You’re out of free articles.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
Sign In or Create an Account.
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Welcome to Heatmap
Thank you for registering with Heatmap. Climate change is one of the greatest challenges of our lives, a force reshaping our economy, our politics, and our culture. We hope to be your trusted, friendly, and insightful guide to that transformation. Please enjoy your free articles. You can check your profile here .
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Subscribe to get unlimited Access
Hey, you are out of free articles but you are only a few clicks away from full access. Subscribe below and take advantage of our introductory offer.
subscribe to get Unlimited access
Offer for a Heatmap News Unlimited Access subscription; please note that your subscription will renew automatically unless you cancel prior to renewal. Cancellation takes effect at the end of your current billing period. We will let you know in advance of any price changes. Taxes may apply. Offer terms are subject to change.
Create Your Account
Please Enter Your Password
Forgot your password?
Please enter the email address you use for your account so we can send you a link to reset your password:
The industry is not doubling down on the future of fossil fuels. Far from it.
The oil industry is not telling a credible story about its own future. Far from doubling down on the future of oil — as they’d have us believe — and as climate action advocates fear – the most powerful oil producers are planning for obsolescence, but they’re hoping to do it on their own, lucrative, terms.
The end of more than a century of growth in oil use is almost here, but it’s not straightforward.
One of the world’s leading forecasters of energy trends is now emphatic that the amount of oil, gas, and coal used around the world each day will begin to taper off within a few years. According to the International Energy Agency, global oil consumption, currently just over 100 million barrels per day, will peak later this decade at around 102 milllion barrels per day even without any new climate policy measures. We are at “the beginning of the end of the era of fossil fuels,” IEA chief Fatih Birol wrote in September.
None of this is adequate to stay within safe climate limits, but it’s hard to overstate what it means for the oil industry, which has enjoyed almost uninterrupted growth for its 150-odd-year existence.
Oil producers vigorously pushed back on the IEA’s outlook. OPEC+, the oil producers’ cartel, accused the agency of being “ideologically driven.” Chief executives of Exxon and state-controlled Saudi Aramco insisted that demand will continue to grow for decades to come.
But while the biggest and most successful oil producers rail against the IEA’s forecast, hinting that the agency is some kind of woke climate activist, their own actions tell a different story. Oil producers know that their industry is on the cusp of an inexorable decline, and they are preparing for it.
That might seem counter-intuitive given the spate of merger and acquisition news this fall. Last month Exxon made an $65 billion bid for Pioneer Natural Resources, which owns a swathe of Permian shale, and a couple of weeks later Chevron offered $53 billion for Hess Corporation, which includes a chunk of deepwater oil fields off Guyana. “Fossil fuels aren’t going anywhere,” declared The New York Times after the Exxon-Pioneer announcement. Like many other stories, the Times’ article pointed out that Exxon is choosing to invest in more oil, but not renewable energy. Earlier this year Shell cut its target for renewable energy growth. It looks like another vote in favor of oil’s strong future.
But neither the oil industry’s protestations, nor the big U.S. acquisitions, nor the lack of enthusiasm for green investments by oil majors, tells us that oil’s rise will continue for decades. In fact some of these developments point in the opposite direction.
Let’s start with the acquisitions. They’re certainly big; Exxon is preparing to buy Pioneer for shares equivalent to a sixth of Exxon’s own market capitalization; and Chevron’s Hess acquisition is of similarly huge proportions. Big corporate takeovers, however, do not indicate a growing industry. In boom years anyone can raise capital; when things get tough it’s time for “consolidation” because only companies with scale can survive.
To understand how these deals are conservative bets on the future of oil, look at what in the commodities world is called the "production cost curve” — a way of analyzing the financial logic of anything that’s mined or pumped out of the ground.
The curve shows total oil production capacity, ranked horizontally from the cheapest to the most expensive to extract. (The colored dots represent different International Energy Agency scenarios, with the first more climate-aligned and the last being simply “business as usual,” but they’re not particularly important for our purposes.)
The oil industry consists of a panoply of producers, each owning assets with different geological features, chemical compositions, and financial flexibility that put them on different parts of the curve.
Now, the greater the world’s total oil consumption, the more likely it is that prices will be high enough that those at the highest end of the production cost curve — everyone on the steep incline on the curve’s right — can still make money.
