For years, the conventional wisdom was that oil companies were either racing toward a net-zero future or fighting to delay it. The reality in 2025 is far more complex. Most major players haven’t abandoned decarbonization at all, but they have changed how they are approaching it. Investment is now concentrated in fewer technologies and projects, timelines are stretching into the late 2020s and 2030s, and companies are showing far more caution in how and where they commit capital.
My latest annual survey of 13 global oil companies, from BP, Shell, and ExxonMobil to ENI, Repsol, Reliance, and Saudi Aramco, shows five clear trends shaping transport-energy strategy. They tell a story of a sector still in motion, but moving with far more calculation than before. The figure below provides a sense of what these companies are investing in as of 2025. Don’t call it a transition, because that’s not what it is. I don’t think decarbonization is terribly accurate either. Call it diversification into lower carbon energies that in some cases may supplement fossil fuel supplies and in others, supplant it.
1. Capital Is Concentrating in HVO and SAF
Across the industry, hydrotreated vegetable oil (HVO) and sustainable aviation fuel (SAF) remain the preferred near-term lower carbon options. These are the fuels companies know how to produce at scale, that slot into existing infrastructure and that regulators are still incentivizing. The result is steady, and in some cases growing, investment. Some examples:
- ENI is expanding its biorefining footprint with a new 500,000-tonne-per-year Ecofining plant at Livorno, backed by a €500 million European Investment Bank loan. Together with existing plants at Gela and Porto Maghera, ENI remains one of the world’s top HVO producers.
- Repsol has brought its Cartagena advanced biofuels facility online (250,000 tonnes per year) and is building a second at Puertollano, expected in 2026. It plans 1.7 million tonnes of renewable fuels by 2027, rising to 2.7 million by 2030.
- Petronas, ENI, and Euglena reached FID in 2024 on a 650,000-tonne-per-year biorefinery in Malaysia. Construction starts in late 2024, with commissioning planned for 2028.
- TotalEnergies is converting its Grandpuits refinery into a zero-crude biorefinery and will add 230,000 tonnes of SAF capacity by 2026.
These examples show that HVO and SAF are not side bets, they are central to company strategies. But investment is becoming more selective. For example, BP has scaled back its new-build SAF projects, focusing instead on co-processing upgrades that can deliver near-term volume with lower capital risk. Shell has yet to reach FID on its $1.4 billion Convent project in Louisiana, once positioned as a major low-carbon fuels hub, and construction has not even started.
The clear message: companies still view renewable diesel and SAF as essential, but they are no longer chasing every possible project. Capital is being focused where returns are most certain and policy signals are clearest.
2. Blue Hydrogen Remains a Core Bet
Despite the noise around green hydrogen, the industry’s money is still flowing toward blue. It’s cheaper, it leverages existing gas assets and it can be integrated into refineries and chemical plants now often paired with carbon capture to deliver substantial emissions cuts. Some examples:
- ExxonMobil’s Baytown project in Texas is one of the largest low-carbon hydrogen investments in the world. Set to begin operations in 2027-28, it will produce around 1 billion cubic feet per day and capture more than 98% of its 7 million metric tons of CO₂ emissions. Exxon is also planning to market ammonia produced from Baytown hydrogen as an export fuel.
- Saudi Aramco aims to produce 2.9 million tonnes of hydrogen annually by 2030, rising to 4 million by 2035, and is building out ammonia export infrastructure. A pilot project in Jiangmen, China, is already converting ammonia back into hydrogen for delivery to end users.
- Reliance has delayed its original goal of transitioning fully to green hydrogen by 2025. It is still focused on blue hydrogen from syngas and has pushed large-scale electrolyzer deployment to the late 2020s.
Surveyed companies initially concentrated their spending on blue hydrogen, leveraging existing refining and gas assets. However, beginning in 2021, a decisive shift occurred: green hydrogen began to attract more capital, particularly from majors like Shell, TotalEnergies, ENI, and national champions such as Saudi Aramco. The figure below illustrates this evolution in CAPEX commitments from surveyed companies, highlighting the surge in green hydrogen spending relative to blue.
Green hydrogen is advancing, particularly in Europe where the policy conditions are more stable. Shell’s Holland Hydrogen I, a 200 MW electrolyzer in Rotterdam, is set to start producing 60,000 kg/day of green hydrogen this year. TotalEnergies is developing the “H2 Notos” project in Tunisia to supply 200,000 tonnes annually to Europe, with scalability up to 1 million tonnes.
The strategic takeaway is simple: oil companies are building the hydrogen economy around blue first. Green will scale only once renewable power costs fall, electrolyzer supply chains mature and governments deliver long-term policy certainty (outside of the EU).
3. SAF Projects Are Fewer, But Larger
While the number of announced SAF projects has shrunk, the ones that remain are materially larger and more impactful. Several facilities are already operational or nearing completion, and they will shape the jet fuel market for the next decade.
- Valero and Darling Ingredients’ Diamond Green Diesel facility in Port Arthur, Texas, completed a major upgrade in 2024 that allows up to 50% of its 470 million gallons per year of renewable diesel capacity to be converted to SAF. Shipments are already underway, making it one of the largest operational SAF plants globally.
- Chevron is moving ahead with the Marquis ethanol-to-jet project in Illinois, targeting 120 million gallons per year of SAF and renewable diesel.
