Decarbonization in the Oil and Gas Sector: The Role of Power Purchase Agreements and Renewable Energy Certificates

Abstract

This study examines the adoption of Power Purchase Agreements (PPAs) and Renewable Energy Certificates (RECs) as strategic tools for decarbonization in the oil and gas sector. Focusing on the 21 largest oil and gas companies across Europe, North America, and South America, the analysis reveals varied adoption rates and strategic emphases between regions. European companies exhibit robust integration of PPAs and RECs to expand renewable energy capacities and reduce emissions, aligning closely with aggressive EU climate policies. In contrast, American companies show a cautious approach, focusing more on emission reduction from existing operations than on renewable expansions. The study’s findings indicate that, while both regions are advancing in their decarbonization efforts, European companies are leading with more defined renewable energy targets and comprehensive low-carbon strategies. This research contributes to understanding how different regulatory environments and market conditions influence corporate strategies towards sustainable energy transitions in traditionally hard-to-abate industries.

1. Introduction

The primary challenge of the 21st century is twofold: enhancing quality of life for all while decarbonizing human activities to mitigate climate change [1]. Achieving this involves limiting temperature rise to below 2 °C, necessitating a transition to low-carbon energy sources. To a significant extent, the aim of lowering greenhouse gas (GHG) emissions often coincides with other energy objectives, like harnessing local renewable resources and curbing regional pollution [2]. However, while many countries have decoupled gross domestic product growth from GHG emissions through increased use of low-carbon energy, fossil fuels will remain essential for driving the global economy [3].

Hard-to-abate industries are characterized by high energy intensity, heavy reliance on fossil fuels, and limited availability of low-carbon alternatives. Decarbonizing these industries is crucial for achieving global climate goals but presents complex challenges that require innovative solutions and collaboration across stakeholders [4,5]. Hard-to-abate industries refers to sectors of the economy that encounter substantial obstacles in reducing their GHG emissions due to the nature of their operations and the limitations of current technologies [6]. The significance of hard-to-abate industries lies in their substantial contribution to global emissions and their critical role in various sectors of the economy. Sectors such as steel manufacturing, oil and gas, energy production, chemical and petrochemical production, cement production, and heavy transportation are examples of industries that fall into this category [7,8,9,10]. Governments worldwide, particularly in Europe and the US, are increasingly implementing strict regulations and policies aimed at reducing emissions in these sectors [11]. For example, the transportation sector, comprising road, rail, air, and maritime transport, continues to rely on fossil fuels despite improvements in fuel efficiency, with aviation and shipping being notable contributors to CO₂ emissions [12]. The Renewable Energy Directive III (RED III) seeks to expedite the decarbonization of the EU’s transport sector, which has experienced rising emissions since 1990 [13]. Additionally, in the US, the Renewable Fuel Standard mandates that transportation fuel must contain a minimum volume of renewable fuels, requiring biofuel blending [14].

Focusing on the oil and gas sector, which is integral to the global economy, unique decarbonization challenges arise as both its upstream and downstream activities significantly contribute to GHG emissions [3]. While the transition to low-carbon energy sources is essential for meeting climate goals [15], the sector must navigate market complexities, geopolitical tensions, and the need for substantial investments in infrastructure transformation [16]. To move towards a low-carbon future, the sector requires large-scale organizational changes [17], sector-specific coupling strategies, and supportive regulatory frameworks to ensure a just and sustainable transition [18].

In the literature, considerable attention has been paid to how major oil and gas companies, such as BP and Shell, have navigated the shift towards low-carbon transition pathways since the 1970s. Despite this attention, the broader strategic approaches of most oil and gas companies remain insufficiently explored [19]. There is a notable lack of research into the narratives that oil and gas companies employ to justify their shift towards renewable energy, an area not traditionally within their core business scope. Moreover, studies examining the comprehensive transition of these companies towards sustainability are sparse, particularly in terms of their adoption of electrification and Renewable Energy Sources (RES), production of low-emission fuels, or integration of these strategies [20], as the development strategies of major oil and gas companies are influenced by national energy mixes and environmental regulations [21].

In addition, research indicates that environmental regulations in Europe and the US significantly influence GHG emissions and corporate behavior. As two of the world’s largest GHG emitters, these regions have made notable strides in decoupling emissions from economic growth through effective policy measures and technological innovations [22]. Governments play a crucial role by providing financial incentives, grants, and tax breaks through policies like the Inflation Reduction Act in the US and the European Green Deal. These policies are pivotal in driving the energy transition with substantial investments, though tensions have arisen between the US and EU over protectionist subsidies [23].

Oil and gas companies are adopting various strategies to address decarbonization challenges [24]. However, progress towards decarbonization has been relatively modest, with most companies engaging in hedging rather than fully transitioning away from fossil fuels [25]. Furthermore, the deployment of Carbon Capture and Storage infrastructures remains slow, primarily due to their high costs and social acceptance issues [26].

Although the industry’s intellectual and financial capital could accelerate the transition to a more sustainable energy landscape [27], the financial burden of these initiatives is substantial and extends to stakeholders beyond the oil and gas companies, including consumers, governments, and investors [28]. Consumers may face higher energy prices as companies may pass some of the costs onto them, though this impact could be softened by government subsidies and market competition. Investors also play a significant role by financing decarbonization initiatives through green bonds and sustainable investment funds. Despite the upfront costs, the broader society stands to gain from reduced environmental and health costs, potentially offsetting the initial financial expenditures [29].

This study focuses on analyzing the diversification strategies of the 21 largest oil and gas companies across Europe, North America, and South America, emphasizing green diversification through the adoption of renewables and the implementation of Green Certificates. It explores the critical process of transitioning to low-carbon alternatives within these companies and highlights the dynamic nature of this shift. The research includes a detailed examination of strategies for embracing green energy, such as expanding renewable energy capacity and employing Power Purchase Agreements (PPAs) and Renewable Energy Certificates (RECs).

The scope of this study is confined to the regions of Europe, North America, and South America due to their significant role in global GHG emissions and the availability of comprehensive and accessible data [30]. This focus allows for a detailed analysis within contexts where regulatory and market conditions actively support the transition to low-carbon strategies. The exclusion of other markets from this analysis is primarily due to variations in regulatory environments, energy mixes, and the availability of comparative data to that of Europe and the Americas. Particularly, Asian markets, while crucial, often have different regulatory and market dynamics that could require a distinct analytical approach, which could be considered in future research to provide a global view of the industry’s transition strategies.

This study is structured around four central research questions that aim to dissect the details of decarbonization strategies within the oil and gas sector:

RQ1:

What are the projected capacity targets for Renewable Energy Sources among leading oil and gas companies?

RQ2:

What alternative low-carbon diversification strategies are being considered by the oil and gas sector for decarbonization?

RQ3:

What specific emission reduction targets have been set by these companies?

RQ4:

How does the presence or absence of upstream operations affect the companies’ adoption of low-carbon diversification strategies?

To answer these research questions, this study conducts a detailed analysis of publicly available reports, press releases, and other relevant publications from the selected oil and gas companies. The objective is to identify critical elements and priorities within their green diversification strategies. The findings are intended to provide deeper insights into how these companies are managing the energy transition, specifically highlighting their strategic approaches and commitments to sustainability. This approach ensures a comprehensive understanding of the sector’s adaptation to environmental imperatives.

The remainder of this study is organized as follows: Section 2 outlines the background of the key themes explored within this research, while Section 3 details the methodology employed. Section 4 presents a comprehensive analysis of the leading oil and gas companies in Europe and the Americas. Section 5 synthesizes the study’s findings, offering managerial and societal implications, and suggesting paths for future research.

