In a significant shift that underscores the challenges facing the renewable energy sector, BP Plc has announced its intention to exit the Australian Renewable Energy Hub (AREH), a massive $36 billion green hydrogen production project. This decision marks BP’s withdrawal as both operator and equity holder, reflecting a broader strategic shift back toward its core fossil fuel operations amid concerns about profitability and market realities.
Project Details and BP’s Exit
The Australian Renewable Energy Hub, located in Western Australia’s Pilbara region, was envisioned as one of the world’s largest green hydrogen facilities. It aimed to leverage vast solar and wind resources to produce renewable hydrogen for export, potentially powering industries and contributing to global decarbonization efforts. The project, valued at approximately $36 billion, has been in development for several years but has faced hurdles, including high costs and technological challenges associated with scaling green hydrogen production.BP’s exit comes as part of a refined corporate strategy under new leadership, following the departure of former CEO Bernard Looney, who had championed ambitious renewable initiatives. The company cited the need to prioritize investments that deliver stronger short-term returns, particularly in oil and gas, after years of underperforming stock prices. While specific financial details of the exit—such as potential write-downs or sale terms—have not been disclosed, the move aligns with BP’s efforts to streamline its portfolio and focus on high-margin activities.
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This retreat is not isolated; it highlights ongoing difficulties in the green hydrogen space, where production remains too expensive for widespread adoption despite its promise as a clean energy carrier.
Developers worldwide are canceling projects or scaling back investments, threatening emissions reduction targets set by governments and corporations.
A Broader Trend: Big Oil’s Return to Basics
BP’s decision is emblematic of a wider trend among major oil companies, which are increasingly retreating from renewable energy commitments to double down on traditional fossil fuels. This pivot is driven by financial pressures, including low returns on green investments, volatile energy markets, and shareholder demands for profitability.
For instance, BP itself has made several similar moves in recent months. In February 2025, the company slashed its renewable energy investment plans and boosted annual oil and gas spending to $10 billion, effectively ditching a target to expand renewable generation 20-fold by 2030.
More recently, BP sold its U.S. onshore wind business to LS Power, further divesting from renewables as part of its ongoing retreat.
Shell, another UK-based oil giant, is following suit. Under new leadership, Shell has pulled back on renewables, offloading assets to better compete with U.S. peers like ExxonMobil and Chevron.
In Libya, both Shell and BP have recently signed deals with the National Oil Corporation to explore and develop oil and gas fields, signaling a return to high-potential hydrocarbon projects abroad. BP is assessing opportunities in the Messla and Sarir fields, while Shell evaluates the al-Atshan field, amid Libya’s push to increase production to 2 million barrels per day by 2028.
This move underscores a shift away from unprofitable renewables toward higher-margin oil and gas ventures, especially with Brent crude prices around $73 per barrel.
Other majors are exhibiting similar patterns. Equinor has halved its renewable budget for 2025-2027 to $5 billion, prioritizing pragmatism over ambitious transitions.
ExxonMobil and Chevron have largely avoided deep dives into wind and solar, focusing instead on fossil fuels, while TotalEnergies and Eni join in riding the oil and gas demand wave.
Across the board, European energy firms doubled down on oil and gas in 2024 and into 2025, reversing climate pledges amid faltering green agendas and emphasizing near-term profits.
Even in the U.S., the energy industry is publicly retreating from climate pledges, redoubling commitments to fossil fuels at events like CERAWeek.
This collective backslide is attributed to low returns on renewables, market volatility, and a realization that the energy transition may not unfold as quickly as anticipated.
Implications for the Energy Sector
This trend raises questions about the pace of the global energy transition. While renewables continue to grow—driven by policy support and technological advancements—the retreat by Big Oil could slow progress in key areas like green hydrogen and wind power.
Critics argue that companies like BP are misleading investors by blaming low-carbon strategies for poor performance when oil market fluctuations are the real culprit.
Proponents of the shift, however, point to economic realities: fossil fuels remain essential for energy security and profitability in the near term.
For Australia, BP’s exit from AREH could delay the country’s ambitions to become a green hydrogen superpower, though other investors may step in. Globally, it signals that Big Oil is recalibrating, prioritizing “back to basics” over bold green bets.
As the world grapples with climate goals, this development highlights the tension between short-term financial imperatives and long-term sustainability. Energy News Beat will continue monitoring these shifts in the dynamic energy landscape.
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