Home Sustainability and Eco Friendly initiative news Analysis: Shell’s bumper profits ‘have not translated into higher renewables investment’

Analysis: Shell’s bumper profits ‘have not translated into higher renewables investment’

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Analysis: Shell’s bumper profits ‘have not translated into higher renewables investment’


Shell’s investment in renewables and low carbon energy pales in comparison to the amount of capital it continues to plough into fossil fuels and shareholder payouts, even despite the oil and gas giant announcing £3.9bn in quarterly profits today, fresh analysis shows.

The latest quarterly financial results announced by Shell today show that the firm spent 5.6 times more on fossil fuels than on its ‘Renewable and Energy Solutions Division’ during the three months from April to June, according to analysis by the think tank Common Wealth.

Overall, the oil and gas giant raked in $5bn – or £3.9bn – in earnings during the three months to the end of June 2023, a 56 per cent drop in profits compared to the previous quarter, largely due to falling fossil fuel prices which had spiked last year after Russia’s invasion of Ukraine. 

But the fall in quarterly earnings still adds to what has been monumentally profitable 18 months for Shell which – like many of its fellow oil majors – continues to plough much of its record profits into share buy backs and continued investment in fossil fuels, with only a fraction going to renewable energy and transitioning its business in line with net zero.

The latest financial results announced today by Shell show shareholder transfers for Q2 2023 stood at $6.2bn, exceeding profits in the past quarter, while the oil and gas company also announced a new share buyback programme of £2.3bn for the coming three months.

Announcing today’s results, Shell CEO Wael Sawan hailed the firm’s “strong operational performance and cash flows in the second quarter, despite a lower commodity price environment”

“Today we are delivering on our Capital Markets Day commitment of a 15 per cent dividend increase,” he said. “We are going further on our buyback guidance by commencing a $3bn programme for the next three months and, subject to Board approval, at least $2.5bn at the Q3 2023 results.”

Sawan said the firm would also continue to prioritise share buy backs going forward, while claiming the firm would continue to “deliver more value with less emissions”.

However, Common Wealth’s data analyst Sophie Flinders said Shell’s windfall profits had not translated into higher investment in growing its green energy business, even despite the worsening outlook for the climate.

“In short, there’s too much money to be made in fossil fuels to place the responsibility of decarbonising energy on oil giants like Shell,” she said. “Deadly heat waves in America, wildfires across the Mediterranean and floods in the Philippines and Pakistan show that the crisis is already upon us — and that oil giants need to be consigned to the dustbin of history.

“Shareholders are lining their pockets at the cost of a habitable climate,” she continued. “Clear, ambitious political interventions are needed to decarbonise energy and avert the worst of the climate crisis.” 

Shell is not the only energy firm to report yet more bumper profits this week in the wake of Russia’s invasion of Ukraine, which has seen UK households and businesses hit with soaring energy bills and rendering the UK economy with sticky inflation. 

Today British Gas owner Centrica also posted a record profit of £969m for the first six months of 2023, with chief executive Chris O’Shea claiming that results would allow the firm to increase its customer support package to more than £100m. He also touted a new green investment strategy promising “several billion pounds” spending towards the energy transition, which he said would create thousands of new jobs.

“Our robust balance sheet has allowed us to invest heavily in the UK and Ireland’s energy security and will make sure that our customers have cleaner energy at the right price,” he said.

Norwegian state-owned energy group Equinor – the firm behind the UK’s largest undeveloped oil and gas field Rosebank – also announced Q2 earnings of $7.54bn this week, while elsewhere banking giant Barclays this morning also revealed its pre-tax profits reached £4.6bn for the first half, compared to £3.7bn for the same period last year.

Investors and campaigners have increasingly targeted Barclays over its financing of new oil and gas, with the bank reporedly providing £148bn in fossil fuel financing between 2016 and 2021, making it the world’s seventh largest funder of fossil fuels globally, according to the Rainforest Action Network.

Responding to Q2 2023 financial results from the likes of Shell, Centrica and Equinor, Labour’s Shadow Climate and Net Zero Secretary Ed Miliband, said the sheer size of the profits at such a challenging time for homes and businesses demonstrated the “continuing scandal” of the government’s failure to act on windfalls pocketed by the oil and gas companies.

“Labour would act to close loopholes and bring in a proper windfall tax on oil and gas giants to help tackle the cost of living crisis, alongside our plan to make Britain a clean energy superpower so we can lower bills for families and businesses,” he said.

 

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