Experts tell the Daily Caller News Foundation that two of Europe’s biggest energy companies are shifting from green energy to their core oil-and-gas businesses. This move signals a willingness by these firms to accept political risks, as oil and natural gas will continue to be a major source of revenue.
Bloomberg reports that Shell and BP, a fellow U.K. oil firm, have recently decided against further reductions in oil production, to restore investor faith as their renewable ventures are struggling. The moves were met by criticism from climate-focused shareholders – activist investors and protesters attempted to storm Shell’s annual meeting in May – but the companies will likely stay the course, despite criticism.
Kish stated that “smart energy executives who are looking to the long-term recognize that politics is fleeting.” “Politicians are often distracted by the latest shiny object, but with real business sense and knowledge of engineering and science it’s clear that real energy is good for business. It’s what people want and need.”
The Wall Street Journal reported that Shell CEO Wael Sawan referred to his company’s change as a “fundamental cultural shift” in a presentation on Wednesday intended to attract investors, particularly American ones, who would support the company. Shell’s performance in 2022 was poor compared to Exxon Mobil, Chevron and other U.S. giants. Sawan made catching up a top priority.
BP took a similar approach, increasing its investments in oil and natural gas while slowing down the development of greener alternatives.
Bernard Looney, BP’s Chief Executive Officer said: “At the very end, we are responding to what the society wants.”
In a DCNF statement, Ryan Yonk of the American Institute for Economic Research described green investments as “green-washing”, which companies would rather see as “a cost of doing business” than as an actual driver of profits. Reuters reports that BP’s shares soared more than 15 percent in the days after its February announcement to reduce its hydrocarbon production by only 25%, instead of the original target of 40 percent.
Yonk stated that “the profitability of these kinds of ventures is usually much lower than the market-driven growth and innovation because they are defensive by nature, and not driven by consumer demand. Instead, they’re driven by actual regulatory action or by the expectation of it happening,” Yonk explained. Fossil fuels will continue to be a major part of the energy production in America and around the world for the foreseeable.
Myron Ebell is the director of the Center for Energy and Environment, Competitive Enterprise Institute. He told DCNF that while political pressure in the past may have led companies to green projects, the current political climate is more favourable for oil and gas. Ebell explained that the Russian invasion of Ukraine triggered an energy crisis both in the U.S.A. and Europe. This gave companies “strong incentives” to pump out more oil, while also giving them political cover to “be more candid” about such investments.
Ebell told DCNF that “the EU’s major oil companies have a harder time than America trying to stay politically correct, while continuing to provide the energy needed by the world and making enough profits to satisfy investors and invest in new manufacturing,” he said. They are confronted with the fact that renewables provide little energy and at a high price.
Shell’s Wednesday press release reaffirmed its commitment to achieving net-zero emission levels by 2050, but it added in the footnote that this change would be dependent on social factors. Shell said there was a “significant risk” that it would not achieve its target if society as a whole did not make the shift to net zero before then.
Shell and BP didn’t immediately respond to a DCNF comment request.