“Low-carbon” business strategies conceal plans to expand gas

London/New York, 29 February – Oil and gas companies are still rewarding executives for increasing/expanding fossil fuel production, even when this conflicts with their energy transition targets and stated climate policies, warns a report from the financial think tank Carbon Tracker released today.

The report, Crude Intentions II, analyses the remuneration policies of 25 of the largest listed oil and gas companies and finds that all but one – Occidental Petroleum – still incentivise fossil fuel production growth and operate under the assumption that fossil fuel demand will continue to grow, despite the energy transition.

While a growing number of companies reward executives for preparing for the energy transition, remuneration metrics often conceal incentives to increase fossil fuel production. For example, companies like bp, Chevron, ExxonMobil, and TotalEnergies champion strategies that are framed around transition, yet include incentives to grow production. Additionally, some metrics incentivising ‘low carbon’ investment drive growth in ‘natural’ gas, reflecting promotion of gas as a ‘low carbon’ or ‘transition’ fuel.

Researchers found companies with some of the most ambitious climate policies are among the worst offenders.  While companies like Eni, and Repsol have pledged cuts of 30-35% by 2030, production growth targets still determine 29% and 23% of management pay respectively.

Carbon Tracker Associate Analyst and report author Saidrasul Ashrafkhanov said:

“We’re increasingly likely to see peak demand for each of the fossil fuels by the end of the decade. For most oil and gas companies this means planning for their own output to decline over time, yet going by their remuneration policies, this generally doesn’t seem to be in planning.”

Crude Intentions II finds nine company remuneration policies to be partially or fully undisclosed, with national oil companies among the worst offenders. It notes, however, that PetroChina has for the first time disclosed its incentives, but with limited detail on the grant values of the different components making up executive remuneration.

The report finds ten companies in our universe incorporated energy transition response pay metrics, all of which incentivised diversification into new business areas. The analysis reveals the Atlantic divide has endured: European companies attach more weight to efforts to pivot to new markets and are more likely to incentivise renewables and other forms of low-carbon energy than companies based in the US, reflecting overall corporate strategy.

Carbon Tracker Head of Oil, Gas and Mining Mike Coffin said:

“The energy transition is accelerating, and oil and gas companies must plan for peaking demand for their product. Investors should be concerned executives are continued to be incentivised to grow production volumes, and develop new long-cycle assets, particularly if this is contrary to stated company strategy. Asset Owners and Asset Managers should use their votes accordingly to ensure that executives are acting in their best long-term interests.”

Only six companies have prospectively disclosed their remuneration policies for 2023. Compared with 2022, the overall split between oil and gas production growth and other metrics has stayed largely the same, with slight variations in the share of growth metrics. One noticeable difference was the return of indirect growth incentives at TotalEnergies.

Even though incentives should be expected to support strategic objectives, of the companies which have emissions reduction remuneration metrics, the analysis finds that just five companies have incorporated metrics that directly match the wider corporate targets for emissions reductions. Of these, four cover just scope 1 or scope 1 and 2 emissions, while only Shell has a remuneration incentive that supports its scope 3 emissions reduction target in addition to operational emissions, but even then, this is only on an intensity basis.  None of these targets link to the finite limits of the remaining carbon budget.


The analysis builds on the methodology first developed in Paying With Fire and updated in subsequent reports in the series, most recently in Crude Intentions that is designed to quantify the influence of incentives on executive decision-making by calculating the relative share of the different metrics used within target short- and long-term performance-related pay awards.

For the purposes of this report, metrics are grouped into one of four categories, depending on whether they incentivise: i) growing production volume directly; ii) growing production indirectly; iii) actively incentivise a strategic response to the energy transition, or; iv) focusing on value or other non-growth metrics including for example safety performance.

Once the embargo lifts the report can be downloaded here: https://carbontracker.org/reports/crude-intentions-ii-how-oil-and-gas-execs-are-still-incentivised-to-grow-production-despite-peaking-demand/



To arrange interviews please contact:

Joel Benjamin                         Jbenjamin@carbontracker.org                    +44 7429 637423

David Mason                          david.mason@greenhousepr.co.uk             +44 7799 072320


About Carbon Tracker

The Carbon Tracker Initiative is a not-for-profit financial think tank that seeks to promote a climate-secure global energy market by aligning capital markets with climate reality. Our research to date on the carbon bubble, unburnable carbon and stranded assets has begun a new debate on how to align the financial system with the energy transition to a low carbon future. www.carbontracker.org