2. Strategies for Decarbonization

The oil and gas sector is presently confronted with the ‘Energy Trilemma’—balancing the escalating global energy demand with societal pressures for decarbonization and the need to reduce costs [31]. There are several pathways through which the industry can significantly lower its carbon footprint and pivot towards a more sustainable future [32]. The potential of RES in this transformation is underscored by Temizel et al. [33], while Hunt et al. [27] discuss the promising role of a hydrogen economy. Additionally, Theodorou et al. [31] explore the decarbonization of oil and gas assets through specific energy transition projects. As the energy landscape evolves, oil and gas companies are increasingly committing to global energy decarbonization initiatives. The industry’s engagement in carbon management, decarbonization efforts, and the pursuit of net-zero emissions targets is pivotal to this transition. By harnessing technological innovations and supportive legislative frameworks, the sector is uniquely positioned to make substantial contributions towards mitigating climate change and fostering a more sustainable energy ecosystem [32].

The subsequent sections provide detailed background information on each key theme explored within this study in accordance with the respective research questions detailed in the Introduction section, offering a comprehensive overview of the current state of decarbonization efforts within the oil and gas sector. The first theme examines how oil and gas companies are integrating RES and utilizing PPAs to support their decarbonization goals, reflecting on the first research question’s focus on renewable energy capacity targets. The second theme explores alternative low-carbon diversification strategies, such as Carbon Capture and Storage and hydrogen production, addressing the second research question regarding low-carbon transition strategies. In addressing the third research question, the subsequent theme analyzes the specific emission reduction targets set by these companies, alongside the challenges and regulatory obligations that shape these goals. Lastly, the influence of upstream operations on the adoption of these low-carbon strategies is explored, corresponding to the fourth research question, to understand how different operational aspects affect strategic decarbonization decisions.

2.1. Power Purchase Agreements and Renewable Energy Certificates for Decarbonization

PPAs and RECs are critical instruments for the oil and gas sector’s shift towards decarbonization. These mechanisms not only support the adoption of renewable energy technologies but also enable the sector to meet energy demands in an environmentally sustainable manner.

A key strategy to fulfill the increasing need for energy while reducing environmental pollution is the integration of renewable power technology into oil and gas. Thus, many oil and gas companies are diversifying their portfolios by investing in RES, such as solar, wind, and biofuels. By leveraging their expertise, infrastructure, and financial resources, these companies can accelerate the deployment of renewable energy technologies and contribute to the transition to a low-carbon economy [34]. The decarbonization journey of hard-to-abate industries, such as the oil and gas sector, can be facilitated by PPAs [35]. Moreover, PPAs serve as a strategic approach to ensure the procurement of renewable energy, effectively diminishing the ecological impact of these sectors [36]. In Europe, PPAs have been successful in promoting green energy and achieving climate neutrality [37]. In a significant stride towards environmental conservation, the oil and gas sector stands to curtail emissions by up to 75% by embracing renewable energy production methods [38].

PPAs facilitate the direct acquisition of renewable energy from producers by companies, hence contributing to the advancement of RES. They are mostly associated with RES and are particularly widespread in Europe [37]. PPAs are increasingly being used by private companies in the US and Europe to obtain financing for renewable energy projects, and they potentially take over the role of government support in this respect [39]. They might also be designed to optimize the acquiring organization’s long-term benefits, as sustainable energy strategies can be integrated into PPAs to enhance their value [40].

PPAs have multiple advantages that help in decarbonization initiatives. They provide cheap renewable energy, which is essential for reducing GHG emissions. In addition to providing long-term pricing stability and risk reduction, PPAs are an attractive option for organizations looking for ways to reduce their energy costs and environmental impact. The announcement of corporate PPAs has been found to induce significant positive stock returns, particularly in the case of virtual PPAs [36]. PPAs also offer a way for institutional buyers to increase their share of renewable energy in total electricity consumption without direct investment in renewable energy assets. Defined as forward contracts between renewable energy asset owners and institutional buyers, PPAs specify the delivery of a fixed or variable amount of electricity from a specific renewable energy asset at a predetermined price [36].

The PPA market, however, does face several difficulties and obstacles, including the requirement for interprovincial PPAs and regulatory risks. These include technological, economic, and social barriers, as well as issues with contract design, risk allocation, and monitoring. The role of Guarantees of Origin is crucial for this effort, by providing a tracking instrument and contractual obligation between suppliers and customers. Guarantees of origin are essential as they act as a verification tool that ensures electricity is generated from renewable sources. They facilitate a transparent link between production and consumption, allowing for traceability and serving as a contractual agreement between energy suppliers and consumers [41]. Furthermore, there are legal issues to consider, such as those related to tolling, pricing, and project risk allocation. The lack of a transparent and credible legal and regulatory framework in developing countries can further complicate the implementation of PPAs. Environmental constraints, including political, legal, financial, social, and policy-related factors, can also impact the success of PPAs [42].

Therefore, the successful implementation of PPAs in hard-to-abate industries requires addressing these barriers and considerations. PPAs continue to be a successful instrument for decarbonization initiatives in spite of these difficulties [43]. Hundt [36] estimates that a $194 trillion investment is required by 2050 for a global shift to net-zero emissions, focusing on low-carbon energy tech. Listed companies play a pivotal role in generating and directing this investment to reduce their carbon footprint. They can invest in renewable energy assets, becoming producers themselves, which allows for easier and more transparent power procurement. This strategy helps companies lower their GHG emissions by utilizing or purchasing renewable energy assets, with external acquisitions often involving independent providers or developers. Such investments in renewable energy are considered crucial for sustainable development [36].

2.2. Alternative Low-Carbon Strategies

Oil and gas companies are increasingly turning to diverse low-carbon technologies to meet decarbonization targets. Among these, Carbon Capture and Storage and hydrogen production stand out as key strategies that leverage existing industry infrastructure and technological advances to significantly reduce CO₂ emissions and foster sustainable energy development.

Carbon Capture and Storage technologies enable the capture, transportation, and storage of CO₂ emissions from industrial processes, including power generation and oil and gas production [44]. These technologies can be further enhanced by linking them with RES and low-carbon power generation systems, which can be achieved through the deployment of energy storage [45]. The use of Carbon Capture and Storage technologies, along with RES, bioenergy, and hydrogen, can significantly reduce CO₂ emissions and contribute to low-carbon development of energy systems [46]. By implementing Carbon Capture and Storage projects, oil and gas companies can reduce their carbon footprint while leveraging existing infrastructure and expertise in underground storage [47]. These projects can help achieve net-zero GHG emissions by 2050 [3]. However, getting Carbon Capture and Storage projects into action can be costly and energy-intensive; in particular, capture systems need more investigation to drive down costs. Notwithstanding these obstacles, Carbon Capture and Storage technologies have great potential to lessen the negative effects of manufacturing operations on the environment [47].

To address global warming, several CO₂ conversion technologies have been advanced, including thermochemical, electrochemical, and photochemical processes. These strategies convert CO₂ into valuable hydrocarbons, utilizing RES. Notably, the thermochemical route has shown high conversion efficiencies and selectivity towards long-chain hydrocarbons suitable for fuel applications. Despite these advancements, achieving commercial viability remains a challenge due to issues such as catalyst deactivation and the need for high efficiency and density in industrial settings [48,49].

Hydrogen has emerged as a promising low-carbon energy carrier with applications in transportation, industrial processes, and power generation. Its potential to decarbonize these sectors is particularly significant, as it can be produced from low-carbon sources, such as renewable energy. Oil and gas companies can leverage their existing infrastructure and expertise in hydrogen production to scale up hydrogen projects and support the transition to a hydrogen economy [50]. The integration of Carbon Capture and Storage technologies in hydrogen production processes, such as steam methane reforming, can further enhance its low-carbon value. Steam methane reforming emits significant CO₂ emissions as a byproduct of hydrogen production. To mitigate CO₂ emissions to the atmosphere, an integrated hydrogen production process consisting of steam methane reforming technology coupled with Carbon Capture and Storage technologies could be investigated, including an assessment of the overall economics [51]. Guilbert and Vitale [50] have shown that PPAs are an effective method for providing hydrogen production facilities with renewable electricity. This strategy is especially pertinent for oil and gas companies seeking sustainable pathways, such as the production of green hydrogen, a point underscored by Hundt [36].

