Energy companies disclose substantial capital expenditure commitments to low-carbon activities. The disclosed numbers are large, but the definitions are inconsistent across companies, making peer comparison genuinely difficult. Some companies include efficiency improvements to existing fossil fuel infrastructure in their transition capex. Others include only genuinely new renewable capacity. The difference in headline figures between these approaches can exceed 40%.
A framework for normalisation
We have developed a normalisation framework that strips disclosed transition capex back to three categories: genuinely additive renewable capacity, carbon capture and storage on existing assets, and efficiency improvements. Applied to the 20 largest European energy companies, the framework produces normalised transition capex figures that differ from disclosed figures by an average of 28% — with the direction of the difference depending on each company's disclosure approach.