• By The Financial District

Big Oil Exit From Russia May Delay Transition To Clean Energy

Major international oil companies began dumping their investments in Russian oil and gas this week following the country’s invasion into Ukraine.

Photo Insert: View from a Rosneft oil tanker

But experts say it’s unlikely these decisions will mean anything good for the transition to clean energy and could actually set the companies back with their plans to achieve net-zero emissions, Emily Pontecorvo reported for Grist environmental magazine.

It started with BP. Last weekend, under pressure from the UK government, the British oil giant decided to exit its nearly 20 percent stake in the Russian company Rosneft.

Russian crude makes up about a third of BP’s oil production, and the company said it would take a financial hit of as much as $25 billion. In a statement, BP chairperson Helge Lund said “the Rosneft holding is no longer aligned with BP’s business and strategy.”

Shell, Exxon, and the Norwegian oil company Equinor have since followed, withdrawing from various joint ventures in oil and gas projects in Russia. While abandoning oil and gas production is exactly what climate advocates want these companies to do, the moves do not represent a shift in strategy for Big Oil.

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For one thing, when BP first announced its plans to achieve net-zero emissions in 2020, the company made it clear that the plan did not apply to its stake in Rosneft. Now, the exit from Russia might actually hurt that plan, according to Jonathan Elkind, a senior research scholar at Columbia University’s Center on Global Energy Policy.

Both BP and Shell have said they planned to fund their forays into clean energy with profits from the fossil fuel side of their businesses. “So this creates, at a minimum, a crosswind that they have to figure out a way to manage,” said Elkind, referring to the two companies’ exit from Russia.

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“That may translate into a need to rethink some of what their priorities had been.” In other words, the situation in Russia won’t stop demand for fossil fuels, and major oil companies may decide to replace their Russian investments with new oil and gas ventures elsewhere.

According to the International Energy Agency, Russian oil and gas production is not the most carbon-intensive in the world, but it’s also not the cleanest. If this leads BP, Shell, or Exxon to move into parts of the world with dirtier production, their emissions could increase.

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