Analysis: Shell's bumper profits 'have not translated into higher renewables investment'
A leading energy company has released quarterly results showing a profit of $5 billion, and their investments in fossil fuels are 5.6 times more than that in renewable energy sources.
Although Shell recently reported £3.9bn in profits for the quarter, analysis reveals the number of resources they dedicate to renewables and low carbon energy is significantly lower than the capital they continue to invest into fossil fuels and dividends for shareholders.
Common Wealth, a think tank, analyzed that in the three months from April to June, Shell spent 5.6 times more on fossil fuel-related activities than their 'Renewable and Energy Solutions Division.' This was made evident by the firm's recently released quarterly financial results.
Compared to the previous quarter, the oil and gas titan saw a 56 per cent decrease in profits in the three months until the end of June 2023; they made $5bn or £3.9bn. This was mainly due to dwindling fossil fuel prices which had risen after Russia's invasion of Ukraine in the previous year.
Shell has had an incredibly fruitful 18-month period, yet the recent dip in quarterly earnings still adds to this. Much of its income has gone to share repurchases and fossil fuel investments, with only a tiny part directed to renewable energy and changing its business to meet net-zero goals.
Shell's financial report revealed that in Q2 2023, shareholder transfers were more significant than in the prior quarter, amounting to $6.2bn. The oil and gas company will also carry out a share buyback programme of £2.3bn for the next three months.
Wael Sawan, CEO of Shell, declared that the company's second-quarter results displayed a "robust operational performance and cash flows" despite a declining commodity price atmosphere.
At our Capital Markets Day, the CEO declared that the commitment was made to increase the dividend by 15 per cent, which is now being fulfilled. Additionally, they are going beyond expectations with the commencement of a $3bn buyback programme over the next three months and, following Board approval, at least $2.5bn more in the Q3 2023 results.
Sawan stated that the company would remain focused on future share repurchases and attempt to "deliver greater value with fewer emissions".
Sophie Flinders, a data analyst for Common Wealth, commented that Shell's tremendous gains had not been converted to increased investment in its renewable energy sector, despite the increasingly dire climate situation.
She declared that the potential profits that fossil fuels can achieve are too lucrative for oil companies such as Shell to be held responsible for decarbonizing energy. Catastrophes like scorching heat waves in the US, wildfires in the Mediterranean area and flooding in the Philippines and Pakistan prove that the emergency is already here and that these oil giants should be put in the past.
"Those with financial stakes in companies are profiting from the detriment of a habitable atmosphere," she further noted. "It is essential that strong, distinct political measures take place to reduce carbon emissions and avert the most destructive elements of the climate emergency."
Along with Shell, other energy companies have reported record profits recently due to the Russia-Ukraine conflict. This has led to a sharp increase in energy bills for UK citizens and businesses and, consequently, considerable inflationary pressure on the British economy.
Centrica, the parent company of British Gas, reported record-breaking earnings of £969m for the initial six months of 2023. Chris O'Shea, the firm's CEO, declared that these results would enable them to increase their customer support package to more than £100m. Furthermore, he announced a new green investment plan that is anticipated to involve "several billion pounds" of investment and create thousands of new jobs.
The CEO noted that due to their strong balance sheet, they have made significant investments in the energy security of the UK and Ireland, ensuring that their customers have access to energy at an affordable, cleaner cost.
This week, the Norwegian state-owned energy group Equinor released a report on their second-quarter earnings totalling $7.54bn. Meanwhile, Barclays reported their pre-tax profits for the first half of the year as £4.6bn, a notable increase from the £3.7bn reported in the same period last year. Their largest oil and gas field, Rosebank, is owned by Equinor.
Investors and activists have focused their attention on Barclays for financing new oil and gas projects, which the Rainforest Action Network reported amounting to £148bn between 2016 and 2021, placing the bank as the seventh biggest funder of fossil fuels in the world.
Ed Miliband, Labour's Shadow Climate and Net Zero Secretary, spoke out on the Q2 2023 financial results from Shell, Centrica and Equinor, claiming that the massive profits made at a difficult period for households and companies highlighted the "persisting outrage" of the government's neglect to take steps against the money taken by oil and gas firms.
Jeremy Corbyn noted that the Labour Party would take action to eliminate loopholes and implement a windfall tax on oil and gas companies to help reduce the cost of living. He also added that the plan to make Britain a clean energy giant would help lower bills for households and businesses.