BP’s Massive Impairment Signals Bad Times for Net-Zero Spending
This week, BP announced it would take a $4–$5 billion hit to its Q4 earnings from winding down its energy transition business. The announcement followed a similar one from Ford, which said in December it would incur $19.5 billion in losses due to a substantial curtailment of its EV plans. These two are far from the only ones losing money on what was, a few years ago, considered a sure-return investment. And that’s bad news for net-zero plans.
BP did not go into detail about the specific nature of the impairments it would book for the fourth quarter of 2025. But the supermajor’s low-carbon business has so far performed underwhelmingly, and this is not an exception among the supermajors. BP has been reducing its exposure to transition industries gradually. The company has made public plans to exit Lightsource BP—Europe’s largest solar power player—and has divested from its onshore wind power business in the United States. Over the past three years, BP has reported impairment charges in the billions every year, with the amounts varying from $5.7 billion in 2023 to $5.1 billion in 2024, and a total of $6.9 billion for 2025.
Of course, not all of that comes from the company’s low-carbon business. Yet this business has failed to deliver in line with expectations, as evidenced by plans to divest and focus on core oil and gas production and processing. BP is not the only one. Shell has also been reducing its presence in the energy transition space, suspending construction of a biofuels plant in the Netherlands, divesting from wind power, and reporting last year that it would take an impairment of between $800 million and $1.2 billion from its low-carbon business.
These developments are far from welcome for the energy transition industries that, until recently, enjoyed virtually unlimited interest, driven by government policies, complete with financial support. Proponents of low-emission energy have argued for years that it is a profitable investment even without subsidies, but it seems that Ford, BP, Shell, and many others are beginning to have doubts.
Investment in wind and solar power generation is still growing, but not as strongly as before. For instance, last year BloombergNEF reported that while global low-carbon energy investment had hit an all-time high over the first half of 2025, specific investment in utility-scale solar power and onshore wind actually declined. In Europe, which boasts one of the fastest rates of growth in alternative energy generation, new additions slowed down last year, notably in Germany, where the cost-of-living crisis is forcing the government to reconsider its top priorities.
Many have blamed President Donald Trump for the corporate world growing cold towards wind, solar, and EVs. After all, Trump’s first order of business was to ban offshore wind and remove subsidies for EVs and set a deadline for certain subsidies, including for things like utility-scale solar installations.
One could argue, however, that this is a long-overdue test for the respective industries—their proponents have argued for years that solar, wind, and EVs are profitable enough to be viable without subsidies. It seems, however, these industries still have a way to go before they become profitable without subsidies, judging by the number of scrapped projects following the Trump administration’s legislative changes and the slump in EV sales following the phaseout of the subsidy program.
Meanwhile, the blackout in Spain and Portugal last year, the surge in negative wholesale electricity prices in Europe, and wind droughts are emerging as important factors to consider when planning investments. A few years ago, these flaws in transition technology were overlooked because there was not enough wind and solar generation to make the flaws impossible to ignore. Now that there is, said problems are becoming impossible to ignore—and they are dampening investors’ appetite for the energy transition.
