Oil and Gas Giants Plan to Expand Production Despite Climate Goals

European oil and gas producers raise 2030 output targets

New research from the London School of Economics shows that Europe’s six largest oil and gas companies have increased their fossil fuel production plans for the rest of the decade. The findings highlight a growing disconnect between public climate commitments and actual business strategy.

According to analysis by Reclaim Finance, none of the six major European producers now plan to reduce fossil fuel output by 2030. Several have recently revised their targets upward. The gap matters because these production decisions directly shape global emissions and influence whether international climate goals remain achievable.

For UK businesses, the trend reinforces an important commercial reality. Supply chain emissions increasingly affect tender eligibility, investor expectations, and regulatory compliance. Understanding how your suppliers and partners approach climate strategy is no longer optional.

Production plans exceed net zero scenario by wide margin

The research examined updated production targets from BP, Shell, TotalEnergies, Eni, Equinor, and Repsol. Four of the six companies have revised their 2030 oil and gas production targets upward in recent months. The increases leave their planned output more than 50% above the levels outlined in the International Energy Agency’s Net Zero Emissions by 2050 scenario.

Shell abandoned its previous oil production reduction target earlier this year. The company now intends to increase oil and gas production by 1% annually until 2030. Reclaim Finance calculates this trajectory will leave Shell’s output more than 20% above the NZE pathway level.

Repsol has not raised its target. However, the company similarly does not plan to reduce oil and gas production over the period. Its maintained output level still exceeds the NZE scenario by more than 50% in 2030.

The IEA’s NZE scenario assumes no new fossil fuel fields or LNG export terminals open after 2021. Despite this, all six companies are moving forward with significant gas and liquefied natural gas expansion. Shell, TotalEnergies, Eni, BP, and Equinor each plan new LNG export terminals before 2030.

This focus on gas reflects a strategic bet that demand will remain strong during the energy transition. Nevertheless, the IEA’s modelling suggests such expansion is incompatible with limiting global warming to 1.5 degrees Celsius.

Scope 3 emissions dominate producer climate footprints

The analysis highlights that Scope 3 emissions account for more than 90% of total emissions across these six companies. Scope 3 covers indirect emissions from the use of sold products, which for oil and gas firms means the carbon released when customers burn the fuel.

This proportion matters because it shifts the climate impact calculation. Production volume becomes the primary driver of total emissions, not operational efficiency improvements or renewable energy investments at company facilities.

For businesses buying energy or using oil and gas products in their operations, this data point has practical implications. Your Scope 3 emissions from purchased fuels flow directly from producer output decisions. As carbon reporting requirements expand under regulations like the Streamlined Energy and Carbon Reporting framework, understanding these upstream connections becomes more important.

Many UK SMEs now report Scope 1 and Scope 2 emissions as part of tender submissions or investor requirements. Scope 3 reporting remains voluntary for most smaller firms, but the direction of travel is clear. Government guidance increasingly expects businesses to account for supply chain emissions, particularly in sectors with material fossil fuel use.

Capital allocation reveals strategic priorities

The research examined not just production targets but also capital spending plans. Investment patterns show where companies expect future returns, which provides a clearer picture of strategy than public statements alone.

Despite net zero pledges, the six firms continue to allocate significant capital to fossil fuel expansion. This includes exploration, field development, and new infrastructure for gas export. Renewable energy and low-carbon investments remain a small proportion of total capital expenditure for most of these producers.

Investor groups and campaign organizations increasingly scrutinize this gap between stated ambitions and capital allocation. The argument is straightforward: if a company genuinely plans to reduce emissions in line with net zero, its spending should reflect that trajectory.

For UK businesses, this dynamic creates both risk and opportunity. Firms that depend on stable, predictable energy costs face uncertainty as the sector navigates contradictory pressures. At the same time, companies that can demonstrate genuine emissions reductions may gain competitive advantage as procurement standards tighten.

Supply chain implications for UK businesses

The production plans outlined in the research have direct consequences for businesses across UK supply chains. Energy-intensive sectors face continued exposure to fossil fuel price volatility and carbon pricing mechanisms. Manufacturing, logistics, construction, and food production all carry material energy costs that link back to upstream production decisions.

Meanwhile, public sector procurement rules increasingly require suppliers to demonstrate credible carbon reduction plans. PPN 06/21, introduced in 2021, requires suppliers bidding for central government contracts above £5 million to publish a Carbon Reduction Plan and commit to net zero by 2050. Similar requirements are spreading through local government and private sector supply chains.

Businesses that rely on oil and gas producers within their value chain may find their own carbon footprints harder to reduce if those producers are increasing output rather than transitioning. This creates a reporting challenge: your emissions may rise even if your operations remain unchanged, simply because your suppliers are growing their fossil fuel business.

Conversely, companies that can switch to lower-carbon alternatives or demonstrate supply chain engagement on emissions may improve their competitive position. Tender evaluations increasingly include carbon criteria alongside cost and quality. The gap between producer rhetoric and action makes supplier due diligence more important, not less.

Financial sector response and transition risk

The UN Environment Programme Finance Initiative has identified oil and gas producers as facing significant transition risk as economies move toward net zero by 2050. Transition risk refers to the financial impact of policy changes, technology shifts, and market evolution during the shift to a low-carbon economy.

Banks, insurers, and asset managers are beginning to adjust their exposure accordingly. Some institutions have introduced lending restrictions for new fossil fuel projects. Others require higher climate disclosure standards from energy sector borrowers. The regulatory environment is also tightening, with the Financial Conduct Authority expecting firms to integrate climate risk into decision-making.

