Analysis: Oil and Gas Majors Slashed Low Carbon Spending by 65 per Cent in 2025

Why It Matters

The drastic spending cut threatens progress toward industry‑wide decarbonisation and could delay global net‑zero targets, prompting investors to reassess oil‑major commitments.

Key Takeaways

• Low‑carbon spend fell 65% across seven majors in 2025.
• Total investment hit its lowest level since 2019.
• Cuts driven by weak oil prices and profit pressures.
• Shift may delay industry’s net‑zero timelines.
• Investors question commitment to energy transition.

Pulse Analysis

The transition from fossil fuels to low‑carbon energy has become a litmus test for the world’s biggest oil and gas companies. Bloomberg New Energy Finance’s latest analysis shows that seven industry leaders slashed their clean‑energy outlays by roughly two‑thirds in 2025, driving total low‑carbon investment to the lowest point since 2019. This plunge follows a series of ambitious pledges made after the Paris Agreement, highlighting a widening gap between public commitments and actual capital allocation. Understanding the scale of this retreat is essential for anyone tracking the sector’s climate strategy.

Several forces converged to trigger the spending retreat. Persistently low crude prices eroded profit buffers, prompting executives to prioritize cash‑flow preservation over long‑term projects such as carbon capture, hydrogen, or offshore wind. At the same time, shareholder activism has intensified, with investors demanding higher short‑term returns and questioning the financial viability of large‑scale decarbonisation initiatives. Regulatory uncertainty in key markets, coupled with rising construction costs, further discouraged new commitments. The result is a pragmatic, albeit short‑sighted, reallocation of capital toward core upstream activities.

The implications extend beyond corporate balance sheets. A sustained reduction in low‑carbon spending could delay the industry’s contribution to the global net‑zero goal, increasing reliance on external policy mechanisms to bridge the gap. Investors are likely to scrutinize ESG scores more closely, potentially redirecting capital toward firms that maintain robust transition plans. Policymakers may respond with stricter reporting requirements or incentives to ensure that announced climate targets translate into tangible investment. The next few years will test whether the sector can rebound from this fiscal pullback and realign its trajectory with climate imperatives.