Shell invested 5 times as much in in oil and gas as "Renewables and Energy Solutions" in Q3, new analysis finds

At the same time, shareholder payouts were 7 times as much than the investment in "low carbon" segment in Q3.
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Shell invested 5 times as much in in oil and gas as "Renewables and Energy Solutions" in Q3, new analysis finds

At the same time, shareholder payouts were 7 times as much than the investment in "low carbon" segment in Q3.
Executive Summary

Analysis from the think tank Common Wealth finds Shell reported profits of $6.2 bn (£ £5.1 bn) in its Q3 2023 results.  

Shareholder payouts totalled $5 bn (£4.2 bn). The firm also announced an increase in its share buybacks for the next quarter to $3.5 billion, bringing the total announced shareholder distributions for 2023 to ~$23 billion.

The analysis adds to the mounting evidence that despite its rhetoric on net zero, Shell is doubling down on fossil fuels as the climate crisis intensifies. The new figures show Shell's investment in “Renewables and Energy Solutions” division pales relative to its investment in fossil fuels and what distributes to shareholders.

In Q3, Common Wealth found Shell invested times as much in fossil fuels ($3 bn) as in its “Renewables and Energy Solutions” segment ($0.66 mn). This segment includes a range of investments including renewables, hydrogen and carbon capture.  

The analysis comes after BP released its Q3 results on Tuesday, with the energy giant investing 11 times as much in oil and gas as its "low carbon" segment.

In total, Shell has paid shareholders $189.6 bn since 2010, while BP has paid shareholders $105.1 bn since 2010. Together, the two fossil fuel giants have paid shareholders $294.7 bn.  

Over the summer, the government re-announced plans to issue 100 new fossil fuel exploration licenses in the North Sea and approval was granted for the Rosebank oil field, the largest in the UK. However, according to the campaign group Uplift, an estimated 80% of North Sea oil is exported overseas, highlighting the limited domestic benefits of the government's policy.

Previous Common Wealth analysis has also highlighted the growth of private equity-backed firms and overseas state-owned entities in North Sea oil and gas, with countries like the UAE and China present in the North Sea, among others. Forthcoming research from Common Wealth will track the changing pattern of ownership of North Sea oil.  

The surge in profits and shareholder payouts from fossil fuel giants amidst an energy-driven cost of living crisis raises critical questions about the structure and role of the for-profit corporation in driving a secure and fair transition to a clean energy future.  

Mathew Lawrence, Director, Common Wealth, said:

When someone shows you who they are, believe them. Today’s results have proved yet again that Shell are a fossil fuel company first, renewable investor a very distant second. Their strategy is clear: double down on oil and gas to maximise shareholder wealth, regardless of the consequences for a boiling planet or hard-pressed households. The evidence is incontrovertible. The energy giants will not change course unless the rules that shape their operation are transformed so their investments align with the needs of people and planet.  

Chris Hayes, Senior Analyst at Common Wealth, said:

The last two years have locked us into two mutually reinforcing distributive and ecological crises, with oil majors hoovering up cash from the rest of the economy and using to consolidate their position and hasten climate breakdown.

All net zero pathways demand fossil fuel majors wind down their existing dirty assets and scale up renewables. Yet as we see, as long as the stewards of these assets remain answerable to shareholders, the pace of both will remain glacial. As Bernard Looney reiterated at the last earnings call, "our returns thresholds are sacrosanct". Little else is.  

Using cash windfalls to buy up existing low- carbon companies should not be mistaken for additive investment in decarbonisation and should be recognised for what it is — consolidation of market power whose consequences are purely distributive.

Melanie Brusseler, Senior Researcher at Common Wealth, said:

Malcoordination of the energy transition can be told as a tale of two energy firms: in the largest deal in its history, last month Chevron acquired oil and gas producer Hess—a $53 billion bet that demand for fossil fuels will remain steady for decades. This comes mirrored across the industry as companies invest energy crisis super-profits in an acquisition frenzy. Chevron’s Chief Executive says that he sees no imminent peak in oil demand, painting himself as a realist among what he suggests are a growing band of environmental ideologues. The International Energy Agency, the west’s oil watchdog, is not “remotely right” that all fossil fuels, including oil and gas, will see a peak in demand before the end of this decade, according to Wirth.

Meanwhile, the German government is preparing a bailout of Siemens Energy, who has seen its shares fall by nearly 70% since June when it announced losses by its wind turbine arm Siemens Gamesa due to technical problems, input inflation, and boom bust order cycles downstream of disorganized private investment in clean generation.

For-profit energy firms are structurally unable to orchestrate the phaseout of fossil fuels and the rapid, large- scale rollout of a clean energy system. Instead, we need public energy companies freed from the profit imperative that can invest and divest to meet social goals.  

Sophie Flinders, Data Analyst at Common Wealth, said:

Today’s results tell us one thing: Big Oil is one of the biggest barriers to the clean energy transition. Shell has failed to substantially increase their renewable capacity and instead diverted investment into new fossil fuel extraction and the expansion of their existing oil and gas operations. This makes sense to them. Their oil and gas segments are profitable and provide significant and reliable returns. But this does not make sense for protecting the planet from the worst of climate breakdown.    

Full Text
Shell invested 5 times as much in in oil and gas as "Renewables and Energy Solutions" in Q3, new analysis finds