As BP, Shell scale back energy transition plans, where do Indian oil companies stand?

Indian companies’ green plans

As the country plans to achieve net-zero emissions target by 2070, Indian oil companies have set their respective goals to cut greenhouse gas emissions.

Indian Oil Corporation Limited (IOCL), India’s largest oil company,  aims to achieve net- zero operational emissions by 2046. Other state-owned oil marketing companies (OMCs), Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL), have set a target of net-zero scope 1 and 2 emissions by 2040.

Scope 1 emissions are greenhouse gas emissions from sources of a company while Scope 2 refers to indirect emissions associated with the purchase of electricity, steam, heat, or cooling.

Meanwhile, Oil and Natural Gas Corporation (ONGC) Limited and GAIL (India) have committed to meet net-zero targets by 2038 and 2035, respectively.

Roadblocks faced in green transition

Despite ambitious plans by Indian oil companies, the projects taken up by the firms for energy transition have not picked up pace as expected.

India’s first green hydrogen plant, being set up by Indian Oil, faces legal trouble as IOC was accused of favouring a joint venture for its GH2 plant. Indian Oil is setting up a green hydrogen plant with a 10-kilo-tonnes per annum (KTA) capacity at its Panipat facility in Haryana.

What have global oil giants decided?

Global energy giants, including BP, Shell and Equinor, have scaled back plans to invest in green energy, citing market conditions and value creation for shareholders.

BP, on February 25, announced cuts in renewable energy investments and focus instead on increasing oil and gas production. BP said it would increase its investments in oil and gas by about 20 percent to $10 billion a year, while reducing previously planned funding for renewables by more than $5 billion.

Earlier in the month, Norwegian oil giant Equinor reduced ambitions for developing renewable energy capacity by 2030. The company downgraded ambitions for renewable installed capacity to 10-12 gigawatt (GW) by 2030, from the earlier target of 12-16 GW.

Shell, in 2024, announced plans to moderate its near-term carbon emissions cuts by reducing the net carbon intensity of its energy products by 15-20 percent by 2030, compared to the previous target of 20 percent.

The Trump effect

The recent shift in the energy market is also coming at a time when newly-elected US President Donald Trump has committed to increasing oil and gas production in the country, with the promise to cut energy bills by half for the consumers.

Trump, in late January, also signed an executive order to withdraw US support from the Paris climate agreement. Trump’s actions are expected to slow down green energy efforts worldwide.

India's growing investment in oil and gas

Indian oil companies have also recently started investing heavily in its core businesses amid higher domestic energy consumption, and slower growth in the renewable energy sector.

BPCL is setting up a new greenfield refinery in Andhra Pradesh amid talks with Saudi Arabia for investment opportunities. Other OMCs have also announced new refinery plans. In 2023, HPCL announced the setting up of a new oil refinery in Rajasthan’s Barmer with a capacity of nine MMTPA (million metric tonne per annum), which is expected to be commissioned in January 2025.

Meanwhile, Indian Oil, which has the largest refining capacity in the country, is also expanding the capacity of its refinery in Panipat, Haryana, to 25 MMTPA from 15 MMTPA.