IF YOU had been scanning the headlines about the fight between clean energy and fossil power, you’d think that the energy transition went through a sharp boom-and-bust cycle during the past five years. If you looked instead at the data, you’d have a very different impression.

The headline version more or less tracks the number of times BlackRock, Inc. Chairman Larry Fink mentioned the word “climate” in his annual letter to investors. An issue that once barely troubled capitalists took center stage briefly in 2020 and 2021 against the backdrop of the COVID-19 pandemic, before vanishing as Russia’s invasion of Ukraine, a corporate backlash against any initiative deemed “woke,” and the restoration of the fossil fuel-loving Donald Trump to the White House banished it from the conversation.

The reality provides less cheer to either side of the debate. The shift toward clean power hasn’t stopped, or even slowed. In many quarters, particularly energy storage, electric vehicles, and solar, it’s accelerating with renewed vigor. Investors aren’t opening their checkbooks to lavish more money on fossil fuels, either. What we’re seeing instead is a continued shift in spending from dirty to clean energy — one that’s too relentless to gladden the fossil fuel sector, but too slow to hit net-zero targets.

The collapse in oil prices amid the policy chaos of the past month certainly doesn’t help. The iShares Global Clean Energy ETF is up 0.8% so far this year, while the Strive US Energy ETF — a crude-focused fund touted by Trump ally Vivek Ramaswamy, and trading under the ticket DRLL — is down 8.4%. The broader S&P 500 index has slumped 12.3%.

But the performance of other open-ended funds gives the lie to the idea that ESG strategies exhibit weak, rather than just middling, performance. About 22.5% of ESG-themed ETFs in the US have had positive returns year-to-date, compared to 21.9% for the market as a whole.

That translates into the place where the rubber hits the road: capital investment. Spending on renewable power held frustratingly steady at around $300 billion annually for many years, and showed little sign of picking up until Fink’s attention had moved elsewhere. It’s since accelerated, and comfortably overtaken upstream spending on developing oil and gas fields.

Despite this, clean energy’s lead is still a modest one, and highly dependent on how you measure it. Is it a “transition investment” when you buy an electric car? If so, is it a “fossil investment” when you buy a conventional one? Many analysts count the former toward the clean energy total, but leave out the latter when they’re calculating fossil figures, which seems arbitrary. BloombergNEF’s comparison shows a race that hasn’t been decisively won, but one where clean power is relentlessly inching ahead.

If you wanted a gut check of this scenario, there’s no better place to look than in the capital allocation decisions of the world’s biggest oil companies. Every chief financial officer must decide to kick money back to shareholders in the form of dividends and buybacks, or to spend it on growth in the form of capital expenditures. Traditionally, petroleum companies have split this roughly two-to-one in favor of capex — what you’d expect in times of growing demand, when shareholders want the promise of cashflows five or 10 years in the future.

The ratio, however, has flipped since 2021. The five biggest independent oil companies are instead sending more money back to shareholders than they’re investing in their own businesses.

(The picture is even more dramatic if you include Saudi Arabian Oil Co. Its massive $124 billion dividend payout last year was about a third bigger than the capex budgets of the five independents put together.)

The pullback on spending is showing up at the other end of the oil majors’ businesses, too: The longevity of the reserves on which their long-term future depends. Traditionally, any company that didn’t hold enough petroleum in its wells to continue current output levels for 10 years was thought to be mortgaging its future. That’s increasingly becoming the norm, however, with Shell Plc, Chevron Corp., and BP Plc all coming in well under 10 years recently, and even the more ebullient Exxon Mobil Corp. and TotalEnergies SE well below historic levels.

This shift suggests that oil and gas is now a sunset industry, managing a long-term, if occasionally profitable, decline. If you’re after growth, you’re much better off looking amid the chaotic ferment of China’s clean energy industry (Longi Green Energy Technology Co., BYD Co., and Contemporary Amperex Technology Co. are all valued at a premium to the CSI 300 index) than the more stolid Western fossil power sector (Exxon Mobil and Chevron are at a discount to the S&P 500).

The energy transition isn’t dead. It just needs to pick up the pace. — BLOOMBERG OPINION