“To make a switch from a global economy that depends on fossil fuels for 80 percent of its energy to something else is a very, very big job,” said Daniel Yergin, the energy historian who has a forthcoming book, “The New Map,” on the transition now occurring in energy. But he noted, “These companies are really good at big, complex engineering management that will be required for a transition of that scale.”
Financial analysts say the dreadnoughts are already changing course.
“They are doing it because management believes it is the right thing to do and also because shareholders are severely pressuring them,” said Michele Della Vigna, head of natural resources research at Goldman Sachs.
Already, he said, investments by the large oil companies in low-carbon energy have risen to as much as 15 percent of capital spending, on average, for 2020 and 2021 and around 50 percent if natural gas is included.
Oswald Clint, an analyst at Bernstein, forecast that the large oil companies would expand their renewable-energy businesses like wind, solar and hydrogen by around 25 percent or more each year over the next decade.
Shares in oil companies, once stock market stalwarts, have been marked down by investors in part because of the risk that climate change concerns will erode demand for their products. European electric companies are perceived as having done more than the oil industry to embrace the new energy era.
“It is very tricky for an investor to have confidence that they can pull this off,” Mr. Clint said, referring to the oil industry’s aspirations to change.
But, he said, he expects funds to flow back into oil stocks as the new businesses gather momentum.