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A personal observation on how climate action still ends up tied to Big Oil because of where the capital sits

Last year, I was at a sustainability conference where the event was powered by the Indian Petroleum Corporation. During one of the discussions, speakers mentioned that the markets for oil, coal, petroleum, and other non-renewable energy sources are actually expected to grow and may only peak around 2047.

So the narrative that we are immediately “running out of fossil energy” is not entirely accurate.

At the same time, the transition toward renewable energy is also happening. Over time, we realized that if we can access multiple energy sources and make them cheaper and more efficient, it makes sense to diversify. As a result, both renewable and non-renewable energy systems are being used simultaneously, and together they are powering a large part of today’s technological advancement.

The Transition Isn’t What We Think

An article published by Blume VC last year mentioned that India Energy Week was largely sponsored by oil and gas companies. This year, we are seeing Mumbai Climate Week, Delhi Climate Week, and India Climate Week happening almost back-to-back after the World Economic Forum 2026 in Davos.

If you look at the sponsors of many climate events, some of them are clearly sustainability or clean energy companies. But others come from sectors like defense, natural resources ministries, or large foundations.

Which raises an interesting observation: where is the money for all these initiatives actually coming from?

Often, it is the same capital being rerouted through different channels.

This is not meant as an accusation. It is simply an observation about how capital flows. The same pools of money move across sectors and initiatives, sometimes creating positive impact, sometimes raising complicated questions. But fundamentally, the source of capital is often interconnected.

Not a Shift, but a Coexistence

The article also noted that many large oil and gas companies have announced net-zero commitments for the 2030s or 2040s. At the same time, they acknowledge that they cannot completely divest from fossil fuels in the near future.

However, they also recognize that they have a lot to lose if they do not invest in emerging energy systems such as solar, electric vehicles, hydrogen fuel cells, and other renewable technologies. As a result, many of them are beginning to invest in renewables alongside their fossil fuel businesses.

Interestingly, the same point was echoed at the sustainability summit I attended in October 2025, and it aligns with the Bloomberg reporting from February 2025.

A 2022 article by Neil Raden also explored the debate around big oil investing in green technology. The reactions have been mixed.

For example, Amogy, a startup developing liquid ammonia as a clean fuel for commercial transportation, raised funding in its Series B round with participation from SK Innovation and Aramco Ventures, both linked to the petrochemical industry.

Similarly, Shell has invested heavily in EVs, Hydrogen, and carbon capture and storage (CCS) technologies.

Critics argue that if large oil companies maintain their dominance in the energy sector, they could delay the transition to a green economy while continuing to profit from fossil fuels.

What Was Known—and What Followed

In fact, a 2024 article by the Natural Resources Defense Council  highlights findings from a U.S. congressional investigation showing that Big Oil has actively worked to sustain fossil fuel dependence for decades, despite early awareness of climate risks. As far back as 1959, nuclear scientist Edward Teller warned that carbon dioxide emissions from burning oil could drive global warming, and by 1979, Exxon had internally acknowledged the environmental consequences of continued fossil fuel use—yet the industry continued lobbying and shaping narratives to delay climate action.

The same investigation also found that significant funding from fossil fuel companies has flowed into over 80 academic institutions—including Harvard Kennedy School, Princeton University, Tufts University, the Massachusetts Institute of Technology, and the University of California, Berkeley—often supporting research and narratives that position methane gas more favorably compared to renewable energy, raising concerns about how capital shapes climate discourse.

Supporters counter that companies like ExxonMobil, Shell, and others possess the capital, infrastructure, and global supply chains required to accelerate the transition. They can fund green tech startups and scale emerging technologies faster than smaller actors could on their own.

So the question remains:

Where does sincere investment end, and where does greenwashing begin?

Many oil, gas, and mining companies have now declared net-zero goals, and because most of them are publicly listed, they are required to disclose progress toward these targets and report their milestones.

