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BP and Shell: Big Oil risks big embarrassment as profits roll in during COP26

London Evening Standard

BP and Shell: Big Oil risks big embarrassment as profits roll in during COP26

By Lucy Tobin
World leaders this week gathered in Glasgow to discuss tackling climate change, which is driven in part by fossil fuel emissions. At the same time super majors like BP and Shell have announced billions in profits thanks to surging oil prices.

The timing was impeccable: as 30,000 COP26 delegates listened to UN Secretary-General António Guterres warn that “our addiction to fossil fuels is pushing humanity to the brink… either we stop it — or it stops us,” BP hurled billions of dollars at its investors via its third-quarter results.

The oil major pledged to return another $2.25 billion via buybacks and dividends this week thanks to Brent oil trading at $85 dollars a barrel, its highest since 2014. Boss Bernard Looney admitted BP was “a cash machine at these types of prices.”

Over at rival Royal Dutch Shell, Ben van Beurden, chief executive of the world’s ninth-biggest greenhouse gas emitter, begged Glasgow to “become the city where real progress is made in setting the world on a path to net-zero emissions.” Last week Shell posted a $4.13 billion third-quarter profit and record cashflow thanks to soaring oil and gas prices.

All are benefiting from a resurgent oil price. Demand has surged as economies reopen. Bank of America this week predicted oil could hit $120 a barrel by next June as demand continues to outstrip supply.

The huge sums being made by oil companies risk embarrassment as world leaders gather in Glasgow to talk about saving the planet. Fossil fuels are a big part of the problem.

“Net zero means huge declines in the use of coal, oil and gas,” the International Energy Agency said in a landmark report earlier this year. “This requires steps such as halting sales of new internal combustion engine passenger cars by 2035, and phasing out all unabated coal and oil power plants by 2040.”

Behind the COP26 platitudes, a snapshot of the world’s ongoing oil addiction came from Joe Biden’s motorcade of ‘Beast’ limousines. Cars were pictured guzzling petrol at one of BP’s Scottish forecourts before driving the US President back to talks about fossil fuel-weaning.

Oil majors like BP and Shell argue they are using their scale and huge profits to invest in new green technology that will one day save the planet. They add that turning off the oil taps and gas pipes now would simply plunge the world into darkness. Renewables don’t currently have the scale needed to meet the world’s energy needs and a failure to recognise the continuing importance of oil and gas can create problems, as the UK’s recent energy crisis has shown.

But activists say oil companies are moving too slowly and any good intentions are outweighed by the impact of continued oil and gas emissions on the planet. The International Energy Agency estimates that major oil and gas companies are spending only around 4% of capital expenditure on renewables (up from 1% in 2020).

“Over the past two years, especially since the start of the Covid-19 crisis, we’ve seen a flurry of new, confusing, deliberately obfuscating climate commitments from oil and gas majors,” says David Tong at environmental campaign group Oil Change International. “None of the oil majors have sustainability plans that are remotely in line with the bare minimum for [limiting global warming to] 1.5 degrees – but they’re all engaged in greenwashing.”

Those customers include global leaders, some of whom travelled COP26 via private jet allowing them more space to think about climate change.

Leaders are keenly aware of the potential charge of hypocrisy and the potentially toxic association with oil majors.

UN-hosted climate gatherings have previously given Big Oil places on the podium: in 2018 a Shell boss boasted that his firm had helped write the Paris climate agreement, saying: “We can take some credit for the fact that Article 6 is even there at all”.

This time around, Shell’s van Beurden said: “We were told that we were not welcome.”

Shell and BP declined to comment.

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