Global oil and gas companies are recalibrating their energy transition strategies in 2026 as persistent market volatility, policy uncertainty, and uneven demand growth challenge earlier decarbonisation ambitions.
Leaders such as BP, Shell, and ExxonMobil — formerly at the forefront of corporate climate targets — are refining their approaches, shifting focus from rapid diversification toward reinforcing their core hydrocarbon portfolios.
Carbon capture and storage (CCS) continues to anchor emission mitigation efforts across the sector.
Projects such as ExxonMobil’s Baytown CCS initiative in Texas and Shell’s Quest facility in Alberta remain operational benchmarks, illustrating how the technology can complement conventional production while reducing net emissions.
According to the International Energy Agency (IEA), global CCS capacity exceeded 55 million tonnes of COâ‚‚ captured annually in 2024, with capacity expected to double by 2030 under current investment trajectories.
However, the drive toward hydrogen, renewable power, and low‑carbon fuels has slowed.
Data from GlobalData Oil & Gas Research show that several companies are revisiting their interim 2030 targets.
The pause is most evident in Europe, where BP and Shell have both scaled back renewable project pipelines. BP, for instance, reduced spending on low‑carbon ventures from $5 billion to $3–4 billion in 2025, citing “capital discipline in an uncertain market”.
Similarly, ExxonMobil’s renewable fuel projects are being reprioritised in line with its strategy to “balance emissions ambitions with shareholder value.”
Rising capital costs, inflationary pressure, and supply chain challenges have made large‑scale renewable projects less financially attractive.
According to BloombergNEF, average global costs for onshore wind and utility‑scale solar projects rose by nearly 10 per cent between 2022 and 2024, reversing a decade-long trend of steady declines.
These increases, compounded by higher interest rates, are prompting many energy firms to re‑evaluate project viability.
At the same time, energy security concerns — heightened by geopolitical disruptions—have driven a renewed reliance on fossil fuels.
The International Energy Agency’s World Energy Outlook 2024 noted that oil demand rose slightly to 102 million barrels per day, underscoring continued dependence on hydrocarbons despite the push for decarbonisation.
The re‑use of existing infrastructure and the relative profitability of oil and gas portfolios have further encouraged companies to defer parts of their energy transition efforts.
Battery storage and grid‑scale energy storage solutions, while critical to integrating renewables, remain limited in scale compared to fossil fuel systems.
Global installed energy storage capacity stood at around 85 GW in 2025, a fraction of the capacity required for a fully renewable grid.
Still, the long‑term direction remains clear.
Solar and wind are projected to make up over 40 per cent of global power generation by 2035, a substantial rise from less than 15 per cent in 2021.
As 2026 progresses, oil and gas companies are charting a cautious course through uncertain terrain — refining emissions strategies, preserving profitability, and preparing for a lower‑carbon future.
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