Whether this leads to a genuine transition or a more complex energy coexistence model is something we are still watching unfold.

A McKinsey report highlights that private capital will be critical for driving the green transition. Many of the most important climate solutions are highly asset-heavy and capital intensive. These include sectors such as carbon management, industrial decarbonization, oil and gas decarbonization, sustainable fuels, hydrogen, circular economy infrastructure, renewable power systems, agricultural and food-system transformation, decarbonizing buildings, and water security and infrastructure solutions.

The challenge is that these types of businesses require significant upfront capital.

Because of this, many capital-intensive climate technologies are not a natural fit for traditional venture capital models. Venture capital typically operates on the assumption of extraordinary growth with limited positive cash flow in the early stages, where startups continue raising capital to scale. However, venture funds themselves have finite capital pools, which limits the scale of investment they can provide.

What these climate technologies often require is capital at the scale typically deployed by private equity firms. Yet private equity investors tend to invest in businesses that are already cash-flow positive, and many of these climate technologies are still considered too early or too risky for that stage of financing.

This creates a structural capital gap.

At the same time, these businesses are also too early to receive significant bank financing, and they cannot rely solely on grants or philanthropic funding to scale.

As a result, many capital-intensive climate technology ventures require large volumes of capital much earlier in their lifecycle, often through a blend of private and public funding mechanisms. In other words, they need more capital earlier, at levels typically associated with later-stage investors.

Another important insight from the report is that existing climate technologies already hold substantial potential to reduce emissions. Estimates suggest that up to 90% of baseline man-made emissions by 2050 could be abated using technologies that already exist today.

However, only about 10% of the required emissions reductions will come from technologies that are fully commercially mature today. Approximately 45% of the required abatements will depend on emerging technologies that have not yet been deployed at scale, such as floating offshore wind turbines and next-generation fuels.

McKinsey also notes that the economic viability and pricing dynamics of many of these technologies remain uncertain, making it difficult for traditional capital markets to fully commit at this stage.

This analysis, published in 2024, highlights a central dilemma in climate innovation:
The world already has many of the technologies needed to reduce emissions, but deploying them at scale requires financial structures that do not yet fully exist.

Where the Capital Is Going

According to a BloombergNEF report from 2024, climate tech companies raised approximately $51 billion in venture capital and private equity funding.

A large share of this funding went into low-carbon energy and low-carbon transportation companies.

The report also notes that the United States has remained the best-funded climate tech startup market for the third consecutive year.

Another key insight from the analysis is that the transport sector — particularly low-carbon transport — continues to receive disproportionately high levels of funding relative to its share of global emissions.

In other words, while transport decarbonization is attracting significant investor attention, some other high-emissions sectors may still be comparatively underfunded in climate innovation.

Funding the Future, Holding the Past

Another article discusses how major energy companies such as Shell, BP, Deveron, Schneider Electric, TotalEnergies, Expansive, BorgWarner, and others have begun strengthening their technology capabilities by diversifying their energy mix and investing in climate tech startups.

The article references a 2024 Climate Tech Investment Trends report by Sightline Climate, which notes that oil and gas companies are increasingly moving toward renewable energy investments. One of the main reasons for this shift is strategic hedging. These companies are investing in clean energy startups to capitalize on future opportunities, while at the same time maintaining—or even expanding—their traditional fossil fuel operations to secure immediate profits.

The report also provides several examples of large energy companies investing in startups focused on renewables, power infrastructure, and climate technologies.

Energy as Strategy

However, the situation is becoming more complex due to rising geopolitical instability, which is beginning to influence energy investments. There is growing strategic competition among the United States, China, and the European Union, particularly around clean energy policy, supply chains, and technological leadership.

As a result, many countries are prioritizing energy security, which has led to increased investments in fossil fuel projects even as governments and corporations continue to promote ESG commitments and clean energy transitions.

