Fossil fuels are back with a vengeance! And the world is cooking

Last year turned out to be an absolute belter for the world’s oil and gas majors, despite the ungodly heat and the climate catastrophes caused by their products.

Just a few years back, the industry was on the defensive, its lobbyists finding that public and political opinion were hardening against it as calls for climate action grew louder.

Illustration by Simon LetchCredit:

In 2020, Larry Fink, founder and chief executive of BlackRock, the US investment behemoth that has over $US11 trillion ($17.75 trillion) in assets under management, warned the world’s executives that if they wanted to see the colour of the money his firm controlled, they needed to demonstrate they were taking climate change seriously. BlackRock would, he wrote, be willing to “vote against management and board members when companies are not making sufficient progress”.

Climate activists were thrilled.

“This is the letter, and stance, that’s put us on pins and needles – everyone is watching to see if BlackRock follows through on these commitments,” wrote the Union of Concerned Scientists, one of the leading climate advocacy groups in the United States.

And BlackRock did follow through. Later that year, it voted against the re-election of two ExxonMobil directors, saying it believed they had failed to make progress on climate change action or reporting. It voted instead in favour of a shareholder resolution to split the role of chief executive and chairman.

At the 2021 Glasgow climate talks, finance and fossil fuel industry leaders trod the halls alongside world leaders and climate negotiators, all declaring they would throw their efforts into a rapid transition from dirty to clean fuels. Big fossil companies released environmental, social and governance (ESG) statements and took to referring to themselves as “integrated energy” outfits rather than oil and gas majors, declaring their intention to ramp up investment in wind and solar, and to deploy their vast research resources to new clean technologies.

Average temperatures are now at 1.6 degrees above the pre-industrial period.Credit: Sydney Morning Herald

BP’s then-chief executive, Bernard Looney, co-wrote an opinion piece with Christiana Figueres, the diplomat who was a driving force behind the Paris Agreement, celebrating the company’s new green focus. They urged jobseekers to look for work with companies dedicated to reducing carbon emissions and investors to park their capital with corporations determined to “shift from brown to green”. The piece talked up BP’s plans to increase low-carbon investment tenfold and cut oil and gas production by 40 per cent by 2030.

“It’s a bold step in the right direction,” they wrote.

Shell too had grand plans to cut emissions, including a goal to reduce its carbon intensity by 45 per cent by 2035. ExxonMobil talked up the $US300 million it had spent since 2009 on research into making biofuels from algae.

Back then, International Energy Agency reports referred to the “grand coalition” between the oil and gas industry and policymakers that would be needed to reduce emissions, and the recently installed Biden administration had started work on what would eventually become the largest single piece of climate legislation in US history, the Inflation Reduction Act, channelling hundreds of billions of dollars into clean-tech stimulus packages.

The world was still staggering towards the end of the COVID-19 crisis, which had cut fossil fuel demand, and in turn energy prices, and in turn oil and gas company profits.

Much has changed since then.

Most pertinently, when COVID lockdown ended, so did a brief pause in emissions increases. And the planet resumed cooking.

Extinction Rebellion protesters at COP 26 in Glasgow in 2021. Back then, fossil fuel industry leaders declared they would throw their efforts into a rapid transition from dirty to clean fuels. No such declarations now.Credit: Getty

In the Paris Agreement, world leaders had committed to reducing emissions in line with stabilising warming at well below 2 degrees and as close as possible to 1.5 degrees above pre-industrial temperatures. According to the UN, in the years between 2010 and 2020, the average temperature climbed to 1.1 degrees above that pre-industrial average. Then, 2023 proved to be the hottest year on record, until that was broken in 2024. Average temperatures are now at 1.6 degrees above the pre-industrial period.

Last year climate change intensified 26 of the 29 weather events studied by the scientific group World Weather Attribution. These events killed at least 3700 people and displaced millions. Its report said climate change added 41 days of dangerous heat in 2024. Of 16 floods studied for the report, 15 were found to have been driven by climate change-amplified rainfall.

The other relevant shift since 2020 is that the fossil fuel industry is fighting back harder than ever against those who would seek to curtail it to protect the climate. Profits are up and political pressure for change is down.

An energy crisis caused by Vladimir Putin’s full-scale invasion of Ukraine in 2022 prompted a resurgence in energy prices and a change of tone from governments that had been demanding the industry curb its emissions. The industry responded fast.

In February 2023, during a quarterly earnings report, BP announced it had made a record profit of $US27.7 billion over the previous year, more than double its 2021 profit, and that it was reducing its goals to cut oil production. A few months later, poor old Bernard Looney abruptly resigned.

