Source: French to English Tester Published on: 2026-05-21
Source: The Conversation – France (in French)– By Fernanda Arreola, Professor of Strategy and Entrepreneurship, ESSCA School of Management
Can large oil companies such as Shell really accomplish their energy transition? Behind the difficulties lies the central notion of “carbon lock-in.” This is first related to the lifespan of oil infrastructures, but a second type of lock is superimposed on it, linked to the expectations of the markets and shareholders.
Why is the energy transition progressing so slowly, even though low-carbon technologies exist, are becoming less costly, and are gradually gaining market shares? This current question finds an answer in the foundational work of Gregory C. Unruh, who introduced in the early years2000the concept ofcarbon lock-in, or carbon lock-in in French.
According to him, our economies are locked into a fossil trajectory, not because of the absence of alternatives, but because the technologies, institutions, and behaviors enabling the conditions for this trajectory mutually reinforce each other,creating systemic inertia. In other words, thecarbon lock-in, it is when a system continues to operate, not because it is optimal, but because it is already in place.
This theoretical framework has since been enriched by numerous works, notably those ofSteven J. Davis, which shows how existing infrastructures condition future emissions and make any shift costly and uncertain. In this perspective, transforming the energy system does not simply consist of innovating,but to undo a set of dependencies accumulated over time. This perspective takes on a particular resonance in the case of Shell, which we analyzed in ourstudyrecent.
In the early 2020s, the company faces increasing pressure. Strengthened climate regulations, heightened societal expectations, andunprecedented judicial decisions, notably in the Netherlands. These elements correspond to what the literature identifies as exogenous shocks, external situations capable of destabilizing a system.
Shell’s transition then presents itselfa priorias compliant with the theory, but it quickly becomes apparent that there is a second-order carbon lock-in, related to markets and strategic orientations, particularly shareholder expectations. Explanations.
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Shell: a transition that hits two barriers
From 2015 to 2024, Shell is making significant investments in low-carbon technologies such as hydrogen, biofuels, and carbon capture. This is particularly the case for its Rotterdam refinery (Netherlands), known as the refineryShell Pernis. At first glance, the company seems to be starting an exit fromcarbon lock-in.
Shell seems to be starting to reach a new level. Low-carbon activities are gaining importance, the company’s strategy is evolving, and a reduction in dependence on hydrocarbons appears feasible. Our article shows that this phase corresponds to a major unlocking. The technological and infrastructural constraints that define thecarbon lock-in, then begin to diminish. It is here that, for the first time, the material conditions for a transition become truly plausible.
G. A. Unruh et al., 2026,Provided by the author
But this dynamic does not stabilize. Very quickly, another form of constraint emerges: that of the financial markets. The profitability expectations of investors, stock market valuation logics, and governance models exert strong pressure on strategic choices.
From the investors’ point of view, fossil activities often remain the most profitable in the short term. Low-carbon investments, which are more uncertain and take longer to pay off, struggle to compete. Gradually, Shell’s strategy is rebalancing. Climate ambitions are being adjusted, and traditional activities are regaining a central role.
This finding reminds us that the success of the transition largely depends on existing organizations, institutions, and practices. However, the new activities here rely on the infrastructure, skills, and value chains inherited from oil. In this case, the transformation does not replace the existing system; it overlaps with it.
This observation confirms a key point of our research: theindustrial transitionsare rarely ruptures, but rather progressive reconfigurations.
The real difficulty? Getting out of the second carbon lock-in
It is within this tension that lies the main contribution of our research. We show, indeed, that breaking out of carbon lock-in is not enough. Even when technological constraints weaken, a new lock-in can emerge, of a financial and strategic nature. We have called it “second-order carbon lock-in”second-order carbon lock-in).
This second lock-in no longer rests solely on existing infrastructures, but also on economic factors such as shareholder expectations, profitability requirements, and governance structures. In other words, even when the transition becomes technically possible, it can remain economically difficult.
G. A. Unruh et al., 2026,Provided by the author
This distinction between the two forms of carbon lock-in suggests that climate policies cannot be limited to supporting innovation or adapting the regulations that apply to infrastructure. They must also transform the economic and financial incentives that guide corporate decisions. Without this, transition efforts risk remaining partial, unstable, or even reversible.
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The history of Shell is not an exception. It reveals a more general dynamic, that of an energy transition that is progressing, but remains constrained by the deep-seated logics oflegal systemand economic. Exit fromcarbon trapdoes not therefore only consist of changing technology. It is also necessary to change therules of the game.
The case of the Shell Pernis refinery highlights both the effectiveness and the limits of traditional decarbonization measures. The primary interventions aim first to reduce theinternal inertias within techno-institutional complexes(that is to say systems including both public and private actors who participate in the dissemination of new technological standards). They are essential to initiate the transition, but remain insufficient when companies are embedded in transnational systems, notably global financial markets and international competition, which can reintroduce new constraints.
This has two very concrete consequences:
For public decision-makers, this implies going beyond national frameworks and aligning climate policies with the evolution of financial governance. Better coordination with institutions such as the European Central Bank (ECB), the European Securities and Markets Authority (ESMA), or the International Organization of Securities Commissions (IOSCO) appears necessary to limit misalignments between climate objectives and market logic. Complementary instruments, such as long-term contractual frameworks or protections against certain financial pressures, could also support companies in transition.
For companies, the transition cannot be reduced to a local technological or regulatory issue. This is all the more true for multinational firms, which operate within several national frameworks simultaneously and must manage multiple and often conflicting expectations, particularly from their investors. Transition investments require specific strategies, capable of enhancing their long-term profitability while limiting short-term pressures.
The authors do not work for, do not advise, do not hold shares, do not receive funds from any organization that could benefit from this article, and have declared no affiliations other than their research institution.
–ref. The “carbon lock-in,” or why major oil companies like Shell are abandoning their decarbonization projects –https://theconversation.com/the-carbon-lock-in-or-why-major-oil-companies-like-shell-give-up-their-decarbonization-projects-283288