BP’s Significant Write-Down Indicates Tough Times Ahead for Net-Zero Investments

Major Energy Companies Face Setbacks in Transition Investments

This week, BP revealed it expects to record a $4–$5 billion loss in its fourth-quarter earnings as a result of scaling back its energy transition initiatives. This disclosure comes on the heels of Ford’s announcement in December, where the automaker projected $19.5 billion in losses due to a significant reduction in its electric vehicle ambitions. These companies are not alone—many organizations that once viewed clean energy as a guaranteed investment are now facing substantial financial challenges, casting doubt on global net-zero targets.

BP has not specified the exact sources of its anticipated impairments for the fourth quarter of 2025. However, the company’s ventures in low-carbon energy have consistently underperformed, a trend mirrored by other major oil firms. BP has been steadily withdrawing from transition sectors, recently outlining plans to exit Lightsource BP, Europe’s leading solar company, and selling off its U.S. onshore wind assets. Over the past three years, BP has reported annual impairment charges ranging from $5.1 billion to $6.9 billion.

While not all of these losses stem from BP’s low-carbon operations, the division has failed to meet expectations. The company’s strategy now emphasizes its core oil and gas businesses. BP is not unique in this shift—Shell has also scaled back its energy transition efforts, halting construction of a biofuels facility in the Netherlands, divesting from wind energy, and last year announcing an $800 million to $1.2 billion write-down in its renewables division.

These reversals are troubling for the clean energy sector, which until recently enjoyed robust support from both governments and investors. Advocates have long claimed that renewables are profitable even without subsidies, but the recent actions of Ford, BP, Shell, and others suggest growing skepticism.

Renewable Investment Growth Slows

Although funding for wind and solar projects continues to rise, the pace has slowed. BloombergNEF reported that while global investment in low-carbon energy reached record levels in the first half of 2025, spending on large-scale solar and onshore wind projects actually declined. Even in Europe, a leader in alternative energy expansion, growth decelerated last year—particularly in Germany, where economic pressures have forced the government to reconsider its priorities.

Policy Shifts and Industry Challenges

Some attribute the cooling interest in renewables and electric vehicles to policy changes under President Donald Trump, who moved to restrict offshore wind, phase out EV subsidies, and set deadlines for other clean energy incentives.

However, this period may serve as a crucial test for the industry. Despite years of claims that solar, wind, and EVs could thrive without government support, recent project cancellations and declining EV sales following subsidy reductions suggest these sectors are not yet self-sustaining.

Other challenges have also emerged. Last year’s blackout in Spain and Portugal, the rise of negative wholesale electricity prices in Europe, and periods of low wind generation have all highlighted vulnerabilities in transition technologies. As renewables become a larger part of the energy mix, these issues are becoming increasingly difficult for investors to ignore, dampening enthusiasm for further investment.

By Irina Slav for Oilprice.com