But while prices for oil are currently high, the acquisitions are not counting on them remaining so. Wood Mackenzie noted that Chevron’s Guyana fields would have “highly competitive breakeven costs.” Another energy consultancy, Rystad, pointed out that Exxon-Pioneer would have the lowest breakeven costs of any Permian producer; whereas previously they’d only rank second and fourth, respectively. In other words, Chevron and Exxon are rationally trying to position themselves on the left-hand side of the curve — the safe demand zone — where they hope to outlast competitors whose breakeven costs per barrel are too high to survive a world weaning itself off oil.
So the beginning of the end of oil doesn’t mean game over for Exxon, Chevron, or Saudi Aramco – if they play their cards right. Some oil will be sold for the next couple of decades at least. The trajectory down, however, is unprecedented, and it’s not clear that even the canniest producers won’t get caught out by the speed of transition to electric vehicles, for example.
But what about backing away from green energy? If fossil fuels’ heyday is over, surely everyone should pile into the next big thing?
Not necessarily. Consider where their money comes from. Big oil companies like Exxon and Chevron have plenty of cash, but they have to keep shareholders happy. Those investors are in those companies for various reasons; but one reason some of them actively choose it is for its specific characteristics: long capital-intensive investment cycles and high profits when things go well.
Green energy investments are different. The rates of return can be lower, but risks are also lower, particularly over a longer time horizon.
In fact it’s a conventional tenet of investing that if companies see their entire industry shrinking, they should not necessarily pivot into a new sector that is replacing it. The principles of “shareholder value,” for example, holds that companies should return cash to shareholders if there are no credible investment opportunities, so they can divert that money into new sectors.
That’s exactly what those massive share buyback programs are doing. The world’s biggest oil companies ramped up purchases of their own shares — which returns cash to investors — to the value of more than $135 billion last year, according to investment manager Janus Henderson; Bloomberg estimates it was a more than 10-fold increase on the previous year and many U.S. and European majors are extending or expanding their buybacks this year.
The buybacks, as much as they might be a repellent illustration of windfall profits arising from wars, are being conducted instead of investing in more upstream investment. Of course, this logic doesn't align with the much-repeated idea that “oil companies will have to be involved in the transition,” but neither do the actions of oil companies.
Finally, it pays to question the messenger. It would not be in oil companies’ interests to say out loud that demand is peaking soon, even if they and their investors all know it.
Imagine if Exxon or OPEC+'s secretariat said “yes, oil demand is probably close to peaking; it might plateau for awhile but the era of growth is over.” Money would flow out of the sector. Smaller, more expensive producers would stop investing in finding and producing more oil, which would lead to more volatile price spikes, driving the world to switch to clean energy even faster (JP Morgan says the recent high prices has already provoked “demand destruction” — in part explaining why prices haven’t spiked as much as recent world events might suggest.) Governments and other companies might even step up efforts to cut their dependency on oil. It would become a self-fulfilling prophecy with challenging implications for countries and companies whose existence is based on pumping oil and gas.
OPEC is typically optimistic about oil demand in its own publications. It predicted back in 2006 that oil demand in 2025 would be 113 million barrels per day — a number that’s 10 million above what has ever been reached. (It’s now forecasting that oil demand will reach a similar level — 116 million/day — only 20 years later, in 2045.) But OPEC, and particularly its most powerful member Saudi Arabia, has long been quietly anxious about demand destruction. With the IEA saying recent prices suggest that is already happening now, thanks to the rise of electric vehicles, OPEC has further reason to keep their fretting private.
Oil producers are — again, rationally — planning to extract the last bit of profits from a declining sector, while hoping that energy users everywhere remain dependent upon a volatile, expensive, and polluting – but very profitable – energy source. If newer sovereign producers try to get into the game late (such as Barbados, Senegal, and Mozambique) they might well get caught out by the shrinking oil market. That would leave the cheaper and better-capitalized producers — Gulf countries, or the U.S. majors — to continue selling at a comfortable profit, albeit slightly lower than they’d receive in the pre-peak era.
The oil majors are settling in for a long, comfortable decline.
Log in
To continue reading, log in to your account.
Create a Free Account
To unlock more free articles, please create a free account.
From the Inflation Reduction Act to the Trump mega-law, here are 20 years of changes in one easy-to-read cheat sheet.
