Unsurprisingly, the ongoing energy transition continues to face headwinds. Various governments have made bold proclamations regarding their objectives to slash greenhouse gas emissions over the next few decades. However, this has resulted in far fetched ideas, like fully eliminating internal combustion engine vehicles, some of which has been backed by oil and gas companies now known as “energy companies.”

In the UK, a total ban on new internal combustion engines mandated by 2030 has now been delayed. Here in the US, thousands of auto dealerships have sent letters and engaged lobbyists to fight against the federally mandated CAFE standard, which will force a transition to electric vehicles (EVs). Consumers in the US and the UK have been slower than expected to adopt EVs due to concerns about value, charging station infrastructure, and driving range limitations. On a grand scale, the transition to hybrid vehicles then to EVs will likely happen. The efforts to ramp up EV adoption by improving the infrastructure are commendable, but phasing out internal combustion engine vehicles by 2030 is impossible. 

As the auto industry resists this transition, energy industry players continue to moderate their aggressive plans to phase out oil and gas, transitioning to primarily renewable energy sources. Last week, BP moved to divest its US-based onshore wind business. Though the onshore wind business in the US is a minor cog in BPs global operations, this move is one example of how energy companies are rethinking their aggressive energy transition initiatives and reevaluating the long-term need for profitable oil and gas operations. 

Continued oil and gas production is needed to meet not only the growing demand which is forecast to peak in 2040, but also to finance the longer-term and necessary energy transition.