As profits rise...
Oil and gas firms to invest £250bn in low carbon energy
Oil and gas firms plan to invest up to £250 billion on low carbon energy projects by 2030, according to research by Offshore Energies UK (OEUK).
The trade group has assessed the spending plans of companies operating in UK waters over the remainder of the decade and estimates that 60% will be allocated to building renewable and low carbon energy infrastructure.
The research is published as Shell today announced record first quarter profits of $9.13bn (£7.3bn) and BP earlier this week posted a doubling of underlying profits. Both prompted further calls for a windfall tax on energy company profits.
Industry leaders insist that the level of profit depends on oil prices, and that only by making strong returns can they invest in the clean energies of the future.
Shell chief executive Ben van Beurden said: “Generating value through strong earnings and cash flow, coupled with maintaining a healthy balance sheet and continuing the disciplined delivery of our strategy, are crucial for Shell to play a leading role in the energy transition.
“This allows us to support our customers as they shift to cleaner energy. It’s also the best way for us to contribute to the security of energy supplies.”
OEUK says investment by the oil majors are just a fraction of what is needed for the UK to reach net zero – the point at which it generates no overall greenhouse gas emissions. The UK government’s target for achieving this is 2050.
The Office for Budgetary Responsibility (OBR) has put the cost of reaching net zero at £1.4 trillion and has said £1tn of this must come from UK companies.
BP announced plans to invest up to £18bn in the UK’s energy system by the end of 2030. Most of its plans are for offshore wind and other low-carbon projects such as mass hydrogen production and CO2 capture.
Shell has said it will invest £25bn into UK energy systems over the next decade with 75% of the investment in low-carbon products and services including offshore wind and hydrogen production.
OEUK said low carbon projects include £20bn in mass hydrogen production and carbon capture transport and storage plants.
Ross Dornan, OEUK’s market intelligence manager, who oversaw the research, said: “The UK’s energy companies are leading perhaps the most ambitious and far-reaching energy transition our nation has ever seen.
“They are providing the UK with energy now, mostly from oil and gas, while working to replace those fuels with low-carbon alternatives.
“It means we must invest in our existing oil and gas reserves to protect the UK against the global prices spikes and possible shortages generated by crises like Russia’s invasion of Ukraine, while also spending billions on the energies of the future.
“The amounts being spent are far greater than any sums that might be raised by a windfall tax but what policymakers need to understand is the sheer scale, not just of the investments but also of the ambition.
“The UK could become a world leader in low-carbon and renewable energy – but to achieve that we need long-term thinking by planners and policymakers.
“Above all we need a stable and predictable set of rules governing the way the industry is taxed and regulated.
“We are proud to pay our taxes and support the UK’s net zero targets but if those rules keep changing it will undermine confidence, drive investors away and make the UK’s net zero targets impossible to achieve.”