2.3. Emission Reduction Targets and Decarbonization Challenges

The Greenhouse Gas Protocol defines three scopes of emissions for companies: Scope 1 (direct emissions from owned sources), Scope 2 (indirect emissions from purchased energy), and Scope 3 (all other indirect emissions in the value chain). While Scopes 1 and 2 represent operational emissions, Scope 3 captures embodied emissions [52]. This classification is crucial, as the oil and gas sector faces significant challenges in its journey towards decarbonization. Technical barriers, such as the absence of market-ready low-carbon technologies and the rapid evolution of industrial processes, hinder adoption [53]. Financially, high costs for technological upgrades and uncertainties in regulatory and carbon pricing frameworks make it difficult for companies to commit to cleaner alternatives, especially in sectors that are difficult to decarbonize. These financial barriers delay investments and slow down emission reduction efforts, while also affecting profitability and market competition [17].

Operational challenges include limited access to renewable energy, dependence on fossil fuels, and complex supply chains, all of which complicate the shift to low-carbon technologies. The lack of clear policies and regulatory guidance further exacerbates these issues, making the implementation of decarbonization strategies more challenging [54].

To progress towards a more sustainable energy future, a collaborative effort is required from industry stakeholders, policymakers, and technology developers to navigate financial, operational, and regulatory obstacles [17]. Embracing sustainable practices will involve the entire industry, governmental transparency, and educational reforms to integrate best practices into future research. Combining carbon pricing with subsidies for research and development is suggested as a way to address these challenges and facilitate the transition [55].

Addressing the substantial emissions from hard-to-abate industries is crucial for meeting global climate objectives. The urgency to mitigate their carbon footprint is highlighted by their considerable contribution to emissions. Climate change mitigation efforts must extend beyond the energy and transportation sectors to include more hard-to-abate industries. Achieving decarbonization in such sectors necessitates a concerted effort from governments, businesses, investors, and other stakeholders to devise and execute strategies that not only reduce emissions but also maintain industry growth and competitiveness [10].

The European Union (EU) has set ambitious targets to achieve carbon neutrality by 2050, aligning with the Paris Agreement and the European Green Deal [56]. Key to realizing these targets are energy-efficiency measures and the electrification of demand-side industries and processes, including the production of alternative fuels, green gases, and Renewable Fuels of Non-Biological Origins. Forecasts indicate a significant surge in electricity demand should the EU successfully meet its net-zero emissions goal by the designated year [57]. The EU’s regulatory framework has evolved to include more comprehensive strategies, such as the Renewable Energy Directive (RED II and III) in 2023, which emphasize increasing the share of renewable energy and integrating green certificates into broader energy strategies like PPAs [41]. However, the EU’s climate governance approach, as exemplified by the European Green Deal, faces challenges in terms of speed, coherence, and just transition [58]. The transition to a net-zero future will require significant investment in renewable energy and energy efficiency [59].

On the other hand, the US lags behind Europe in decarbonization efforts, with a heavier reliance on industrial and subnational efforts [60]. The role of the US in leading the energy transition is uncertain, with the country making a bet on the long-term future of the global oil and gas sector while aiming to achieve net-zero goals by 2050 [61]. However, the US has also seen significant legislative developments, such as the Inflation Reduction Act of 2022, which represents the most substantial climate legislation in US history. This Act establishes a comprehensive framework for investing in a broad spectrum of programs designed to incentivize clean energy initiatives (like Carbon Capture and Storage or low-carbon hydrogen), reflecting a strategic shift towards more aggressive climate action and sustainable energy practices [41].

Therefore, it is evident that hard-to-abate industries represent a critical challenge in the fight against climate change due to their significant contributions to global emissions and the complexities involved in decarbonizing their operations. The oil and gas sector in North and South America and Europe is facing increasing pressure to reduce its carbon footprint. However, the industry is not on track to meet international climate goals, with many companies failing to set ambitious emissions targets [62].

2.4. Upstream Operations and Low-Carbon Diversification Strategies

The role of upstream operations in shaping low-carbon diversification strategies represents a critical and complex challenge for the oil and gas sector. These operations significantly influence Scopes 1 and 2 emissions, necessitating strategic adjustments to reduce environmental impact effectively. Research by Xia et al. [63] and Tagami [64] underscores the pivotal role of centralized decision-making in driving the adoption of such strategies, emphasizing that coherent and unified leadership is essential for effective implementation. Additionally, these studies highlight how climate policies directly affect the strategic choices available to companies, shaping their ability to innovate and adapt to regulatory pressures. By integrating these insights, the industry can better navigate the complexities of reducing emissions while maintaining operational efficiency and competitiveness.

3. Methodology

This study aims to dissect the decarbonization strategies within the oil and gas sector. To systematically address this objective, we implemented a methodological framework comprising the following key stages:

• Formulation of Research Questions: The research commenced with a clear formulation of four specific research questions, derived from the initial study’s rationale, as outlined in the Introduction section. These questions are intended to explore various aspects of decarbonization strategies among major oil and gas companies.
• Selection of Companies: We selected 21 major oil and gas companies based on their geographical location across Europe, North America, and South America, and on a minimum market capitalization of €10 billion (according to [65]). This criterion was chosen to ensure that the companies had sufficient public data available for analysis.
• Data Collection: We conducted a thorough search of publicly available annual financial reports, sustainability reports, press releases, and other relevant publications from the chosen companies. The search specifically targeted gathering data pertinent to the formulated research questions.
• Data Recording and Synthesis: All collected data were systematically recorded and organized into tables to facilitate direct comparison across different companies and to align with the specific research questions. This approach enabled a structured analysis and synthesis of the data.
• Analysis and Conclusion Drawing: The final stage involved a detailed analysis of the compiled data to identify key trends, similarities, and divergences in the decarbonization strategies of the selected companies. The findings from this analysis were then synthesized to draw meaningful conclusions regarding the current state and future directions of decarbonization efforts within the sector.

This methodological approach ensures a rigorous and systematic exploration of decarbonization strategies in the oil and gas sector, providing a robust foundation for the study’s conclusions and recommendations.

4. Results

This section presents the findings from our analysis of the decarbonization strategies implemented by selected oil and gas companies across Europe and the Americas. Section 4.1 focuses on European companies, while Section 4.2 examines those in the Americas. Section 4.3 offers a comparative overview of the strategies across these regions.

4.1. European Oil and Gas Companies

Numerous studies underscore the ambitious targets established by European oil and gas companies aimed at enhancing renewable electricity generation and reducing emissions. Dragomir et al. [66] and Lu et al. [67] highlight the critical nature of these targets, noting the particular challenges associated with tracking long-term objectives. Rehfeldt et al. [68] and Romasheva and Cherepovitsyna [69] explore strategies for emission reduction, emphasizing the role of fuel switching and the integration of RES.

Table 1 presents comprehensive details, derived from this study, on investments, strategies, and targets related to low-carbon initiatives among these companies. Each company selected for analysis ranks among Europe’s leading oil and gas majors, with a market capitalization exceeding €10 billion.

Table 1. European oil and gas companies.

