#84 Back to Black? Why Oil Majors Seem to Be Retreating From Renewables (with Michael Liebreich, Ecopragma Capital)
May 8, 2025
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Michael Liebreich, an investor and founder of Bloomberg New Energy Finance, discusses why oil majors like Shell and BP are pulling back on renewables amid a climate crisis. He suggests this retreat is a short-term strategy rather than a complete U-turn, driven by immediate profit motives. Liebreich dives into the complexities of energy investments and critiques the narratives surrounding the transition. He emphasizes the importance of sustained financing, innovative solutions, and policy changes to enhance the appeal of renewable technologies.
Oil majors are retreating from renewables as immediate financial returns pressure their investment strategies amidst a climate crisis.
A shift in global energy investments shows clean energy's share rising dramatically from 15% in 2004 to around 70% today.
Effective policy frameworks are essential to incentivize renewable energy investment and create a cohesive regulatory environment for innovation.
Deep dives
Michael Liebreich's Background and Journey
Michael Liebreich, a prominent figure in the energy transition space, has a diverse background in engineering and business. His journey began at Cambridge, where he studied engineering and excelled in thermodynamics, later transitioning into consultancy roles across various industries, including cheese and life insurance. His passion for skiing led him to the Olympics, where he competed for Great Britain, ultimately fueling his multifaceted career. This eclectic blend of experiences shaped his understanding of energy dynamics and laid the groundwork for his future endeavors in clean energy finance.
Investment Trends in Energy Transition
The discussion highlights a significant shift in global energy investments, with clean energy receiving an increasing share of funding. Initially, in 2004, only 15% of energy investment was dedicated to clean technologies, but this figure has now surged to around 70%. The flow of investments has favored clean energy projects, reflecting a broader trend as stakeholders recognize the advantages of renewable sources over fossil fuels. Despite fluctuations in individual oil companies' commitments to renewable energy, the overall trend indicates a realignment towards sustainable solutions and infrastructure development.
Challenges Faced by Oil Majors in Transitioning
Oil and gas companies are currently facing numerous challenges as they attempt to pivot towards renewable energy investments. Many of these companies have scaled back their renewable energy targets, citing a lack of immediate financial return as one of the reasons for retreating from ambitious goals. Liebreich emphasizes that while the oil majors possess considerable capital and resources, the inherent differences in business models and investment returns between fossil fuels and clean technologies present significant hurdles. Furthermore, the risk-averse nature of these firms, coupled with pressures from investors demanding short-term profitability, complicates their ability to adapt to the rapidly evolving energy landscape.
The Importance of Policy Frameworks
Effective policy frameworks play a crucial role in accelerating the transition to renewable energy, yet current policies often fail to create the right incentives. The need for structures that recognize the inherent value of flexible power generation is paramount, particularly in regions with high penetration of variable renewables. Policymakers must focus on amalgamating solutions for energy reliability while allowing for risk-adjusted returns on investment. A systemic shift toward creating a more cohesive regulatory environment, including zoning and pricing structures, will facilitate the necessary investment and technological innovation needed for a cleaner energy future.
The Future Path and Opportunities in Energy
Despite the myriad challenges, there remain substantial opportunities within the clean energy sector, encouraging a forward-thinking approach to solutions. Liebreich urges individuals and investors to explore burgeoning markets and technologies that are already proving effective, particularly in regions like Pakistan, which has rapidly expanded its solar capacity. It is crucial to prioritize funding and support for proven solutions rather than investing in uncertain or overly complex technologies, like hydrogen, that face significant barriers to implementation. By channeling energy and resources into viable projects, stakeholders can contribute to a faster transition to a sustainable energy landscape.
In Episode 84, clean‑energy luminary Michael Liebreich joins the show to unpack why oil giants like Shell and BP appear to be throttling back on renewables just as the climate crisis intensifies. Drawing on decades in clean-tech finance and heavy-transport electrification, Liebreich argues that the pivot is less a U-turn than a short-term cash grab—and that the physics and economics of “not burning stuff” will ultimately win.
Expect candid takes on capital markets, policy headwinds, and where the smartest money is flowing now, all delivered with Liebreich’s trademark data-driven bluntness.
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