The landmark Republican reconciliation bill, which President Trump signed on July 4, has shattered the tax credits that served as the centerpiece of the country’s clean energy and climate policy.
Starting as soon as October, the law — which Trump has dubbed the One Big Beautiful Bill Act — will cut off incentives for Americans to install solar panels, purchase electric vehicles, or make energy efficiency improvements to their homes. It’s projected to raise household energy costs while increasing America’s carbon emissions by 190 million metric tons a year by 2030, according to the REPEAT Project at Princeton University.
The loss of these incentives will in part offset the continuation of tax cuts that largely benefit wealthy Americans. But the law as a whole won’t come close to paying for those cuts in their entirety. The legislation is expected to swell federal deficits by nearly $3.8 trillion over the next 10 years, according to the Tax Foundation, a nonpartisan think tank. This explosive deficit expansion could make it more difficult for the Federal Reserve to cut interest rates, possibly further constraining energy development.
President Trump has described the law as ending Democrats’ “green new scam,” and conservative lawmakers have celebrated the termination of Biden-era energy programs. The law is particularly devastating for programs encouraging electric vehicle sales, as well as wind and solar energy deployment.
But the act is more complicated than a simple repeal of Democrats’ 2022 Inflation Reduction Act. In one case, Trump’s big law ends a federal energy incentive that has been in place, in some form, since the 1990s. In others, Republicans have tied up existing energy incentives with new restrictions, regulations, and red tape.
Some parts of the IRA have even remained intact. GOP lawmakers opted to preserve Biden’s big expansion of incentives to support nuclear energy and advanced geothermal development. That said, the Trump administration could still gut these tax credits by making them effectively unusable through executive action.
It can be confusing to keep the One Big Beautiful Bill Act’s many changes to federal energy law in your head — even for experts. That’s why Heatmap News is excited to publish this new reference “cheat sheet”on the past, present, and future of federal energy tax credits, compiled by an all-star collection of analysts and researchers.
The summary takes each clean energy-related provision in the U.S. tax code and summarizes how (and whether) it existed in the 2000s and 2010s, how the Inflation Reduction Act changed it, and how the new OBBBA will change it again. It was compiled by Shane Londagin, a policy advisor at the think tank Third Way; Luke Bassett, a former Biden administration official and Senate Energy committee staffer; Avi Zevin, a former Biden official and a partner at the energy law firm Roselle LLP; and researchers at the REPEAT Project, an energy analysis group at Princeton University. (Note that I co-host the podcast Shift Key with Jesse Jenkins, who leads the REPEAT Project.)
You can find the full summary below.
On presidential proclamations, Pentagon pollution, and cancelled transmission
Current conditions: Over 1,000 people have evacuated the region of Seosan in South Korea following its heaviest rainfall since 1904 • Forecasts now point toward the “surprising return” of La Niña this fall • More than 30 million people from Louisiana through the Appalachians are at risk of flash flooding this weekend due to an incoming tropical rainstorm.
The Hugh L. Spurlock Generating Station in Maysville, Kentucky.Jeff Swensen/Getty Images
President Trump on Thursday signed four proclamations allowing certain highly polluting industries to bypass regulations established by the Biden administration. In addition to chemical manufacturers that help produce semiconductors and medical device sterilizers, the proclamations singled out coal-fired power plants and taconite iron ore processing facilities for two years of exemptions. Taconite is a low-grade iron ore primarily mined in the Upper Peninsula of Michigan and northern Minnesota, which is then processed for use in the production of iron and steel. Trump justified the move by arguing that compliance with the current emissions rule for coal-fired power plants raises the “unacceptable risk” of shutdowns, “eliminating thousands of jobs, placing our electrical grid at risk, and threatening broader, harmful economic and energy security effects,” while the iron processing emissions rule “risks forcing shutdowns, reducing domestic production, and undermining the nation’s ability to supply steel for defense, energy, and critical manufacturing.”
The proclamations allow industries to comply with the Environmental Protection Agency standards that predate former President Joe Biden’s tenure. Trump justified the pause by claiming the former administration had mandated compliance with “standards that rely on emissions-control technologies that have not been demonstrated to work.” Researchers have previously found that air pollutants related to coal power plants cause nearly 3,000 attributable deaths per year. Taconite iron ore processing facilities produce harmful acid gases, including hydrogen chloride and hydrogen fluoride, as well as mercury, which have been linked to numerous adverse health effects.
