Shell’s 2022 profits are certainly shocking: £32.2bn is double the company’s profit last year and the highest in over a century. But this staggering amount of money (more than twice what Pakistan needs to recover from its devastating floods and enough to cover all the pay rises that striking UK workers demand) is not even the most shocking thing about the company’s announcement. That is instead to be found in how Shell’s boss presented these results to the world.
Standing against a bland backdrop of yellow geometric shapes Wael Sawan, who has been CEO since last month, hailed the historic profits in a YouTube video. “[The world] needs its energy to be increasingly low carbon as we transition to a net-zero future. Shell’s strategy is the right one for this balanced energy transition,” Sawan insisted. “We’re doing our part, working to be the trusted partner of choice of our customers, government and investors.”
Environmentalists, scientists and lawyers point out the hypocrisies built into such remarks, however. Greenpeace activists are currently occupying a ship heading for Shell’s North Sea drilling platforms in protest at the damage the company’s planned new extraction there will cause to the climate. In March last year, meanwhile, the UK law group ClientEarth launched a lawsuit alleging the company had mismanaged its climate risk.
This week Global Witness has pressed the US financial regulator to investigate Shell for overstating its spending on renewable energy. The non-profit group alleges that just 1.5 per cent of the oil giant’s capital expenditure was allotted to genuinely renewable technologies, such as wind and solar, despite Shell’s claim that 12 per cent went to a division called Renewables and Energy Solutions. The result is “pure greenwashing”, Global Witness alleges. In response, the company has said that it is “confident that its financial disclosures are fully compliant with all SEC [US Securities and Exchange Commission] and other reporting requirements.”
Presenting its profits, Shell seemed to engage in a degree of obfuscation. The end of the YouTube video hovers for all of two seconds over a vast page of tiny printed text titled, “Definitions and cautionary note”. Freeze-framing the screen and blowing it up reveals a passage with the following piece of linguistic tight-rope walking: “Shell’s operating plans cannot reflect our 2050 Net Zero target and our 2035 NCF target, as these targets are currently outside our planning period. In the future, as society moves towards Net Zero emissions, we expect Shell’s operating plans to reflect this movement. However, if society is not Net Zero in 2050, as of today there would be significant risk that Shell would not meet this target.”
I asked Shell’s press team for clarity about what this means. At the time of publication they had not responded.
Rishi Sunak’s government needs to step up in the face of such befuddling strategies. Instead of issuing yet more licences for new oil and gas fields, it should start by closing the loophole in its windfall tax that allows fossil fuel companies huge tax breaks in exchange for more drilling. As Ed Miliband, the shadow climate change secretary, and Caroline Lucas, the Green MP, repeatedly stress, these profits could be redirected to help struggling households pay their energy bills.
Change is coming whether oil and gas giants like it or not, however. Last year the EU produced more electricity from solar and wind than from gas, according to analysis by Ember, and the expected rebound in coal use since the invasion of Ukraine was not as big as thought. Both the US and EU are seizing the green energy advantage. Through the Inflation Reduction Act in America and the Green Deal Industrial Plan in Europe, governments are funnelling investment towards green infrastructure where the fossil fuel giants are not.
From loopholes in the windfall tax to the lack of a green infrastructure plan, therefore, Sunak’s government is complicit in the fossil fuel industry’s failure to reform. The Prime Minister may say he “understands” people’s anger over the record profits at a time of soaring energy bills, but unless he adds actions to his words, they risk being as empty as those of the oil giants he defends.