The Iran war has sent oil prices and inflation soaring. It has also produced a less visible but no less damaging consequence: The energy transition is sliding further down the agenda of oil and gas companies.

My research, published in Strategic Management Journal, offers hints as to how this could play out. I studied how oil and gas firms behaved during a previous major disruption to their industry – the 2014 oil price crash, which forced them to reckon with excess capacity. Extrapolating from those findings, today’s environment makes the transition to renewables increasingly unappealing for oil and gas firms. Even when firms have strong incentives to reposition, market forces alone are not enough, let alone when companies can instead capture war-generated windfall profits.

What happened a decade ago

After the 2014 price collapse, a small number of oil and gas companies that had already diversified into wind power cut offshore oil and gas spending and redirected it towards wind projects. These firms represented only about 2.5% of the oil and gas companies I studied. But when this minority chose to invest, the impact on offshore wind technology was significant.

Where a wind farm sat within close proximity of established oil and gas assets, post-shock investment rose by as much as US$23 million per project, compared with a pre-shock average of US$6 million. These firms also deployed larger, more powerful and more technologically advanced turbines than their pure-play wind rivals. Several projects demonstrated that oil and gas companies possess transversal capabilities that can push the technological frontier in offshore wind.

Equinor’s Hywind project, the world’s first commercial floating offshore wind farm, illustrates the point. Developed by a firm rooted in Norwegian oil and gas and commissioned near existing North Sea fields, it drew on engineering competencies that a pure-play renewables developer would have struggled to assemble from scratch.

Post-crash conditions converged to pull energy firms towards wind in that period. The industry had idle capacity, lower returns on incremental oil and gas projects, and a pressing need to find productive uses for expensive resources – vessels, engineering and project management expertise, and an entire supply chain that would otherwise have sat idle. Combined with clear government policy favouring renewables, wind power began to look attractive by comparison – at least to some companies.

What’s happening now

Today’s conditions are the opposite. In the wake of the Iran war, the incentive to redeploy resources towards renewables has collapsed. BP has announced a reorganisation of its business units that clearly reverses its push into renewable energy. TotalEnergies is swapping offshore wind projects on the United States East Coast for oil and gas projects in Texas. Left to itself, the market is plainly insufficient to drive the scale of transition required by climate targets, particularly as policy and decision-makers put climate policies themselves on the backburner.

What the industry can do that others cannot

This matters because the capabilities oil and gas firms possess are not easily replicated elsewhere. The next generation of offshore wind projects – floating foundations, production sites far from shore, cables running across seabeds – would benefit enormously from the industrial project management expertise that sits inside the major oil companies and their supply chains.

My research makes one conclusion difficult to avoid: The firms best equipped to accelerate the energy transition are largely not doing so, and today’s price environment gives them little reason to. Generic calls to abandon oil and gas are not only impractical but wasteful, because this industry possesses many of the elements needed to technologically advance and commercially realise renewable projects at scale.

What policymakers need to do

Policy needs to do more than price carbon. It must create conditions in which the energy transition becomes a strategically attractive use of existing industrial capabilities – not merely a box-ticking obligation or a reputational hedge. That could mean targeted incentives for wind and other renewables, such as geothermal, that leverage existing oil and gas infrastructure, or long-term contracts that de-risk the investment case for firms considering redeployment. Recent moves by the European Union to shift individual behaviour are commendable, but policy needs to be far more targeted towards industrial players if it is to drive change at scale.

The oil and gas industry doesn’t need to remain the villain of the energy transition story. In many respects, it is best placed to accelerate the next chapter. At current oil prices, however, this is unlikely. The gap between potential and action is what policy must target.