Separately, the House passed Trump’s $9 billion rescissions package late last night, which includes cuts to international climate, energy, and environmental programs like the Clean Technology Fund. Republicans Brian Fitzpatrick of Pennsylvania and Mike Turner of Ohio joined Democrats in objecting to the bill. Trump is expected to sign the package Friday. An additional rescissions package is expected “soon.”
The Pentagon’s 2026 budget will enable the Department of Defense’s planet-warming emissions to grow by an additional 26 megatons, or about the equivalent of 68 gas power plants, a new analysis by the Climate and Community Institute found. The U.S. military was already the single largest institutional polluter in the world due to its “vast global operations — from jet fuel consumption and overseas deployments to domestic base maintenance,” as well as its manufacturing of weapons and vehicles, the think tank notes. With the passage of the One Big Beautiful Bill Act, the Pentagon’s budget will exceed $1 trillion in 2026, representing a 17% increase over 2024. Its emissions, in turn, could grow to the point that if the DOD were its own country, it’d be the 38th largest polluter in the world, producing more CO2 emissions than the Netherlands, Bangladesh, or Venezuela. But “the Pentagon’s true climate impact will almost certainly be worse” than what the researchers found, The Guardian notes, “as the calculation does not include emissions generated from future supplemental funding such as the billions of dollars appropriated separately for military equipment for Israel and Ukraine in recent years.”
Get Heatmap AM directly in your inbox every morning:
New York’s Public Service Commission decided Thursday against moving forward with a major transmission project that would have had the capacity to deliver at least 4,770 megawatts of offshore wind power to New York City by the early 2030s. The commissioners said they were unable to justify “charging ratepayers for the multibillion-dollar project when feds are stymying” offshore wind, New York Focus’ Colin Kinniburgh reported on Bluesky. “We will continue to press forward regarding infrastructure needs for offshore wind in the future once the federal government resumes leasing and permitting for wind energy generation projects,” PSC chair Rory Christian said.
The canceled Public Policy Transmission Need determination was not specific to a particular offshore wind project, but rather was intended to match New York’s general offshore wind ambitions when it was approved in 2023. But as Heatmap has previously reported, Trump’s crusade against offshore wind has been a “worst case scenario” for the industry since day one, and, per ABC News 10, effectively “eliminates any reason for building new power lines in the first place.”
Microsoft has inked a deal to purchase 4.9 million metric tons of durable carbon dioxide removal from Vaulted Deep, a waste management startup, for an undisclosed amount. The companies boasted that the deal, which runs through 2038, represents “the second-largest carbon removal deal to date.” Vaulted Deep, an Xprize Carbon runner-up, diverts organic waste from landfills and incinerators by injecting it into wells thousands of feet underground using fracking technologies, which it says ensures over 1,000 years of durability, TechCrunch reports. Since Vaulted’s launch in the summer of 2023, the Houston-based company has removed 18,000 metric tons of carbon dioxide. Microsoft, meanwhile, has slipped behind its 2020 goal to remove more carbon from the atmosphere than it generates by the end of the decade due to its rush to build out data centers.
The Environmental Protection Agency’s reorganization and downsizing are set to continue, with the agency offering another round of buyouts and early retirements to staffers in offices it aims to restructure, Politico reports. Among the affected offices are the Office of Enforcement and Compliance Assurance, which the EPA said it seeks to tweak to “better address pollution problems that impact American communities by re-aligning enforcement with the law to deliver economic prosperity and ensure compliance with agency regulations,” as well as the Office of Land and Emergency Management, which works on Superfund and disaster response issues. The Office of Research and Development, the Office of Mission Support, and the Office of the Chief Financial Officer are also affected.
Separately, in a preliminary decision earlier this week, the agency moved to block the state of Colorado from closing its six remaining coal-fired power plants by 2031. Colorado was attempting to codify the retirement dates in its Regional Haze Plan, which is typically used to protect the air quality of federal wilderness and national parks; however, the EPA rejected the proposal, according to CPR News. “We believe that the Clean Air Act does not give anybody the authority to shut down coal generation plants against the owner’s will,” Cyrus Western, the administrator of EPA Region 8, said. Jeremy Nichols, a senior advocate for the Center of Biological Diversity’s environmental health program, claimed the EPA’s move shows the limits of what climate-conscious states can do on their own. “We may have state rules, but they won't be federally approved,” Nichols told CPR.
