
This isn't hypothetical. Regulatory tightening (EU ETS expansion, methane regulations, sectoral carbon pricing), investor pressure (divestment campaigns, proxy votes), and market dynamics (renewable cost curves) are already reshaping energy demand. The International Energy Agency's net-zero scenario requires steep fossil fuel decline. Yet majors keep building as if demand curves stay flat.
The gap between stated climate strategy and actual capital allocation reveals where real business conviction lives. Boards and investors should demand specificity: Which projects? What transition assumptions underpin their business cases? Has management stress-tested returns under 1.5°C scenarios? And critically: why isn't this transition risk quantified and disclosed under TCFD or equivalent frameworks?
The risk isn't just financial. Capital deployed here is capital not deployed toward renewables, grid infrastructure, or energy system flexibility – the assets energy transition actually requires.