Company Country Market Cap [Sources]	Investments, Strategies, and Targets in Low-Carbon Initiatives
Shell UK and the Netherlands 214.21 bEUR [70,71,72,73]	RQ1: Shell is actively expanding its renewable energy capacity, which is currently operational at approximately 2.5 GW. In addition to this, there is an extra 4.1 GW under construction or in contractual agreements. Looking ahead, Shell has a robust pipeline of potential projects that could contribute around 40.2 GW. RQ2: Between 2023 and the end of 2025, Shell plans to invest $10–15 billion in low-carbon energy solutions, including renewable fuels and Carbon Capture and Storage. RQ3: Shell reduced the net carbon intensity of the energy products it sells by 6.3% compared with 2016, marking the third consecutive year it hit its target. As part of its Energy Transition Strategy 2024, Shell aims to halve emissions (−50%) from its operations (Scopes 1 and 2) by 2030, compared with 2016 levels, and has already achieved more than 60% of this target. Shell is committing to the expansion of its Carbon Capture and Storage capabilities, with a 2050 Emission Target set to achieve net-zero emissions across Scopes 1, 2, and 3. RQ4: Shell does have upstream operations. The upstream division of Shell is involved in the exploration and extraction of crude oil, natural gas, and natural gas liquids.
TotalEnergies France 162.57 bEUR [74,75,76]	RQ1: TotalEnergies has achieved a significant milestone in renewable electricity capacity, reaching 22 GW by the end of 2023. The company has set ambitious targets to expand this capacity to 35 GW by 2025 and 100 GW by 2030. Achieving these goals would position TotalEnergies as one of the top five global producers of renewable electricity from wind and solar, excluding China. RQ2: TotalEnergies is investing in carbon capture, utilization, and storage to target over 10 million tons of CO2 storage by 2030. Total Energies is also investing in Carbon Capture and Storage technology, joining forces with AirLiquide. Finally, TotalEnergies is producing renewable diesel, sustainable aviation fuel, and BioLNG as part of its commitment to sustainable energy. RQ3: TotalEnergies has significantly reduced its carbon footprint, achieving a 24% decrease in Scopes 1 and 2 emissions and a 47% reduction in methane emissions compared to 2015. TotalEnergies is also on course to meet its 2030 target of a 25% reduction in life cycle carbon intensity (Scopes 1, 2, and 3) or −40% for Scopes 1 and 2, aligning with its net-zero emissions ambition by 2050, supported by a 30% investment in decarbonized energy. RQ4: TotalEnergies has upstream operations for oil and natural gas exploration and production.
BP UK 97.62 bEUR [77,78,79,80]	RQ1: To support the energy transition, BP plans to allocate $55 billion to $65 billion on new transition businesses between 2023 and 2030. BP’s Renewables and Power division is actively integrating renewable energy, with a 58.5 GW pipeline by early 2024. The company has set targets for RES, aiming for 20 GW by 2025 and 50 GW by 2050. RQ2: BP has been steadily increasing its investment in low-carbon energy, with a slight rise from $1.02 billion in 2022 to $1.26 billion in 2023, representing 11.7% of its total capital expenditure, focusing on an integrated portfolio that includes, in addition to renewables, bioenergy, and early positions in hydrogen and Carbon Capture and Storage. RQ3: The company is committed to reducing its Scopes 1 and 2 emissions by 20% by 2025 and 50% by 2030, while aiming for a 10–15% reduction in Scope 3 emissions by 2025 and a 20–30% reduction by 2030. BP’s ambition is to become a net-zero company by 2050 or sooner, aligning with the Paris Agreement and contributing to the global shift towards sustainable energy. RQ4: BP has upstream operations, for oil and natural gas exploration, field development and production.
Equinor Norway 77.54 bEUR [81,82,83]	RQ1: Equinor maintains its ambition to reach 12–16 GW of installed renewable energy capacity by 2030. Equinor produced 774 GWh from renewables in the first quarter of 2024, a 48% increase from the same quarter last year. In 2023, the total installed capacity of RES reached 2.1 GW, generating a total of 1938 GWh over the course of the year. RQ2: Equinor allocates 20% of its gross capital expenditure to the transition towards renewable energy and low-carbon solutions, like green hydrogen, alternative fuels and Carbon Capture and Storage. The company anticipates an investment of approximately $23 billion in renewable energy between 2021 and 2026, with plans to boost the proportion of gross capital expenditure dedicated to renewables and low-carbon solutions to over 50% by the year 2030. RQ3: In recent years, Equinor has reported a decrease in its Scopes 1 and 2 GHG emissions, with 11.6 million tonnes of CO2 in 2023, which is a 30% reduction from the reference year of 2015. Equinor has plans to achieve 50% reduction of Scopes 1 and 2 by 2030 and aims to reduce absolute GHG emissions in Norway to near zero by 2050. RQ4: Equinor has upstream operations, being the largest operator on the Norwegian Continental Shelf.
Eni Italy 49.71 bEUR [84,85,86,87,88]	RQ1: The 2024 operating Target for Plenitude, a subsidiary company of Eni, is to achieve a 4 GW capacity in RES, including solar and wind. By 2027, the goal is to surpass 8 GW, which would be threefold the capacity compared to 2023. RQ2: Eni plans to increase biorefining capacity to 3 million tonnes annually in 2025. By 2030, Eni aims to triple its renewable energy capacity and has established new platforms linked to bio-refining, Carbon Capture and Storage, and biochemistry to accelerate low and zero-carbon technologies. Moreover Eni is producing low-carbon hydrogen (blue and green). RQ3: The company has confirmed a net-zero target for Scopes 1 and 2 emissions by 2030 for its upstream operations, and by 2035 for the entire Eni Group. Additionally, Eni has set a goal to reduce Scopes 1, 2, and 3 emissions by 40% by 2030, 80% by 2040, and to achieve net-zero by 2050. RQ4: Eni has a robust upstream presence.
Orlen Poland 18.87 bEUR [89,90,91,92]	RQ1: Orlen is focused on delivering over 9 GW of installed renewable energy capacity (photovoltaic and wind) by 2030. RQ2: Orlen plans to invest approximately €74 billion by 2030, with 40% for carbon reduction projects, aiming to boost biofuel output to 3 million tonnes and produce 1 billion cubic meters of biogas. Their strategy also includes advancing CCU and Carbon Capture and Storage technologies. RQ3: By 2030 the company will reduce CO2 emissions from its current refining and petrochemical assets by 25% and emissions from power generation by 40% CO2/MWh. Orlen’s long-term goal is to achieve net-zero carbon emissions by 2050, aligning with global efforts to combat climate change. RQ4: Orlen operates in the upstream sector through Orlen Upstream, engaging in oil and gas exploration and production in Poland and internationally, including Canada.
Repsol Spain 17.96 bEUR [93,94,95]	RQ1: Repsol has grown its renewable capacity to 2800 MW and aims for 9–10 GW by 2027, focusing on the Iberian Peninsula and the US. Their goal is 20 GW by 2030, with an interim target of 6 GW by 2025, as part of a broader €19.3 billion investment. RQ2: Repsol plans to invest €2.549 billion in renewable hydrogen, aiming to become a market leader in the Iberian Peninsula and a significant producer in Europe by 2030. It aims to have an equivalent installed capacity of 1.9 GW by that year. Moreover, Repsol is investing €16–19 billion over four years, dedicating over 35% to low-carbon projects (blue hydrogen, Carbon Capture and Storage, etc.) Repsol is actively producing renewable fuels. RQ3: Repsol aims for a 30% reduction in Scopes 1, 2, and 3 net emissions by 2030 compared to 2016 levels, and a 55% reduction in Scopes 1 and 2 emissions in its operated assets by the same year. Repsol has committed to achieving net-zero emissions by 2050. RQ4: Repsol has a significant upstream presence. Its upstream operations are focused on the exploration and production of oil and natural gas.
OMV Austria 15.43 bEUR [96,97]	RQ1: OMV aims to build renewable energy production to around 10 TWh by 2030, utilizing renewable energy, primarily for powering its own operations, and plans to build up a renewable energy portfolio with a focus on geothermal energy to produce up to 9 TWh of energy per year from geothermal by 2030. RQ2: Under its Strategy 2030, OMV aims to transition from a linear business model to a circular one, focusing on sustainable fuels, chemicals, and materials with a strong emphasis on circular economy solutions. It plans to reduce oil and gas production for energy by 2050 and invest in green hydrogen, sustainable fuels and Carbon Capture and Storage. RQ3: OMV aims to reduce Scopes 1 and 2 emissions by 25% by 2023, by more than 30% by 2030 and by more than 60% by 2040 compared to 2019. It also targets to reduce Scope 3 emissions by 10% by 2023 and by more than 20% by 2030. OMV is committed to becoming a net-zero company by 2050. RQ4: OMV has a robust upstream operation with 392 kboe/d daily oil and gas production (2022). It explores, develops, and produces oil and gas in regions such as Central and Eastern Europe, Africa, the North Sea, and Asia–Pacific.
Galp Portugal 15.06 bEUR [98,99,100,101]	RQ1: Committed to allocating half of its net capital expenditures in low-carbon projects, including 30% in renewable energy and 5% in new businesses. Plans to increase renewable energy capacity to 1.4 GW by 2023 and 12 GW by 2030. RQ2: Significant Investments in Renewable fuels, Green Hydrogen, Carbon Capture. Galp aims to continue deploying projects to replace its grey hydrogen production by green production. RQ3: Ambition to reduce absolute operating emissions by 40% until 2030 (compared to 2017). Net-zero emissions by 2050. RQ4: Galp has significant upstream operations with 9.1 kg CO2/boe Carbon intensity.
Neste Finland 14.69 bEUR [102,103,104,105]	RQ1: Aimed for 100% renewable electricity use globally by 2023 and achieved 99.6%. RQ2: Significant investments in renewable fuels, green hydrogen, and CO2 capture and storage projects. RQ3: Set emission reduction targets (Scopes 1 and 2) of 19% by 2023 and 50% by 2030 compared to 2019. By 2040, Neste has set a target to reduce the use phase emission intensity of sold products (Scope 3) by 50% compared to 2020 levels. Net-zero emissions by 2050. RQ4: Neste does not have upstream oil and gas exploration activities.