For SMEs, this trend affects access to finance and insurance. Lenders increasingly ask about climate risk and carbon reduction plans during credit assessments. Businesses with high emissions intensity or weak transition strategies may face higher borrowing costs or reduced credit availability over time.

Insurance markets are also responding. Sectors exposed to physical climate risks or transition risks may see premium increases or coverage restrictions. Understanding your emissions profile and having a credible reduction plan can help manage these financial pressures.

What the analysis shows about corporate climate commitments

Several important points emerge from the research. First, long-term net zero pledges do not automatically translate into near-term production cuts. Companies can maintain ambitious 2050 targets while increasing output in the 2020s, relying on future technology or offsets to reconcile the gap.

Second, gas expansion is a central feature of current strategies. Producers frame gas as a transition fuel that displaces coal, which is accurate in some contexts. However, the IEA’s net zero scenario assumes declining gas use from the mid-2020s onward, not expansion.

Third, Scope 3 emissions dominate the climate impact of oil and gas companies. Operational improvements matter, but they address less than 10% of total emissions. Production volume is the decisive variable.

Fourth, capital allocation provides a more reliable indicator of strategic intent than public commitments. Investment patterns reveal whether companies expect fossil fuel demand to grow, stabilize, or decline over the next decade.

For businesses evaluating suppliers, partners, or investments, these distinctions help separate genuine transition planning from positioning. The question is not whether a company has a net zero target, but whether its business plan is consistent with that target.

Key facts summary

• BP, Eni, Equinor, and TotalEnergies have revised 2030 oil and gas production targets upward, leaving planned output more than 50% above the IEA’s Net Zero Emissions by 2050 scenario.
• Shell now plans to increase oil and gas production by 1% per year until 2030, more than 20% above the NZE pathway, after abandoning its previous oil reduction target.
• Repsol has not raised its target but also does not plan to reduce oil and gas production, leaving it more than 50% above the NZE scenario level in 2030.
• All six companies are planning new LNG export terminals by 2030, despite the IEA’s NZE scenario assuming no new fossil fuel fields or LNG terminals after 2021.
• Scope 3 emissions from the use of sold products accounted for more than 90% of total emissions across the six companies in 2024.

How UK businesses can respond

The widening gap between producer climate commitments and production plans creates practical challenges for businesses trying to reduce their own emissions. However, several responses can help manage the risk and maintain compliance with reporting requirements.

Start by mapping your energy and fuel supply chains. Identify which suppliers and products contribute most to your Scope 1, Scope 2, and Scope 3 emissions. This baseline helps you understand where you have exposure to fossil fuel production decisions and where you might have flexibility to switch.

Next, engage with suppliers on their climate strategies. Ask for data on emissions intensity, reduction targets, and capital allocation. This information helps you assess whether their plans align with your own carbon reduction commitments. It also strengthens your position when reporting to clients, investors, or regulators.

Consider alternatives where they exist. Renewable electricity contracts, electric vehicle fleets, and lower-carbon materials can reduce your dependence on fossil fuels and improve your emissions profile. The business case often depends on long-term cost trends and risk management rather than immediate payback.

Build climate criteria into procurement decisions. Sustainable procurement frameworks help you evaluate suppliers on carbon performance alongside cost and quality. This approach also demonstrates due diligence if clients or regulators question your supply chain emissions.

Finally, invest in carbon literacy across your team. Understanding emissions sources, reporting standards, and reduction options makes better decisions possible. Training on carbon management and net zero planning equips your business to navigate an increasingly complex regulatory and commercial environment.

Regulatory and reporting context

The research arrives as UK businesses face growing pressure to measure, report, and reduce emissions. The Streamlined Energy and Carbon Reporting regulations require large companies and quoted firms to disclose energy use and carbon emissions annually. Many smaller businesses report voluntarily to meet client or investor expectations.

Government procurement rules now require suppliers to demonstrate net zero commitments and publish Carbon Reduction Plans. These requirements apply to central government contracts above £5 million, but similar standards are spreading across the public sector and into private supply chains.

The Environment Agency and other regulators are also increasing scrutiny of emissions and environmental performance. Permit conditions for energy-intensive industries increasingly include carbon reduction expectations. Non-compliance can affect operating licenses and regulatory relationships.

For businesses navigating these requirements, the gap between producer rhetoric and action complicates reporting. If your suppliers are increasing fossil fuel output, your Scope 3 emissions may rise even as you improve operational efficiency. Clear documentation of your reduction efforts and supplier engagement becomes essential.

Support is available. Carbon reporting and ESG compliance services help businesses meet regulatory requirements and build credible reduction plans. Professional advice ensures your reporting is accurate, defensible, and aligned with emerging standards.

Where to find further information

The underlying research was conducted by the London School of Economics and summarized by Reclaim Finance. Their analysis examined publicly available production targets and capital spending plans disclosed by the six companies.

The International Energy Agency’s Net Zero Emissions by 2050 scenario provides the benchmark pathway used in the research. The IEA’s net zero roadmap is available on their website and includes detailed assumptions about fossil fuel production, renewable energy deployment, and technology development.

The UN Environment Programme Finance Initiative has published guidance on climate risk for the financial sector. Their resources on transition risk explain how policy changes and market shifts affect different industries, including oil and gas.

UK government guidance on carbon reporting is available through the environmental reporting guidelines on GOV.UK. These documents explain legal requirements and provide methodology for calculating emissions.

For businesses concerned about supply chain emissions or procurement requirements, the PPN 06/21 guidance sets out government expectations for supplier carbon reduction plans.