Law firm CMS has released its Energy Transition 2023 report detailing the energy firms that are slacking when it comes to funding the energy transition.
Last week saw trade body Offshore Energies UK (OEUK) report that around £1.4 trillion is needed to get to net zero, £1 trillion of which must come from private sources, according to predictions from the Office for Budget Responsibility (OBR).
With that in mind, Energy Voice has looked into the numbers in the CMS ‘The evolving role of O&G companies in the energy transition’ report to see who is contributing the most.
When quantifying the amount each firm set aside for investment in the energy transition, CMS explained it encountered issues.
The firm writes: “There is not a uniform way of how capital is being allocated to their various activities towards the energy transition.
“Some companies provide very clear breakdowns between these and their other activities but some do not.”
Pemex trails behind
Throughout 2022 CMS found that the Mexico’s state-backed producer Pemex dedicated $100 million to such projects, which accounted for only 0.7% of its overall capex in 2022.
This was both the lowest amount of investment and the lowest percentage of capital allocated to the transition out of the 10 businesses outlined in the CMS report.
Pemex has been asked for comment on the findings.
TotalEnergies look to ‘increase’ low-carbon spending
At the other end of the table French super major TotalEnergies dedicated $4 billion USD (£3.2bn) of its capital expenditure (capex) to the energy transition. This was significantly more than the next highest investment, which came from Shell.
The UK energy major set aside $2.9bn in 2022 to the energy transition, this made up 11.7% of the company’s overall capex.
TotalEnergies (XPAR: TTE) was just shy of being the firm with the highest percentage of its spending going to the transition with it accounting for 24.5%, just behind the 25% Petronas dedicated.
Petronas made a final investment decision (FID) for the development of its giant Kasawari carbon capture and storage (CCS) project offshore Sarawak in Malaysia last year.
The project is expected to start by 2026 and will be one of the first large-scale CCS schemes in Southeast Asia.
Last year saw TotalEnergies make progress with its Seagreen offshore wind farm in the UK. The last turbine at the 1.1 gigawatt project was installed earlier this year.
Built by a joint venture of SSE Renewables (49%) and TotalEnergies (51%), the £3 billion development is set to be Scotland’s largest offshore wind farm.
When asked about the findings TotalEnergies said: “In 2022 our investments totalled $16.3 billion, including $4 billion in low-carbon energies. In 2023, we expect that figure to increase to $5 billion.
“That sum exceeds our projected capital expenditure for new oil & gas projects ($4.5 billion). In the coming years, investments in low-carbon energies will represent 1/3 of our investments, more than new oil and gas projects (30%).”
Energy transition big spenders league table
As previously stated, Petronas set aside 25% of its capex in 2022 for energy transition investment, this equates to $2.8bn spent.
The firm with the fourth most amount of cash spent on the energy transition throughout 2022 was found to be the Italian firm ENI. It set aside 18.2% of its annual capex to the tune of $15bn.
Equinor and PetroChina both dedicated the same amount, however, the $1.2bn from the Norwegian firm made up 14.0% of its overall capex while the Chinese business’ investment made up only 3.1% of annual spending.
Supermajors BP and Chevron both spent $1bn with it accounting for 6.1% and 8.4% of 2022’s capex respectively.
The only other firm to spend less than a billion dollars on the energy transition was Repsol which set aside $900 million. However, unlike the 0.7% of capital expenditure set aside by Pemex, the $0.9 billion accounted for 24% of Repsol’s capex for 2022, putting the firm just behind TotalEnergies in terms of the percentage of spending set aside for transition last year.
CMS findings comes hot on the heels of OBR predictions as to the scale of investment needed. At the same time a recent study by Robert Gordon University also outlined that up to 95,00 offshore energy jobs in the UK could be at risk throughout the energy transition if investment does not “increase significantly”.