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

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Climate activists at COP26 (PA)
Climate activists at COP26 (PA)

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.

Then there’s Saudi Aramco. The state monopoly - the world’s biggest oil company by far - saw quarterly profits triple to $30 billion.

Soaring oil and gas prices have helped BP notch up a better-than-expected underlying profit haul in the third quarter (Andrew Milligan/PA) (PA Wire)
Soaring oil and gas prices have helped BP notch up a better-than-expected underlying profit haul in the third quarter (Andrew Milligan/PA) (PA Wire)

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.”

Tong point to delays to previously stated carbon-cutting ambitions, a reliance on unproven carbon capture and storage technology, and targets that deal only with direct emissions “but ignore the impact of customers burning the oil and gas they sell - which makes up about 80% of their total emissions.”

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.”

Oil has found a way in, though. Lobby group the International Emissions Trading Association (whose members include Chevron, Shell and Drax) has a big presence. Its range of speakers at Glasgow include BP’s Looney on “the human rights implications of the transition out of high-carbon industries”.

“Of course they’re here,” confirms Greenpeace’s Charlie Kronick. “They’ve all got skin in the game, both because they’re still planning on producing and selling fossil fuels for years to come and, to a far lesser extent, because they’re branching out in low carbon technology.”

There’s an argument that the biggest polluters should be at COP26 if only as a learning exercise. Critics say they’ve had their chance and failed.

“We can’t trust big oil and gas companies to manage their own decline,” Tong maintains. “Inviting them into [policy making at] COP26 would be like having the tobacco companies at a lung cancer convention.”

Shell and BP declined to comment.

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