The results from Table 1 indicate that most European companies are adopting forward-looking measures to boost their production of renewable electricity and enhance their capacity within the 2023–2030 timeframe. These companies are also pledging to cut their total emissions and decrease their net carbon footprint between 2030 and 2050, consistent with the objectives of the Paris Agreement and the EU’s regulatory framework. This reflects a broader obligation among European companies to channel investments into low-emission ventures, with a particular focus on RES, green hydrogen, and Carbon Capture and Storage, marking a strategic transition to more eco-friendly energy alternatives. Furthermore, these companies are solidifying their commitment to renewable energy by establishing ambitious targets for renewable electricity usage and capacity, signaling a shift towards a more varied energy mix and lessening their dependence on fossil fuels. They are also aligning their emission reduction goals with global climate initiatives, reinforcing their commitment to sustainable practices and corporate responsibility. The differing levels of involvement in upstream oil and gas exploration among these companies highlight the various phases they are in as they move towards low-carbon business models, influenced by the costs associated with carbon emissions.

Therefore, it is evident that the European oil and gas companies are making significant strides in the transition to sustainable energy. Neste is on track to produce up to 2.2 million tons of sustainable aviation fuel by 2026 and aims to achieve 100% renewable electricity use globally by 2023. Galp is not far behind, with plans to boost its renewable capacity to 1.4 GW by 2023 and 12 GW by 2030. OMV is focusing on emission reductions, targeting a 30% cut in Scopes 1 and 2 emissions and a 20% reduction in Scope 3 emissions by 2030, compared to 2019. Repsol is expanding its renewable electricity generation capacity, aiming for 2800 MW by 2020 and between 9000 MW and 10,000 MW by 2027. Orlen plans to deliver over 9 GW of installed renewable capacity and reduce CO₂ emissions by 25% by 2030. Eni is set to triple its renewable capacity by 2030 and reach over 7 GW by 2026. Equinor expects to invest around $23 billion in renewables from 2021 to 2026, aiming for over 50% of gross capital expenditures in renewables and low-carbon solutions by 2030. BP has allocated $55 billion to $65 billion for new transition businesses between 2023 and 2030. The company has set targets for RES, aiming for 20 GW by 2025 and 50 GW by 2050. Moreover, TotalEnergies invested over $5 billion in low-carbon energies in 2023, primarily in electricity. Lastly, Shell is investing $10–15 billion between 2023 and 2025 in low-carbon energy solutions, marking a collective effort towards a greener future.

Based on the previous analysis, one of the key challenges for oil and gas companies in their transition to sustainable energy is securing long-term and cost-effective access to renewable electricity [69]. Investments in renewable energy, and especially in the form of PPAs, can be a viable solution to this challenge, as they enable companies to buy electricity directly from renewable energy producers at a fixed price and duration [106]. Renewables and green PPAs can help oil and gas companies reduce their exposure to volatile electricity markets, lower their carbon footprint, and support the development of new renewable energy projects [43]. Therefore, the European oil and gas companies should consider investments in renewable energy as a strategic tool to achieve their ambitious targets and contribute to a greener future.

Nonetheless, the enthusiasm for investing in RES varies greatly among oil and gas companies [107]. Some may prefer strategies that prioritize production of green electricity over low-carbon fuels, focusing on decarbonizing their operations and products through the use of electricity from RES, rather than self-production [69]. For instance, Equinor has disclosed plans to electrify its offshore platforms in Norway by connecting them to the electrical grid or harnessing offshore wind energy, aiming to cut CO₂ emissions by 8 million tons annually by 2026. In a similar vein, Shell has committed to powering its global operations with renewable electricity by 2030, employing a mix of self-generated energy, PPAs, and energy certificates. These companies may regard the production of renewable electricity approach as a more cost-efficient and lower-risk method to meet their emissions reduction objectives, while also capitalizing on the growing accessibility and cost-effectiveness of renewable electricity in the market. Additionally, some oil and gas companies may lack the requisite experience and expertise in developing renewable energy projects, presenting considerable technical and financial challenges. As a result, they might prefer to delegate their electricity requirements to specialized renewable energy providers (preferring PPAs or green certificates) instead of investing in their own production capabilities.

4.2. North and South American Oil and Gas Companies

Oil and gas companies in North and South America are revising their strategies to accommodate the ongoing energy transition, increasingly focusing on sustainable practices and the adoption of green energy. This strategic shift is influenced by several factors, including government policies, the decreasing cost of renewable technologies, and a growing public demand for clean energy [108]. To effectively manage this transition, these companies are diversifying into RES, fostering collaborations, and enhancing their investments in research and development. It is crucial for these companies to ensure consistency in their statements, actions, and financial commitments towards clean energy initiatives. This movement towards sustainability is also driven by an international demand for cleaner energy and the urgent need to address climate change [109,110].

Table 2, based on data from this study, details investments, strategies, and targets pertaining to low-carbon initiatives among the selected companies in North and South America. Each company analyzed is a major player in the American oil and gas sector with a market capitalization exceeding €10 billion.

Table 2. North and South American oil and gas companies.