- TotalEnergies has signed multi-year offtake agreements with airlines and plans to supply more than 500,000 tonnes of SAF annually by the end of 2025 — over 10% of its European jet fuel market.
At the same time, several high-profile initiatives are stalled. Shell’s Convent conversion remains on hold with no FID. BP has narrowed its SAF pipeline, shelving several new-build facilities. Even projects that are proceeding, like Petronas/ENI/Euglena’s Pengerang plant, have commissioning dates well into the late 2020s.
This consolidation shows a clear industry view: SAF demand is real and growing, but cost pressures, feedstock constraints, and policy uncertainty are forcing companies to prioritize fewer, larger facilities rather than spreading capital too thin.
4. CCS Is Becoming the Strategic Backbone
Carbon capture and storage (CCS) is no longer a niche technology. It is quickly becoming the anchor around which oil companies are designing their broader decarbonization strategies, especially when paired with blue hydrogen and refinery retrofits. Some examples:
- BP’s East Coast Cluster in the UK is targeting 23 million tonnes of CO₂ storage annually by 2035 and includes the NZT Power plant, capable of capturing 2 million tonnes per year.
- ExxonMobil is developing a Houston-area CCS hub that could capture 100 million tonnes per year by 2040. Its Baytown project alone will handle 10 million tonnes annually, and the company is expanding CCS operations in Singapore and China.
- Shell’s Northern Lights project in Norway began commissioning in 2024 and is scaling to 1.5 million tonnes per year in 2025. Its Dutch Porthos project, under construction, will add another 2.5 million tonnes annually from 2026.
- Saudi Aramco is advancing its Jubail CCS hub (9 million tonnes per year by 2027) and continues to pilot CO₂ mineralization technologies.
Even mid-sized players are active. Repsol and partners are developing a CCS hub offshore Corpus Christi, Texas, with capacity to store hundreds of millions of tonnes over its lifetime. Petronas aims to capture 3.3 million tonnes annually from its M1 field by 2026.
Not every initiative is smooth. Valero’s original partnership with Navigator Energy collapsed in 2023 amid permitting and public opposition, forcing it to pivot to Summit Carbon Solutions’ Midwest Carbon Express, a project now mired in similar challenges. But overall, CCS deployment is accelerating, and its role in corporate strategy is expanding beyond compliance into revenue-generating services and hydrogen integration. The fact that the Section 45Q CCS tax credit was retained the One Big Beautiful Bill Act (OBBBA) will help propel projects forward in the U.S.
5. The Broader Strategic Shift: Selective, Slower and More Realistic
The most important conclusion from this year’s survey is not that oil companies are pulling back, it’s that they are changing how they approach decarbonization and the “energy transition.” There is no energy transition, and I don’t believe decarbonization is the right word to use for what has been and is happening. It would be more accurate to say that the industry is investing in opportunities to lower the carbon intensity of energies, transport energies and their overall operations while continuing to deliver energies and serve their customers. That should be lauded – and encouraged. The figure below shows surveyed companies’ CAPEX commitments by technology over the last three years.
Companies are focusing on fewer technologies: HVO, SAF, hydrogen, CCS, biomethane, and even EV charging, and aligning those choices with their core businesses. They are also phasing projects more cautiously. Many SAF and hydrogen projects now target commissioning dates in the second half of the decade. Some companies are investing in EV charging, but rollout is slower than expected. BP Pulse aims for 100,000 chargers by 2030 but has reached only 30,000-35,000 so far. Shell has scaled back its 2025 goal of 500,000 charge points, now treating it as a 2030-plus ambition.
Policy and politics are shaping this shift, too. In the U.S., permitting battles have slowed CCS deployment, and the Trump administration’s hostility to renewables is raising questions about offshore wind and solar projects linked to hydrogen production. OBBBA changes to Inflation Reduction Act (IRA)-era tax credits such as hydrogen and renewables may result in delayed or cancelled investments. In Europe, regulatory pressure remains intense, but even there, cost inflation and supply-chain challenges are forcing companies to rethink timelines.
The bottom line is that oil companies are no longer chasing the appearance of transformation. They are making targeted, often very large investments in the technologies but on timelines and scales that better reflect commercial reality.
Conclusion
The most important takeaway from this survey is not that oil companies are retreating from lower carbon energies because they’re not. It’s that the way they are pursuing it has fundamentally changed. The era of high-profile announcements and scattered pilot projects is over. What’s emerging for many companies is a more disciplined, risk-managed approach built around technologies that integrate directly with core operations and offer clearer paths to return.
This shift matters. It means renewable diesel, SAF and other biofuels will remain the backbone of low-carbon liquid fuels for at least the next decade, even as electrification expands and alternative technologies evolve. It means blue hydrogen, not green, will define the early industrial hydrogen economy and that CCS will become a central pillar of refining, chemicals, and heavy transport decarbonization, not a niche add-on. It also means that large-scale projects will continue to concentrate in regions with stable policy frameworks, predictable permitting and supportive regulatory structures. Where those don’t exist, capital will slow or shift elsewhere.
For automakers, airlines, fuel retailers, and policymakers, the implication is clear: planning for the 2030s and 2040s must be grounded in this reality. The industry is not standing still, but it is prioritizing technologies and business models that balance carbon reduction with commercial viability. The companies that align with that shift, building strategies around the infrastructure, molecules, and partnerships that are actually being funded, will be far better positioned than those that continue to plan for a rapid, all-at-once transition that isn’t happening.
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