Since the Trump administration took office for the second time in early 2025, stepping back from the Paris Agreement, repealing elements of the Inflation Reduction Act (IRA) and swathes of tariffs have changed oil, gas and chemical companies’ risks, opportunities and priorities. Amid pressures to refocus on their core business–traditional fossil fuels–energy companies are reassessing their clean energy strategies, at least for the short term. But our Global Clean Energy Survey highlights how most energy companies still recognize the long-term value in helping to facilitate the energy transition.
Moving forward, how is the sector balancing these short- and long-term priorities?
Until recently, it could have been said that some energy companies were on a path to becoming clean energy businesses. But that progress has stalled with the U.S. administration’s volte-face on energy policy and rising concerns over energy security around the world.
Before the Trump administration returned to the White House, energy companies were taking steps on their clean energy journey. When we launched our Global Clean Energy Survey in Q1 of 2025, we found:
The steps on the path to clean energy were tentative before 2025, but as other governments and businesses have followed the U.S. in pivoting towards traditional fuel sources, companies are diverting resources back to traditional operations.
Much of the impetus for moving towards clean energy came from external factors around reputation and sustainability, rather than commercial reasons.
As restrictions relax and political narratives soften in relation to fossil fuel projects, these drivers have weakened. In the absence of strong state intervention and financial incentives to support clean energy, companies have refocused on their core–and most profitable–activities.
For U.S. downstream businesses, refineries are no longer eligible for tax credits from biofuel produced with feedstock sourced from outside the U.S. With limited supplies available at home, this can make business models unviable and deter the large investments needed to build new biofuel refineries or retrofit existing facilities.
Similarly for upstream energy, the Trump administration has blocked all federal permits and land leases for wind projects and signed various executive orders that streamline regulatory processes for energy infrastructure projects, particularly for fossil fuels. Project developers, manufacturers and analysts anticipate that these policy changes will, according to Reuters, “slash installations of renewable energy over the coming decade, kill investment and jobs in the clean energy manufacturing sector supporting them, and worsen a looming U.S. power supply crunch as energy-hungry AI infrastructure expands.”
Debt financing for clean energy projects is under threat. Installations with smaller operators rely on project financing and the economics are heavily reliant on tax incentives. In this new environment, smaller public and private businesses, who lack the resources of the oil and gas majors, have little choice but to cut funding for projects that may now be uneconomic.
Revenue opportunities are the core driver of commercial decisions, and while the doors are open to traditional fossil fuels, energy companies are working hard to strike the right balance. Echoed by McKinsey, “crucial alternative fuels are not likely to achieve broad adoption before 2040 unless mandated”.
In our survey, oil and gas companies expressed concerns about the perils associated with clean energy investments.
Putting a hold on clean energy projects means companies may worry less about these factors. But this path is not entirely free of risk. As companies change course, new and unexpected issues can emerge. Many businesses have already begun to build clean energy technology and infrastructure. If they have to idle or abandon these facilities, it could leave them with stranded assets posing as-yet unknown property and liability risks.
Companies that focus their short-term clean energy investment into carbon capture storage (CCS) could be exposed to pollution claims in the future if the sequestered carbon escapes. This could lead to legal battles over responsibility with third party technology providers and the companies whose carbon is being stored. In the U.S., they may also find themselves liable to repay any tax credits they received.
If the political pendulum swings again and climate change displaces energy security as a driver of energy policy, companies could be perceived as neglecting their responsibilities and face significant reputational damage. In this scenario, short-term gains from oil and gas production could be flipped and companies could face increased transition risks, ranging from regulatory penalties to loss of market share.
Forward-looking companies are taking a balanced approach, answering the call to produce more oil and gas, while continuing to invest and innovate towards cleaner energy in ways that make sense for their business. Strategies that can help businesses navigate this path successfully include:
If you'd like to learn more about clean energy in the oil and gas sector, please contact our team.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