In practice, this creates a dual strategy. While companies publicly emphasize sustainability goals and renewable transitions, many are still heavily reliant on traditional energy systems for near-term revenue. At the same time, they are hedging their long-term position by investing in climate tech innovations.

From the perspective of climate tech startups, these large oil and gas companies are also critical sources of capital. Asset-heavy climate technologies—such as infrastructure, energy systems, and industrial decarbonization—require significant capital deployment, often at levels that few other investors can provide.

These large energy corporations possess deep capital reserves and global supply chains, enabling them to fund and scale climate infrastructure ventures that might otherwise struggle to secure financing.

This dynamic is also reflected in the growing number of mergers and acquisitions in the climate tech sector. Many of the major buyouts and acquisitions of climate startups have been carried out by large energy companies.

For example, carbon capture and storage (CCS) technologies, hydropower developers, and grid-scale energy storage providers have increasingly become acquisition targets for major oil and gas firms seeking to expand their energy portfolios.

For instance, ExxonMobil and Chevron are still anchored in oil and gas, but are increasingly investing in carbon capture and critical minerals like lithium and graphite to position themselves in the EV supply chain.

Clean energy is opening up new revenue streams. As demand rises, oil companies are positioning themselves to capture value by investing in technologies like biofuels, renewable natural gas, and hydrogen—areas that align with their existing capabilities. At the same time, renewables are helping reduce operational costs, with companies using solar and wind to power operations and improve efficiency, while also lowering the cost of capital.

At the very extreme end of this transition lies Ørsted, formerly Danish Oil and Natural Gas, which has become a global offshore wind leader—enabled by sustained political and public support.

Large climate-focused funds continue to attract capital, with Brookfield Asset Management raising $20 billion and Blackstone $5.6 billion for energy transition vehicles. The AI-driven surge in power demand has further accelerated investment, particularly in the U.S., while clean energy stocks have remained strong globally. Despite near-term turbulence, investors see this as a sign of the sector maturing—shifting from early hype to long-term, structural demand.

In effect, the same companies that dominate traditional energy markets are also becoming some of the largest financiers and acquirers of climate innovation.

According to a news report by The Economic Times, global investments in green technology reached a record $2.3 trillion in 2025, marking the highest level of funding ever directed toward the energy transition. The figures are based on data reported by BloombergNEF.

Of this total, approximately $1.2 trillion was invested in renewable energy and power grid infrastructure, both of which are becoming increasingly critical as global electricity demand rises—particularly due to the rapid expansion of data centers and AI-driven digital infrastructure.

Another $893 billion flowed into electrified transportation, including electric vehicles and charging infrastructure, driven largely by strong growth in Asia and Europe.

What makes this surge particularly notable is that it occurred despite policy uncertainty and trade-related headwinds across several regions. Many governments are simultaneously attempting to strengthen energy security and domestic supply chains, which has further influenced the direction of energy investments.

The Asia-Pacific region—led by China, India, and Japan—accounted for nearly half of global spending on energy transition technologies in 2025, according to the BloombergNEF report.

This Is No Longer Just About Climate

Since writing this, the global energy landscape has shifted more dramatically. The ongoing U.S.–Israel–Iran conflict has disrupted flows through the Strait of Hormuz—a critical chokepoint that handles roughly 20% of global crude oil, 20% of LNG flows, around 34% of global oil exports, and about 11% of total maritime trade.

Prices have surged, supply chains are tightening, and countries are once again prioritizing energy security over long-term transition goals. At the same time, this instability is reinforcing the strategic importance of renewable energy—not just as a climate solution, but as a hedge against geopolitical risk. What this means for the future of energy is not a clean shift from fossil to renewable, but a prolonged coexistence—shaped by capital, incentives, and geopolitical realities.

In the next blog, I’ll break down how this conflict is reshaping both the fossil fuel and renewable energy industries, and what it could mean for the road to 2030.

Credits:

The article is written by Deepa Sai, and edited using AI.