ExxonMobil abandoned its research to create low-emissions fuel from algae.

“The dirty secret nobody talks about is how much all this is going to cost and who’s willing to pay for it,” ExxonMobil chief executive Darren Woods told Fortune, referring to the world’s quest to decarbonise. “The people who are generating those emissions [by which he means not the oil industry but its customers] need to be aware of and pay the price for generating those emissions. That is ultimately how you solve the problem.”

As though to clarify the industry’s new attitude towards decarbonisation, Saudi Aramco’s chief executive, Amin Nasser, told an energy conference in Texas last year, “A transition strategy reset is urgently needed, and my proposal is this: We should abandon the fantasy of phasing out oil and gas and instead invest in them adequately reflecting realistic demand assumptions.”

In other words, money should be pumped into pumping oil rather than developing alternatives.

Throughout the year, Saudi Arabia led a group of nations determined to water down global climate change efforts by seeking to have explicit references to fossil fuels dumped from G7 and G20 agreements and in UN resolutions. “They’re just being a wrecking ball,” said Alden Meyer, a senior associate with E3G, a London-based climate research organisation, of the Saudi-led bloc at climate talks in Azerbaijan in November. The talks did arrive at consensus on increasing climate finance for developing nations. However, they did nothing to speed up cuts to emissions, which continue to rise, but which must begin at once to fall by over 7 per cent a year to meet Paris targets.

This was not the only diplomatic success enjoyed by the industry last year. In December, after two years of talks, negotiations on a global treaty to reduce waste plastic collapsed after oil-producing nations objected to a measure that would reduce the production of virgin plastics despite overwhelming international support.

According to the non-profit Centre for International Environmental Law, the 220 registered fossil fuel and chemical industry lobbyists at the plastics treaty negotiations outnumbered all the delegates representing European Union nations combined. The IEA anticipates that oil-based feedstock for plastics will be the main driver for growth in oil demand by the end of the decade.

“Their strategy – lifted straight from the climate negotiations playbook – is designed to preserve the financial interests of countries and companies who are putting their fossil-fuelled profits above human health, human rights and the future of the planet,” said a senior campaigner for the group.

In recent months, the pushback on climate efforts has not been limited to the fossil companies. Since Donald Trump’s re-election to the White House in November, six of the US’s largest banks have dumped their membership of the UN’s Net Zero Banking Alliance, which they had joined pledging to align their lending, investment and capital markets activities with a net zero greenhouse gas emissions by 2050.

“They don’t want to be the subject of social media rants, and their CEOs don’t want to be yelled at in congressional committees,” Patrick McCully, a senior analyst at French climate non-profit Reclaim Finance, told The Banker.

Trump, who campaigned under the slogan Drill Baby Drill!, has promised to abandon the Paris treaty and is expected to boost US oil and gas drilling and expedite LNG export permits.

According to Kathy Mulvey, a climate campaigner with the Union of Concerned Scientists, an industry that was already resurgent over recent years has become even more aggressive in pursuing its critics since the Trump election. This week, ExxonMobil launched a defamation suit against California Attorney-General Rob Bonta and several environmental groups in Texas, demanding damages and a retraction of claims about the oil company’s advanced plastics recycling initiative.

The suit’s wide net has entangled Australian mining billionaire Andrew Forrest and his philanthropic arm, Minderoo. Forrest, rarely one to back down from a blue, says he is “delighted” Exxon has opened itself up to cross-examination with the suit. “The fossil fuel industry is getting increasingly desperate to maintain its toxic grip on society,” he said.

Mulvey says the industry’s political clout is clearly on the ascent. The fact that this is the case as temperatures climb higher and faster than most scientists had predicted, as the impact of climate change becomes ever more clear – as Los Angeles burns – is “scary and weird”, she says.

What is less clear is whether Paris Agreement targets can survive fossil fuels’ renewed ascendance. Jennifer Morgan, the former Greenpeace chief now serving as Germany’s special representative for international climate policy, told me this week she believes the industry’s present aggression may be driven by the fact that it knows the party will soon be over.

“The fossil fuel pie is set to shrink, so of course the scramble for what’s left is heating up,” Morgan said. “But the direction of the global energy transition is clear. Renewables are already the cheapest, cleanest and fastest-growing form of energy. The question is: do you bank on the past or invest in the future?”

Nick O’Malley is national environment and climate editor for The Sydney Morning Herald and The Age.

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