Decarbonization in Energy: how to transform the essential without slowing down competitiveness

The oil and gas industry accounts for about 55% of global CO₂ emissions, including both direct and indirect emissions (scope 3), according to the International Energy Agency (IEA). This figure underscores an obvious paradox: as the world moves toward a low-carbon economy, emissions-intensive sectors – the so-called hard to abate – remain essential to energy supply, mobility, heavy industry and the global economy as a whole.

Energy transition: the role of oil and gas in redesigning the model

The energy transition does not represent a radical break with the conventional model, but a systemic transformation. Oil and gas companies can play a key role as accelerators of this evolution, and not just as its inevitable victims. Over the past five years, we've seen large energy companies begin to diversify their portfolios, increasing their investments in renewables, advanced biofuels, clean hydrogen, carbon capture and storage (CCS), and electric car charging infrastructure. This diversification not only responds to regulatory and climate imperatives, but also to a long-term strategic vision that recognizes that sustainability will be the central axis of future competitiveness.

According to BloombergNEF's Energy Transition Investment Trends 2025 report, global investment in low-carbon technologies reached 2.2 trillion dollars in 2024, with a growing share coming from companies traditionally linked to the oil and gas industry, in line with their diversification strategies. That same year, just over 1 trillion dollars was allocated to fossil fuel investments. This marks a turning point: It is not just about mitigating the impact, but about redesigning the sector's structural role in a climate-neutral economy.

Decarbonization strategies: from efficiency to disruption

The roadmap to decarbonization is being built on three main fronts:

Decarbonization of operations (scope 1 and 2): includes energy efficiency, electrification of processes and migration to renewable sources for industrial self-consumption. The IEA estimates that by implementing best practices, direct emissions have been reduced by as much as 30–50% over the past 10 years. In addition, an increasing number of companies are taking action on two of the most critical sources of emissions within their operations: Methane and routine flaring. Thanks to advances in leak detection and new capture technologies, many facilities have succeeded in significantly reducing their methane emissions.

Energy portfolio transformation: an increasing number of companies are replacing or complementing their offer with second-generation (2G) biofuels, green hydrogen, and products derived from the circular economy. These solutions make it possible to address sectors that are difficult to electrify, such as aviation, maritime transport, and heavy logistics.

Addressing scope 3 emissions: collaborative innovation with industrial clients to reduce the carbon intensity of their value chains is one of the most promising (and complex) pillars. This is where solutions such as the use of clean energy supply contracts (PPAs), carbon consulting and new emission offset models (such as reforestation) come into play.

The financial impetus: sustainable capital and ESG criteria in the transition

Real change will not come only through technology. The transformation of the oil and gas industry toward a low-carbon model also requires significant changes in corporate governance, with sustainability becoming an integral part of the strategic core. The number of companies that integrate ESG criteria in the evaluation of projects and investment decisions has grown by 40% between 2020 and 2024 (source: World Economic Forum – Energy Outlook 2025).

Along with corporate culture, the mobilization of sustainable capital is essential. Sustainability-linked bonds, ESG-linked loans and hybrid financial structures are facilitating the transition. In 2024 alone, sustainable debt issuance by the energy sector reached 139 billion dollars, marking an all-time record according to the Climate Bonds Initiative.

Opportunities and challenges: Decarbonizing without deindustrializing

The great challenge for the oil and gas industry is to maintain its competitiveness and production capacity, while radically reducing its carbon footprint. This implies operating in an uncertain regulatory environment, with geopolitical tensions, fluctuations in demand and growing public pressure. But it also opens up opportunities for the most agile and strategic players.

Europe, for example, aspires to be a hub for renewable hydrogen production and carbon capture. Latin America, with its potential in clean energy and biomass, is emerging as a key player in sustainable biofuels. And the Middle East is beginning to invest massively in energy diversification, seeking to consolidate its leadership beyond crude oil.

Leading the transition from within

The energy transition will not be viable without the active involvement of the oil and gas industry. Far from representing an obstacle, this sector has the capacity to be a vector of profound transformation if it manages to reinvent itself and redefine its role in tomorrow's economy. Decarbonizing without sacrificing competitiveness is not a contradiction; it is a necessary strategic decision.

Companies that understand this not as a threat, but as a structural opportunity, will not only survive. They will lead.

At BBVA CIB, we work together with leaders in the energy sector to turn the challenges of the transition into opportunities for growth, transformation and sustainable impact.