Record Oil Company Profits In 2022 Won’t Be Used For Decarbonization

Record Oil Company Profits In 2022 Won’t Be Used For Decarbonization - Carbon Herald 2
Credit: Tada Images/Shutterstock

2022 has been good for oil company profits. Exxon, Chevron and Shell all announced record revenue and profits for the calendar year, with numbers ranging between $36 and $56 billion. Multiple market factors, as well as the war in Ukraine pushed oil and natural gas prices higher in the calendar year, but it seems there won’t be an increase in investment aimed at reducing emissions.

All three oil companies have “low carbon” business development units and each of them has their own approach to distributing profits and to decarbonization. Exxon is working on multiple carbon capture projects across the world and is one of the leading parties involved in creating a carbon hub around Houston.

Shell and Chevron are more focused on renewables and have set aside funds for investing in solar and wind. But all three of these companies plan to keep investing to increase their oil and natural gas output and will put even more money in that.

Exxon’s investment in new natural gas and oil sites rose 37% in 2022, reaching $22.7 billion. It also shared its lofty ambitions for increasing oil production over the next five years and reaching 4.2 million barrels daily by 2028.

Relevant: Shell CEO Steps Down, Renewables Boss Takes Lead

Back in 2021, Exxon announced plans to invest $15 billion (€13.8 bn) in ‘lower greenhouse gas emissions initiatives’ over the next six years. It has since increased this to $17 billion (€15.7) through 2027. This amounts to $2.8 (€2.6 bn) billion a year, or around 5 per cent of the company’s 2022 profits.

This is where a differences between Exxon and Shell begin to become more pronounced. The British company is indeed cutting oil production.

But it doesn’t seem to be doing so at a pace that is in line with what climate activists want to see. Shell won’t be increasing renewables’ investments in 2023.

Record Oil Company Profits In 2022 Won’t Be Used For Decarbonization - Carbon Herald
Credit: Golden Dayz/Shutterstock

The appearance of such huge oil company profits on the balance sheet will have no impact on these low carbon solutions. Investments in wind and solar, as well as carbon offsets, carbon capture and biofuels seems to have plateaued for the time being.

“Our philosophy has been a real pivot toward energy transition investments,” Sawan said. “But we will make sure that those investments go into the areas where we can see line of sight toward attractive returns to be able to reward our shareholders.”

He adds that the company’s overall investments in energy transition business is higher than the formal figure for the renewable unit, and actually reaches $23-27 billion for this year.

Regardless, it seems we are quite off from an inflection point where some of the largest emitters will switch gears and provide the necessary financial injection to reduce global emissions.

Read more: Chevron Sees Australia As Enormous CO2 Sink For Others

Leave a Reply

Your email address will not be published. Required fields are marked *

Related Posts
Translate »