Company Country Market Cap [Sources]	Investments, Strategies, and Targets in Low-Carbon Initiatives
ExxonMobil US 486.24 bEUR [111]	RQ1: In 2023, ExxonMobil signed long-term agreements to enable over 475 megawatts of wind capacity for its assets in Texas and New Mexico. No specific renewables (photovoltaic or wind) investment strategy. RQ2: ExxonMobil has outlined its commitment to reducing emissions in its 2024 Advancing Climate Solutions Report. The company is focused on achieving its 2030 emission-reduction plans and its 2050 net-zero ambition. Key strategies include electrifying operations, using lower-carbon power, and upgrading equipment. It aims to reduce methane emissions intensity by deploying advanced technologies and best practices. The report also highlights ExxonMobil’s efforts in developing Carbon Capture and Storage, low-emission fuels, hydrogen, and lithium through its low-carbon solutions business. RQ3: ExxonMobil has announced its ambition to achieve net-zero GHG emissions for operated assets by 2050. ExxonMobil is also committed to reducing emissions through the electrification of operations, utilization of greener power sources, and the modernization of equipment. The company’s strategies for mitigating Scopes 1 and 2 GHG emissions by 2030 include the adoption of electrification and the acquisition of energy attribute certificates, such as RECs and guarantees of origin. ExxonMobil’s emission-reduction goals for 2030 are ambitious, targeting a 20–30% decrease in corporate-wide intensity, a 40–50% reduction in upstream intensity, and substantial cuts in methane and flaring intensity. These efforts are expected to lead to an overall 20% reduction in absolute corporate-wide GHG emissions, marking significant progress in its environmental initiatives. RQ4: ExxonMobil is an upstream company.
Chevron US 278.43 bEUR [112,113]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind). RQ2: Chevron is actively investing in renewable energy and storage solutions through various partnerships and projects. Chevron’s strategy for renewable energy and fuels is multifaceted: (a) Diverse Energy Portfolio: Chevron is expanding its energy portfolio to include compressed natural gas, renewable natural gas, hydrogen, renewable diesel, and biodiesel. It has also integrated renewable base oil into its lubricants product lines. (b) Bio-feedstock Processing: Currently, 60% of Chevron’s US terminals can distribute renewable or biodiesel. The Geismar, Louisiana, renewable diesel project, set to launch in 2024, will boost its renewable fuels capacity by 30%. Chevron aims for a production capacity of approximately 100 million barrels per day of renewable diesel, sustainable aviation fuel, biodiesel, and other biofuels by 2030. Chevron has the largest carbon storage project in the US, with a capacity of more than 1 billion metric tons. RQ3: It has set a 2050 net-zero aspiration for equity upstream Scopes 1 and 2 emissions, which are direct emissions from its operations and indirect emissions from the generation of purchased energy. Chevron has set a target to reduce its carbon emissions intensity by more than 5% from 2016 levels by 2028. RQ4: Chevron is an upstream company.
ConocoPhillips US 130.40 bEUR [114,115,116]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind). RQ2: Business units of ConocoPhillips are creating individual roadmaps, empowering units to initiate specific projects, prioritize using the marginal abatement cost curve process, and promote collaboration. This process is crucial for selecting impactful emissions reduction projects, with a funding mechanism for projects with a break-even cost of up to $60 per metric ton of CO2e. ConocoPhillips is funding various projects, including operational efficiency measures, methane and flaring reduction initiatives, blue and green hydrogen and ammonia, Carbon Capture and Storage hubs, renewable fuels and electrification projects, to support its transition to a lower-carbon economy. RQ3: Achieved 41% gross operated and 36% net equity GHG intensity reductions by year-end 2022 from 2016. It aims to strengthen its operational GHG emissions intensity reduction target to 50–60% by 2030 (compared to 2016). Finally, there is a goal of net-zero emissions (Scopes 1 and 2) by 2050. Its plan does not include a Scope 3 (end-use) emissions target. RQ4: ConocoPhillips is primarily an upstream company. It is engaged in hydrocarbon exploration and production, focusing on activities such as exploring for, producing, transporting, and marketing crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids
Petrobras– Petroleo Bras Brazil 98.11 bEUR [117,118]	RQ1: Potential of 50% of total electricity generation capacity through renewable sources by 2030. Mergers and acquisitions and investments for the development of solar and onshore wind in Brazil (up to 30 GW by 2028; future plans without specific targets). RQ2: Petrobras is charting a bold course for the future with its Strategic Plan for 2024–2028, earmarking a staggering USD 102 billion for investments. A significant portion of this, USD 11.5 billion, is dedicated to low-carbon projects, reflecting an average of 11% of the company’s total investments for the period. Potential to expand biofuel production capacity (by volume) by up to 4× between 2022 and 2030. Clean hydrogen, blue and green hydrogen. Expansion of biorefining projects, focused on Bio Jet Fuel and Diesel R. Petrobras already has the largest offshore CO2 reinjection program in the world, in the pre-salt fields (40.8 milTCO2 in 2022, with target to double the cumulative amount of CO2). RQ3: In a robust commitment to sustainability, Petrobras has set a goal for net-zero operational emissions (Scopes 1 and 2) by 2050, with an interim target not to exceed 2022 emission levels over the next five years, achieving a 40% reduction since 2015. Additionally, the company is targeting up to a 30% reduction in emissions intensity across its portfolio by 2030, with the intensity measured as GHG emissions per unit of energy contained in its energy products, using 2022 as the base year. This strategic plan positions Petrobras at the forefront of the energy industry’s transition to a low-carbon future. RQ4: Petrobras is involved in the upstream sector of the oil and gas sector. The company engages in the exploration and production of oil and natural gas.
Canadian Natural Resources Canada 75.03 bEUR [119,120,121]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind). RQ2: In 2022, Canadian Natural Resources demonstrated its dedication to sustainability by investing $151 million in technology development aimed at reducing GHG emissions. The company’s projects are diverse, ranging from Carbon Capture and Storage to improving steam efficiencies and conserving solution gas. Canadian Natural Resources does not currently produce renewable fuels as part of its operations. RQ3: With a strong commitment to environmental stewardship, Canadian Natural Resources has set forth ambitious goals: a 40% reduction in corporate Scopes 1 and 2 absolute GHG emissions by 2035, using 2020 as the reference year, and a 50% reduction in methane emissions from North American exploration and production activities by 2030, compared to 2016 levels. 2050 net-zero emissions target from oil production. RQ4: Canadian Natural Resources has upstream operations.
Marathon Petroleum US 56.64 bEUR [122,123]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind). RQ2: In a significant stride towards sustainability, Marathon Petroleum has also successfully delivered approximately 2.6 billion gallons of renewable fuel in 2023. Marathon Petroleum is conducting a study to determine the feasibility of using green hydrogen. It has also invested in carbon capture, utilization, and storage technologies. Marathon is also investing in renewable natural gas production. RQ3: Marathon Petroleum has set clear environmental targets to reduce GHG emissions across various Scopes by 2030. The company aims for a 30% reduction in Scopes 1 and 2 GHG intensity from the baseline of 2014. Additionally, there is a goal of a 15% reduction in Scope 3 for 2030, Category 11 GHG emissions, from 2019 levels. RQ4: Marathon Petroleum is primarily focused on downstream operations, which include refining, marketing, and transporting petroleum products.
Phillips 66 US 56.57 bEUR [124,125,126]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind), as the company’s focus appears to be on renewable fuels production and energy efficiency initiatives. RQ2: Phillips 66 is actively pursuing a suite of initiatives to meet its 2030 emissions reduction targets, including enhancing energy efficiency across operations, ramping up renewable fuel production, and investing in the electric vehicle battery supply chain. The company is also implementing carbon capture technologies and engaging in lower-carbon hydrogen production. With over USD 1 billion invested in future technology research and development, and strategic infrastructure investments like the joint venture for a European hydrogen fueling station network, Phillips 66 is on track to reduce manufacturing-related emissions. RQ3: Phillips 66 has demonstrated a commitment to environmental sustainability by achieving notable reductions in GHG emissions. In the year 2022, the company successfully reduced the intensity of Scopes 1 and 2 emissions by 8% and Scope 3 emissions by 3%, both measured against the levels of 2019. Looking ahead to 2030, Phillips 66 has set ambitious targets to further decrease emissions intensities: a 30% reduction in manufacturing-related emissions (Scopes 1 and 2) from operated assets, and a 15% reduction in product-related emissions (Scope 3) from the products they manufacture and sell, in 2030. Finally, Phillips 66 has set a target to reduce the GHG emissions intensity (Scopes 1 and 2) from its operations companywide by 50% by 2050. These targets are a testament to Phillips 66′s proactive approach to reducing its carbon footprint and contributing to a more sustainable future. RQ4: Phillips 66 does not engage in upstream operations, such as oil and gas exploration and production.
Valero Energy US 46.97 bEUR [127,128,129]	RQ1: Approximately 25% of Valero’s total refinery energy consumption was derived from renewable sources, but there is no specific strategy for renewable capacity investments. RQ2: In terms of sustainability targets, Valero has made significant strides in its low-carbon fuels strategy. Its strategy includes low-carbon hydrogen, Carbon Capture and Storage, renewable diesel and renewable fuels. RQ3: The company had set 2011 as the baseline year with 32.3 million MT CO2e (Scopes 1 and 2 emissions). Valero achieved its 2025 target by reducing/displacing more than 63% of global refinery Scopes 1 and 2 emissions in 2022, three years ahead of schedule. Looking forward, Valero is on track to achieve 100% reduction in global refinery Scopes 1 and 2 GHG emissions by 2035. By 2050, Valero has an ambition to reduce and displace companywide GHG emissions for Scopes 1, 2, and 3 by more than 45 million metric tons CO2e. Net-zero emissions policy by 2050. RQ4: Valero does not have upstream operations, such as oil and gas exploration and production.
Suncor Energy Canada 46.56 bEUR [130,131,132]	RQ1: Historically, Suncor has invested in wind power projects across Canada. Although it sold its wind and solar assets in 2022 and early 2023, it continues to focus on renewable fuels and blue hydrogen as part of its environmental, social, and governance efforts. Thus, there is no specific strategy for increasing its renewable capacity. RQ2: Suncor has been producing renewable fuel since the mid-2000s, with its St. Clair Ethanol Plant in Sarnia being Canada’s largest ethanol plant. It is also advancing a portfolio of projects aimed at producing advanced renewable fuels and blue hydrogen through investments in companies like Enerkem, LanzaTech, and LanzaJet. Plans for Carbon Capture and Storage. RQ3: Suncor aims to reduce annual emissions by 10 megatons across the value chain by 2030. It also aims to be a net-zero GHG emissions company by 2050 (Scopes 1 and 2) and contribute to society’s net-zero goals. RQ4: Suncor has upstream operations.
Imperial Oil Canada 34.12 bEUR [133,134]	RQ1: There is no specific investment strategy for renewables (photovoltaic or wind). RQ2: Renewable fuels: Imperial Oil is investing approximately USD 560 million to construct the largest renewable diesel facility in Canada at their Strathcona refinery. Imperial Oil is actively pursuing a range of initiatives to meet its GHG reduction targets, including deploying next-generation technologies at its Cold Lake operation, enhancing energy efficiency, and utilizing Carbon Capture and Storage, and finally producing blue hydrogen. RQ3: By the end of 2023, the company is targeting a 10% reduction in GHG intensity from its oil sands operations, taking 2016 as the reference year (Scopes 1 and 2). Looking further ahead to 2030, Imperial Oil is striving for a more ambitious 30% reduction (compared to 2016) in the GHG intensity of its oil sands emissions (Scopes 1 and 2). Ultimately, the company envisions a future where it achieves net-zero emissions by the year 2050, covering both Scopes 1 and 2 emissions. RQ4: Imperial Oil has upstream operations.
Ecopetrol Colombia 23.09 bEUR [135,136,137,138]	RQ1: Ecopetrol had 208 MW renewable capacity by 2022 (0.29 TWh-year). Ecopetrol’s renewable capacity goal is 900 MW of renewable energy by 2025 (1.3 TWh-year) and more than 1000 MW by 2030 (9.5 TWh-year). Ecopetrol’s renewable energy strategy is centered on reducing carbon emissions and enhancing sustainability. Key projects include the development of solar parks, a small hydroelectric plant, and the production of green hydrogen. RQ2: Ecopetrol is focusing on both blue (using Carbon Capture and Storage) and green hydrogen, with plans to produce more than 50,000 tons of clean hydrogen (blue and green) by 2025. Production of Green ammonia and synthetic fuels by 2030. RQ3: These initiatives are part of Ecopetrol’s commitment to achieving a 25% reduction in emissions by 2030 and transitioning towards a cleaner energy mix, in line with their goal of net-zero emissions (Scopes 1 and 2) by 2050 or 50% reduction (Scopes 1, 2 and 3). RQ4: Ecopetrol is actively involved in upstream production.

