Yahoo Finance Higher taxes under Labour will harm green investment, warns Shell boss
Higher taxes under a Labour government would risk throttling investment in green energy infrastructure, the boss of Shell has warned.
Speaking as the FTSE 100 giant posted record quarterly profits of nearly $10bn (£8bn) from $9.1bn a year earlier, chief executive Wael Sawan said the company wants to be a major investor in renewable power but needed “the right ecosystem to be able to do that”.
Mr Sawan said: “I would hope any government coming in would see that and support that.”
He was responding to comments by Labour’s shadow chancellor, Rachel Reeves, and shadow energy secretary Ed Miliband, who both called for higher windfall taxes on energy companies on Thursday.
Pointing to Shell’s first quarter profit of $9.6bn, Labour’s Ms Reeves accused the Conservatives of refusing to “bring in a proper windfall tax on oil and gas giants”.
Mr Miliband, meanwhile, tweeted: “It is staggering that Rishi Sunak and the Conservatives refuse to implement a proper windfall tax to make the energy companies pay their fair share.
“Labour would bring in a proper windfall tax on oil and gas giants to freeze council tax this year.”
The Government has already imposed a so-called energy profits levy after the Ukraine war sent oil and gas prices soaring, raising the effective tax rate on North Sea producers from 40pc to 65pc.
It is expected to bring in about £5bn annually in its first three years, according to the Office for Budget Responsibility, with Shell predicting it will pay around £1bn over the levy’s lifetime.
However, critics say the tax does not go far enough, after the world’s five largest oil and gas companies – Chevron, ExxonMobil, Shell, BP and TotalEnergies – posted combined profits of nearly $200bn in 2022.
And Shell’s announcement that it would hand $12bn back to shareholders through dividends and stock buybacks in the first half of 2023 stoked further calls for a bigger tax raid.
Asked about Ms Reeves’ and Mr Miliband’s comments, and whether Shell felt threatened by a Labour government, Mr Sawan suggested that imposing higher taxes now would hurt the pipeline of future energy schemes.
He said it was “important to recognise” that investments being made by the company today would often not provide returns until a decade later.
Mr Sawan, who took over as chief executive in January, added: “Governments rightly have to do what they need to do. But I think governments are also conscious of the important role that companies like ours play in investing in the fundamental infrastructure in the countries.
“I think we have a lot that we can continue to offer the UK: These projects we are producing today; we bring in [liquefied natural gas] to be able to supplement the needs of the UK; we are a big, big investor in many of the low carbon and zero carbon opportunities here… we’re looking at [a carbon capture and storage] project.
“So companies like ours are a big part of how we can potentially help the world decarbonise, with the right ecosystem to be able to do that. And I would hope any government coming in would see that and support that.”
A Labour source said they “welcomed the challenge” from Shell but insisted: “We want to drive investment in net zero in the UK, and we're confident our policies will create a much better environment for investors, for example by reforming the planning process so renewable projects aren't held up by delays.
“The landscape will be significantly more investable under us than the Tories for low-carbon investment.”
Shell’s latest profits jump came even after oil and gas prices tumbled from their peaks last summer.
They also beat the expectations of analysts, who had predicted Shell would post a profit of about $8bn for the first three months of 2023.
As a result, Europe’s biggest energy company said it is now planning $12bn of shareholder returns in the first half of this year.
That includes $8bn of share buybacks and around $4bn of dividends.
The record quarterly profit comes after Shell last year posted profits of $39.9bn, double the previous number and the highest annual profit in the company’s history.
