Efficiency under low-carbon transition: renewable energy and sustainability insights from largest oil and gas companies

Abstract

This study aims to explore the effects of low-carbon transition policy on both economic and environmental efficiency of the 20 largest OGCs during the period 2010–2019. Using a combined approach of TFE modelling and PLS-SEM, this research analyses the role of various renewable energy sources and corporate sustainability practices. The results show that renewable energy adoption generally improves both economic and environmental efficiency, though the effects vary by source. Biofuels, solar, wind, and hydropower significantly reduce environmental inefficiency, while economic gains are mainly driven by biofuels. Corporate sustainability efforts, particularly strong sustainability policies and active committees, were found to enhance environmental efficiency, highlighting the importance of governance over financial spending. On the operational side, only sustainability policy had a notable positive effect. Policy implications include the need for supportive regulations, incentives for renewable energy investments, and stronger governance frameworks within firms. Encouraging internal sustainability structures and linking environmental goals with performance metrics will be vital for a successful low-carbon transition in the OGC sector.