“There are so many developers and so many projects in so many places of the world that there are examples where either something goes wrong with a project or a developer doesn’t follow best practices. I think those have a lot more staying power in the public perception of renewable energy than the many successful projects that go without a hiccup and don’t bother people.” —Heatmap Pro’s Charlie Clynes, in conversation with Jael Holzman about his new project tracking all of the nation’s county-level restrictions on renewable energy.
New York City may very well be the epicenter of this particular fight.
It’s official: the Moss Landing battery fire has galvanized a gigantic pipeline of opposition to energy storage systems across the country.
As I’ve chronicled extensively throughout this year, Moss Landing was a technological outlier that used outdated battery technology. But the January incident played into existing fears and anxieties across the U.S. about the dangers of large battery fires generally, latent from years of e-scooters and cellphones ablaze from faulty lithium-ion tech. Concerned residents fighting projects in their backyards have successfully seized upon the fact that there’s no known way to quickly extinguish big fires at energy storage sites, and are winning particularly in wildfire-prone areas.
How successful was Moss Landing at enlivening opponents of energy storage? Since the California disaster six months ago, more than 6 gigawatts of BESS has received opposition from activists explicitly tying their campaigns to the incident, Heatmap Pro® researcher Charlie Clynes told me in an interview earlier this month.
Matt Eisenson of Columbia University’s Sabin Center for Climate Law agreed that there’s been a spike in opposition, telling me that we are currently seeing “more instances of opposition to battery storage than we have in past years.” And while Eisenson said he couldn’t speak to the impacts of the fire specifically on that rise, he acknowledged that the disaster set “a harmful precedent” at the same time “battery storage is becoming much more present.”
“The type of fire that occurred there is unlikely to occur with modern technology, but the Moss Landing example [now] tends to come up across the country,” Eisenson said.
Some of the fresh opposition is in rural agricultural communities such as Grundy County, Illinois, which just banned energy storage systems indefinitely “until the science is settled.” But the most crucial place to watch seems to be New York City, for two reasons: One, it’s where a lot of energy storage is being developed all at once; and two, it has a hyper-saturated media market where criticism can receive more national media attention than it would in other parts of the country.
Someone who’s felt this pressure firsthand is Nick Lombardi, senior vice president of project development for battery storage company NineDot Energy. NineDot and other battery storage developers had spent years laying the groundwork in New York City to build out the energy storage necessary for the city to meet its net-zero climate goals. More recently they’ve faced crowds of protestors against a battery storage facility in Queens, and in Staten Island endured hecklers at public meetings.
“We’ve been developing projects in New York City for a few years now, and for a long time we didn’t run into opposition to our projects or really any sort of meaningful negative coverage in the press. All of that really changed about six months ago,” Lombardi said.
The battery storage developer insists that opposition to the technology is not popular and represents a fringe group. Lombardi told me that the company has more than 50 battery storage sites in development across New York City, and only faced “durable opposition” at “three or four sites.” The company also told me it has yet to receive the kind of email complaint flood that would demonstrate widespread opposition.
This is visible in the politicians who’ve picked up the anti-BESS mantle: GOP mayoral candidate Curtis Sliwa’s become a champion for the cause, but mayor Eric Adams’ “City of Yes” campaign itself would provide for the construction of these facilities. (While Democratic mayoral nominee Zohran Mamdani has not focused on BESS, it’s quite unlikely the climate hawkish democratic socialist would try to derail these projects.)
Lombardi told me he now views Moss Landing as a “catalyst” for opposition in the NYC metro area. “Suddenly there’s national headlines about what’s happening,” he told me. “There were incidents in the past that were in the news, but Moss Landing was headline news for a while, and that combined with the fact people knew it was happening in their city combined to create a new level of awareness.”
He added that six months after the blaze, it feels like developers in the city have a better handle on the situation. “We’ve spent a lot of time in reaction to that to make sure we’re organized and making sure we’re in contact with elected officials, community officials, [and] coordinated with utilities,” Lombardi said.