Navigating the Energy Crossroads: Fossil Fuels’ Resilience Amidst Renewable Energy’s Ascent


While the entire world is currently battling against the climate crisis with the promotion of renewable energy becoming a major trend, the energy sector is witnessing one of the most important stages in its history. This article focuses on the complex rhythm of the conventional fossil fuel resources versus the rapidly growing renewable energy sector which is an emerging trend in global energy dynamics.

Navigating the Energy Crossroads: Fossil Fuels’ Revival in a Green Era

Three years ago, amid the surge of the ESG (Environmental, Social, and Governance) movement, Houston proudly declared itself the global hub for transitioning energy. However, as industry leaders convene in the city for the largest US conference, attention has shifted back to oil and gas. Amin Nasser, CEO of Saudi Aramco, expressed concern on the opening day of the CERAWeek event, stating that the global efforts to reform energy systems for climate change mitigation are visibly faltering. He was rather critical towards the environmentalists who were blaming oil producers on exploding the myth of environmentalism without acknowledgement of the reliability and affordability of the current energy infrastructure. Darren Woods, the CEO of Exxon Mobil Corp., also highlighted this important point with his straight statement that the world did not prepare for the net zero emissions by 2050 mainly due to the unwillingness to pay the costs of emission reduction.

With the oil and gas industry, which used to be criticized for becoming a hindrance to green energy and climate-change fighting, shunning some investors during the peak of the ESG wave in 2020 and 2021. On the flip side to this, the humanitarian crisis inflicted on Ukraine by Russia in 2022 reveals the role that fossil fuels still play as oil and gas companies reported record profits that year. Like companies that had heavily spent on low-carbon alternatives, they also emphasized the significance of fossil fuels.

Wael Sawan, CEO of Shell Plc, recently revised long-term emission targets downward and emphasized the stabilizing role of oil and gas during the energy transition. US Energy Secretary Jennifer Granholm, a regular attendee at CERAWeek, provided optimism to the sector by indicating that the administration’s pause on liquefied natural gas export licenses is temporary, much to the disappointment of environmental advocates. Granholm predicted that by the following year, current challenges would be viewed as past issues, eliciting cheers from the audience.

Major oil companies are displaying a persistent hunger for fossil fuels despite the ongoing push for energy transition. Shell recently adjusted its carbon emissions target, acknowledging the prolonged timeline for full implementation of the transition toward net zero by 2050.

In its latest announcement on Thursday, the British energy giant revealed a revised aim to reduce customer emissions resulting from its oil products by 15% to 20% by 2030, compared to its earlier target of 20%. Additionally, it abandoned its 2035 goal of a 45% reduction in net carbon intensity, citing uncertainties surrounding the pace of change in the energy transition. Net carbon intensity measures emissions linked to each unit of energy sold.

These alterations follow a period of rapid consolidation among major oil companies, driven by a desire to expand operations, maintain high profits, and adhere to their core business. Notably, the International Energy Agency highlighted that in 2022, the oil and gas industry allocated only 2.5% of its total capital spending, around $20 billion, towards clean energy investments.

However, such commitments to green energy have faced criticism from investors.

Renewable energy technologies have encountered challenges in gaining momentum amid high interest rates, leading companies like Shell to divest partial ownership of green energy projects in the US.

The pursuit of renewable projects that meet return-on-investment criteria has proven difficult for oil companies, according to Stewart Glickman, an energy equity analyst at CFRA Research.

Furthermore, as enthusiasm for ESG initiatives and investment strategies wanes, energy companies are becoming more assertive in contesting certain green measures.

KKR’s Billion-Dollar Bet: Acquiring Encavis AG Amidst Renewable Energy’s Rollercoaster

The KKR fund has expressed its intention to purchase Encavis AG, a German energy company, for around 2.8 billion euro ($3.0 billion). The private equity group will acquire all the Encavis shares solely in cash at adjustment price of €17.50 per share (representing a premium of more than 54%) as compared to the closing price prior the Bloomberg News reporting of the takeover offer. 

 Encavis’ shares have registered a great decline, almost halving, since its peak price in January 2021; this very trend is also applicable to the overall field of renewable energy stocks. As for the reasons behind this decline, the widening yield curve and the inflationary pressures are two major ones which make the cost of borrowing money to finance clean energy projects to go up.

The firm who owns a series of wind farms and solar parks is the European-based entity that provides renewable energy to around 2.2 million residential consumers. Also, Encavis is offering advisory services to companies that are planning to have solar power plants and energy storage on their premises.

Germany, which plans to provide 80% of clean power generation by 2030, has been using up renewable sources more and more lately. Gas supplies from Russia, the number one exporter, have been limited, making Germans depend more and more on their renewables. In 2023 clean energy finally reached the halfway point of the nation’s total electricity production mark.

The PJT Partners Inc. (PJT), along with KKR, is guiding the acquisition while the Goldman Sachs Group Inc.(GS) is supporting the management board of Encavis and the Lazard Inc.(LAZ) is steering the supervisory board of Encavis.

Masdar’s US Expansion: Acquiring Terra-Gen’s Renewable Energy Stake

UAE-based clean-energy company Masdar has revealed that it has concluded an agreement with Terra-Gen Power Holdings II LLC to purchase a 50% stake in the renewable energy generation company. This is in line with its expansion strategy into the US market.

It is the first step of Masdar that revealed its interest to invest in – at least – 100GW global renewables portfolio by 2030, as it was stated in a press release from the UAE-based company.

Pursuant to the conditions of the agreements, Energy Capital Partners will fully dispose of its share in Terra-Gen, while Existing Infrastructure Investment Manager Igneo will remain as a co-owner after the deal.

Terra-Gen, as a San Diego-based company, currently manages 32 renewable power plants around the US, mainly witnessing these plants in California and Texas. Its portfolio includes roughly 2.4 GW of wind and solar energy products, as well as 5.1 GWh of energy storage solutions.

Apart from that, Masdar has intended to acquire an interest in the existing onshore assets that are clean energy owned by Iberdrola, according to Bloomberg news in February.


To sum up, the composition of energy is going through a very serious transformation because the world is dealing with the complex issue of fighting the changes of climate and also getting the energy required to satisfy the ever-growing energy demands. The growing popularity of ESG movement and the quest to move away from fossil fuels towards renewable energy sources is still affected by issues such as geopolitics and economy hardships. The world’s leading oil companies are coping with this intricate condition by amending their strategies to maintain the traditional sources of fuels and also make investments in cleaner alternatives.

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