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Our view

3Q24 results clearly show a growing gap between the emissions targets and actions of Majors. Despite FY25 targets rapidly approaching, companies are reprioritising shareholder distributions and oil and gas production over long-term investment.

Combined with Shell’s successful overruling of a legal order to reduce their emissions by 45% by 2030, current trends raise concern about the likelihood that companies will maintain and meet their emissions targets. Going forward, the execution of strategy, specifically low-carbon investment, must take centre stage.

Download the note for a summary of 9-month key transition performance metrics.

Investors engaging with oil and gas should consider these engagement questions ahead of 2025:

01 Will majors quantify levers to achieve net carbon intensity (NCI) targets?

This includes levers such as offsets, CCS, and divestments. From FY19-23, major’s NCI reduced by only ~4%, with FY30 low-carbon ambitions insufficient to deliver the emission reduction, leaving up to a 15% gap.

In 3Q24, majors further diverged from targets, with all Euro-majors either removing FY30 production guidance or raising oil and gas production ambitions. Combined with scalebacks in hydrogen ambitions in 3Q24, and biofuel setbacks in 2Q24, the accessibility of low-carbon levers to meet NCI targets are becoming increasingly limited.

02 How can majors increase low-carbon investment?

Low-carbon investment in 3Q24 was $4.2bn, a 25% increase on 3Q23. 3Q24 however saw a sector-wide prioritisation of distributions over capex, highlighting a risk to the momentum in low-carbon investment.

To meet NCI targets, majors must invest an additional $134bn ($19bn p.a.) above current investment targets.

Key findings