Table 2 illustrates that the majority of American oil and gas companies are prioritizing investments in low-carbon initiatives over renewable energy projects, for the period 2023 to 2030. These initiatives typically include enhancing energy efficiency, reducing methane emissions, transitioning to cleaner fuels, and developing Carbon Capture and Storage technologies. The data indicate that these companies have set ambitious targets to significantly reduce their GHG emissions by 2030 or 2050, aligning with global efforts to combat climate change. Moreover, the results suggest a firm commitment from these companies to decrease their overall emissions and net carbon intensity. However, the pace of these reductions appears more gradual when compared to their European counterparts, highlighting a regional divergence in the approach to achieving sustainability goals.

The data also show substantial investments by some companies in renewable energies and fuels, including wind, solar, biofuels, hydrogen, as well as Carbon Capture and Storage technologies. Nonetheless, there is a noticeable disparity in the level of investment and dedication to these low-carbon ventures, with certain companies demonstrating greater initiative and foresight.

In response to the ongoing energy transition, American oil and gas companies are revising their strategies to embrace more eco-friendly practices and RES. This shift is driven by a combination of regulatory policies, the decreasing cost of renewable technologies, and a growing public demand for environmentally friendly energy options. To navigate this transition successfully, these companies are exploring diversification into renewable energy sectors, fostering collaborations, and enhancing their research and development efforts [109]. However, it is crucial for them to ensure consistency between their statements, actions, and financial expenditures on clean energy initiatives.

For instance, as indicated in Table 2, Ecopetrol has invested considerably in renewable fuels, green hydrogen, and CO₂ capture and storage projects, with a goal to transition to 100% renewable electricity usage worldwide by 2023. In a similar vein, Imperial Oil has set a target to reduce the GHG intensity of its oil sands operations by 10% by 2023, using 2016 as the baseline year (Scopes 1 and 2). Looking ahead to 2030, Imperial Oil is aiming for an even more ambitious 30% reduction in the GHG intensity of its oil sands emissions (Scopes 1 and 2). In the long term, the company aspires to achieve net-zero emissions by 2050, encompassing both Scopes 1 and 2 emissions.

4.3. Comparative Overview

Table 3 presents a comparative overview of the decarbonization strategies adopted by European and American oil and gas companies. This comparison highlights the regional approaches and specific practices that these companies are implementing in their pursuit of reduced carbon footprints.

Table 3. Comparative overview of decarbonization strategies in European and American oil and gas companies.

