United Nations Secretary General Antonio Guterres last week didn’t mince his words: He urged all governments to tax the excessive profit of fossil fuel companies from the current price hike, adding that this “grotesque greed” is punishing the poorest and most vulnerable people”.
On the same day, one of the most prominent energy giants Shell announced it would give its workers a one-off 8% bonus after the company reported record profits from high oil and gas prices.
While you can admire Shell for rewarding its workers at this time, let’s remember that its profits in the April-to-June period hit a record £9bn, which equates to $A15.68bn. Couldn’t it do more than that with its recent gains?
Its rival BP has also reported its biggest quarterly profit for 14 years, with underlying profits of £6.9bn (that’s $A12.02bn).
For its part, BP has said it would increase its payments to shareholders by £3.6bn (A$6.27bn) in the next three months. Those shareholders – mostly in the UK or Europe, we presume – include most pension funds.
These numbers sit uncomfortably alongside new estimates that average annual energy bills in the UK will cost over £3,600 (A$6,272) a year.
It’s clear that both Shell and BP – and all fossil fuel companies for that matter – have profited from soaring internationally-set oil and gas prices as a rise in post-Covid global demand has been exacerbated by attempts to cut Russia out of the international energy market.
Together, four of the biggest energy firms – Exxon, Chevron, Shell and TotalEnergies – earned nearly US$51bn in the most recent quarter, which is almost double what they made in the same period last year.
Naturally, Guterres’ concern is for the vulnerable households in many countries which are grappling with higher energy bills, but by urging all governments to tax these excessive profits, is he right in recommending that these “windfall taxes” all go in the same direction?
Surely, he should be addressing the much bigger issue and encouraging the same fossil fuel companies to invest much more of their recent gains into renewable energy to help industries and countries get to net zero before it’s too late?
Most of the fossil fuel companies have been to trying to convince the rest of us for some time that they are seriously addressing the transition to a clean energy future.
Shell, for its part, says it’s committed to reduce absolute emissions from its operations and the energy used to run them by 50% by 2030, compared with 2016 on a net basis. By the end of 2021, the company says it’s made a reduction of 18% and a number of significant moves into low-carbon fuels, solar and wind power, and hydrogen.
It is not easy to find precise figures but in February last year, the Anglo-Dutch oil giant said it would invest up to US$6 billion per year in green energy after its oil output peaked in 2019.
But look at the company’s website and you will find many more examples of projects Shell is currently involved in which have absolutely nothing to do with a “renewable energy revolution”. Look at the company’s major projects and you cannot help but notice that most of them are concerned with oil and gas exploration and production.
BP or bp – as they seemingly want to l be in lower case these days – has talked up renewables before. So much so that it famously rebranded itself as “Beyond Petroleum” in the early 2000s and launched a solar business, only to scrap it a few years later to focus more on its fossil fuels.
Meanwhile, lower case bp says it will spend US$13 billion on all projects this year, with US$2 billion earmarked for low-carbon investments.
It also says it is on track for its target of having developed 20GW of renewables by 2025 and aims for 50GW by 2030. It remains confident of achieving 8-10% levered returns for these investments.
Bernard Looney, Chief executive officer, bp, puts it this way:
“Today’s results show that bp continues to perform while transforming. Our people have continued to work hard throughout the quarter, helping to solve the energy trilemma – secure, affordable and lower carbon energy. We do this by providing the oil and gas the world needs today – while, at the same time, investing to accelerate the energy transition.”
All well and good in a perfect world, but it’s far from perfect these days. When we turn to the International Energy Agency (IEA), in its latest World Energy Investment 2022 – dated June 2022 – it’s a different story.
“Investment to bring more clean and affordable energy into the system is rising, but not yet quickly enough to forge a path out of today’s crisis or to bring emissions down to net zero by mid-century.”
IEA calls this “a critical but formidable challenge” if the world is to have any chance of limiting global warming to 1.5°C.
“Without a massive surge in spending on efficiency, electrification and low-carbon supply, rising global demand for energy services will simply not be met in a sustainable way.”
We know it’s not all down to the fossil fuel companies to respond to this challenge on their own, but as many of us think they are largely responsible for getting us into this “emissions mess”, they could at least show more determination to mend their ways and come clean.
Admittedly, it’s a bit naughty to hark back to another age, but some of us might recall a rather unusual statement from the UN top Climate Change official Christiana Figueres at the time (May 2015), who said it was time to stop “pointing the blaming finger at fossil fuel companies”.
She told business leaders in Barcelona in May 2015 – according to Ed King’s report in Climate Home – that their technical expertise and “amazing power” can help to slow the rise of greenhouse gas emissions.
She further urged that fossil fuel companies should not be demonised for their contribution to climate change, but embraced as part of the solution, as “bringing them with us has more strength than demonising them.”
Not sure that UN or IEA would agree that fossil fuel companies have done that much since 2015 to slow emissions in any significant way. But there’s still time.
They can step forward and use their “amazing power” to tell us what they’re up to.
How they are committing their recent profits – and anything else they have to spare – to help drive the renewable energy revolution.
Ken Hickson is a Singapore-based author and sustainability specialist. He is the author of seven books, including “The ABC of Carbon” (2009) and “Race for Sustainability” (2013).