	European Oil and Gas Companies		American Oil and Gas Companies
Future capacity targets for Renewable Energy Sources	European companies uniformly exhibit a strong commitment to expanding renewable energy capacity, with ambitious targets set for the near future. Notable goals include achieving 100% renewable electricity usage and the development of substantial renewable capacity, as seen in companies like Eni and TotalEnergies.		Only a minority of American companies has established specific targets for renewable electricity production or significant investments in this area. There is a general lack of explicit plans or a move away from renewable investments, with less emphasis on renewable electricity capacity. For instance, Ecopetrol aims for 900 MW by 2025, whereas companies like Imperial Oil lack a defined strategy for renewable assets.
Low-carbon diversification strategies besides renewable energy	Across Europe, there is a unified strategy among oil and gas companies to invest in renewable fuels and low-carbon hydrogen, prominently featuring Carbon Capture and Storage. There is also a notable commitment to the production of green hydrogen.		American companies display varied approaches to low-carbon diversification, with most investing in Carbon Capture and Storage and renewable fuels. However, the approach to hydrogen investment differs, with some focusing exclusively on blue hydrogen and others on a mix of blue and green hydrogen. Noteworthy are companies like Ecopetrol and Suncor, which are investing in renewable fuel production and carbon capture technologies.
Emission reduction targets	European companies have established clear emission reduction goals, aiming for substantial cuts by 2030 and pursuing net-zero emissions by 2050. While targets vary, there is a prevalent industry trend towards significant carbon footprint reductions. Companies such as BP and TotalEnergies have set notable intermediate reduction targets for 2030.		All American companies listed have emission reduction targets, ranging from modest short-term goals to ambitious aspirations for net-zero by 2050. However, the specifics of intermediate targets vary, with companies like Valero aiming for a 100% reduction in refinery Scopes 1 and 2 GHG emissions by 2035.
Upstream operations	The involvement in upstream operations varies, with some European companies having no upstream oil and gas exploration activities, while others maintain a robust presence. These companies are concurrently transitioning to lower-carbon energy sources while continuing their oil and gas exploration activities.		Most American companies maintain a significant upstream presence, with exceptions like Valero Energy, Phillips 66, and Marathon Petroleum, which primarily focus on downstream activities. Upstream operations are characterized by efforts to integrate low-carbon technologies into their production processes.

5. Conclusions

5.1. Theoretical Contribution

This study outlines the primary decarbonization strategies employed by leading oil and gas companies, revealing two predominant approaches. The first involves substantial investment in RES, such as solar and wind, alongside initiatives for energy storage and electrification. These assets are crucial for reducing the carbon intensity of the energy produced by these companies, which is an essential metric for decarbonization. However, the relatively lower returns on investment from renewable projects, compared to conventional oil and gas ventures, might deter investors from augmenting their stakes in this sector [20,45]. The second strategy focuses on technologies that mitigate emissions from existing fossil fuel operations, such as Carbon Capture and Storage and low-carbon hydrogen technologies, or on developing lower-carbon alternatives such as biofuels [139]. These options are particularly appealing to oil and gas companies as they align closely with existing infrastructure and substantially reduce operational emissions.

Additionally, the study reveals a clear divergence in decarbonization strategies between leading European and American oil and gas companies. European companies are progressively focusing investments on the energy transition, significantly emphasizing electrification through RES. For example, Neste aims to achieve global utilization of entirely renewable electricity by 2023, while Repsol plans to boost its renewable electricity generation capacity to nearly 10,000 megawatts by 2027 [23]. Conversely, American companies primarily concentrate on emission reduction technologies for existing fossil fuel operations or focusing on developing more environmentally friendly alternative fuels. The investment landscape for renewable energy in America is notably concentrated among a few companies, thereby most American companies, including giants like Chevron and Exxon, are prioritizing the second diversification strategy. These companies are more inclined towards refining their existing operations rather than investing in new renewable energy projects, with a focus on Carbon Capture and Storage, blue hydrogen, and biofuels to align with emerging environmental standards.

The strategic investment decisions in the oil and gas sector are significantly influenced by the regulatory pressures specific to their operational regions, whether these operations are upstream, midstream, or in refining. This study demonstrates that European companies are aligning with the EU’s vigorous legislative push towards a greener economy, while American firms are leveraging their established expertise in traditional energy sectors to transition towards cleaner alternatives, aligning these efforts with their existing business models. Although the US has historically been less strict on CO₂ emissions compared to Europe, recent legislative changes, such as the Inflation Reduction Act, have stimulated investments in the energy transition. This has raised concerns in Europe, with some viewing the Act as protectionist and potentially detrimental to the EU’s industry. In response, the EU has enacted its own Net-Zero Industry Act, with the European Commission noting potential adverse impacts on European green investments [23,140].

5.2. Managerial Implications

The findings of this study highlight the critical role of strategic investments in RES, PPAs, and RECs for oil and gas companies undergoing decarbonization. Managers within these companies must recognize the distinct approaches and outcomes observed between Europe and the Americas, which can inform strategic planning and operational adjustments. European companies have been proactive in utilizing PPAs and RECs to enhance their renewable energy capabilities and emission reduction, closely aligned with strict EU regulations. In contrast, American companies exhibit a more reserved engagement, focusing significantly on incremental improvements in emissions from existing operations. For management, this emphasizes the importance of aligning business strategies with regional regulatory environments and market conditions.

To achieve their demanding net-zero targets, managers should focus on a balanced integration of robust and attainable renewable energy goals and sustainability practices. This includes wisely distributed investments in RES, PPAs, and RECs, as well as emission mitigation investments and low-carbon fuel production. This balanced approach not only supports compliance with emerging regulations but also establishes oil and gas companies as leaders in sustainability, potentially enhancing their competitiveness in a rapidly evolving global energy market.

5.3. Societal Implications

The transition of the oil and gas industry toward greener practices, as facilitated by the strategic use of PPAs and RECs, holds significant implications for wider society. By reducing GHG emissions and increasing the share of renewables in their energy mix, these companies contribute to global efforts to combat climate change, directly impacting public health and environmental quality. Moreover, the shift towards sustainable practices can drive economic benefits, such as job creation in new green sectors, and promote energy security through diversified energy sources. However, the transition also poses challenges, including the need for societal adaptation to changing energy landscapes and potential economic displacements in regions dependent on traditional fossil fuel industries. Thus, it is vital for policymakers to facilitate smooth transitions by fostering educational programs, retraining initiatives, and policies that support both technological innovation and workforce adaptation.

5.4. Limitations and Future Directions

This study provides important insights into the decarbonization strategies employed by oil and gas companies in Europe and the Americas, emphasizing the use of PPAs and RECs. However, the analysis presented has several limitations that suggest directions for future research. The current study is limited to oil and gas companies in Europe, North America, and South America. This regional focus excludes companies in significant markets, such as Asia, which may have different regulatory environments, market conditions, and decarbonization strategies. Furthermore, while this research outlines general strategies, it lacks detailed life cycle assessments of renewable energy projects and in-depth analyses of how PPAs and RECs are specifically implemented within company operations. Finally, the study relies on publicly available data, which may not capture all aspects of company strategies, particularly in areas like internal efficiency measures and less publicly disclosed investments.

Future research should extend to include oil and gas companies in the Asian market, to provide a more comprehensive global perspective. This expansion would allow for a comparison of decarbonization strategies across different regulatory and economic contexts. There is also a need for detailed life cycle assessments of renewable energy projects to better understand the environmental impacts and benefits throughout the entire life cycle of these investments [41]. Further investigation into the role and effectiveness of tradable green certificates is essential, particularly to address concerns regarding potential inefficiencies and the risks of double counting environmental benefits. The study also highlights the need for a deeper examination of the regulatory challenges and opportunities associated with PPAs and RECs. Such analysis would help clarify the pathways to achieving net-zero GHG emissions and inform policy development. In addition, exploring how different regions’ companies disclose environmental, economic, and social indicators could provide deeper insights into the strategic focus of firms globally. The changing geopolitical landscape, especially the diminishing influence of European international oil and gas companies and the rise of national ones, warrants further analysis to understand how these shifts impact global energy strategies and decarbonization efforts [141]. Future studies should also focus on how Environmental, Social, and Governance factors are integrated into the oil and gas industry’s operations. This holistic approach will support not only environmental objectives but also align with broader societal and governance expectations, strengthening the industry’s commitment to sustainable development [142].

Addressing these limitations and pursuing these future research directions will enhance the understanding of the decarbonization processes in the oil and gas industry and support the development of more effective strategies and policies for sustainable energy transitions.