The energy giant BP has been accused of prioritising its profits over people and the planet after making £2.7 billion in profit over the last quarter, while investing £2 billion in fossil fuels.
Leading think tank IPPR said now was a time when energy companies should be urgently responding to climate change, but instead BP has “doubled down on its oil and gas business to reap enormous profits.”
For every £1 BP spent on low carbon investments in the last quarter, they invested £11 in fossil fuels it was revealed. And since the energy price shock began two years ago, BP has put nine times more into fossil fuels as renewables.
BP also completed more than £14.8 billion of buybacks from surplus cash flow whilst announcing a new round of share buybacks, which will transfer £1.2 billion to shareholders.
“It’s clear that oil and gas companies are prioritising their shareholders at the expense of the transition to clean energy, so the UK government must now take the reins by investing in renewables,” said Joseph Evans, IPPR researcher.
Although BP’s profits have actually fallen on last year, when the oil company saw mega earnings following the rise in oil prices after the Russian invasion of Ukraine, £2.7 billion profit between July and September remains extremely high as organisations ask why ordinary people are still facing high energy bills.
“The government has had countless opportunities to bring down our bills and emissions. Instead, all we’ve had are weakened green policies and massive tax breaks for oil and gas giants,” Friends of the Earth responded.
An aerial view is shown of the hydrogen infrastructure and grid integration research pads at National Renewable Energy Laboratory’s (NREL’s) Flatirons campus. (Photo: Josh Bauer / Bryan Bechtold / NREL)
Despite promises of economic opportunity and jobs, communities slated for hydrogen projects see them for what they are: A handout for the fossil fuel industry.
As our planet’s temperature rises, so does the hype around hydrogen. But hydrogen isn’t the climate savior it’s made out to be. Hydrogen is a dangerous distraction, and we should not fall for it.
Technological fixes to climate change are tempting, and the Biden administration has not resisted the lure of hydrogen: The Department of Energy recently announced a massive $7 billion buildout of seven hydrogen hubs nationwide, the first of several such investments.
Hydrogen is dangerous, partly because it distracts from the real climate solutions we so desperately need. The world’s best climate scientists have been clear that to maintain a livable planet, we must phase out fossil fuels and transition to truly renewable energy now. Hydrogen hubs take us in the opposite direction by further embedding us in the fossil fuel economy.
Communities like mine understand all too well that these projects take a toll on our drinkable water, breathable air, bodies, and livelihoods.
A staggering 99% of hydrogen production relies on fossil fuels, primarily methane, or “natural,” gas. Notably, oil, gas, and petrochemical companies produce the lion’s share of the U.S. hydrogen supply: approximately 10 million metric tons. Once produced, more than two-thirds of hydrogen is used for petroleum refining.
A cursory examination of the partners across all seven proposed hydrogen hubs reveals who actually stands to benefit from them. Key recipients of this first $7 billion of public money are oil, gas, and chemical corporations, including Exxon, Chevron, Dupont, and Air Products. Air Liquide, a French gas company, is a named partner in at least six of the seven hubs chosen for the next phase of public funding. Fossil fuel and petrochemical companies are pushing for this hydrogen buildout because it is their ticket to greenwash their products as ‘climate solutions’ on the public’s dime.
Making hydrogen is highly energy intensive, whether using large quantities of renewable power to make ‘green hydrogen’ through electrolysis or pulling in large quantities of methane gas coupled with energy-intensive and unreliable carbon capture systems to produce “blue hydrogen.” At least two of the seven hydrogen hubs are associated with blue hydrogen production, which scientists say “may be worse than gas or coal.“
Hydrogen production is not only very energy intensive, it also requires considerable amounts of water, a resource that is becoming increasingly more precarious due to the climate crisis. Louisiana this year faced never-before-seen wildfire threats, predicted to continue, largely due to drought. California has had some of the worst wildfire seasons on record. Both states are targeted for the proposed hydrogen buildout.
Calls for “hydrogen-ready” infrastructure are code for doubling down on building new gas production and pipelines, with the vague hope that this infrastructure might one day carry hydrogen. This is the opposite of what we should do, which is to take urgent action to phase out fossil fuels and transition to renewable energy to avoid climate catastrophe.
Hydrogen projects, especially blue hydrogen, put communities in harm’s way. To produce blue hydrogen, CO2 must be scrubbed and captured, a process whose effectiveness is questionable at best. This process requires the buildout of additional infrastructure, thousands of miles of new pipelines, and injection wells to store the CO2 underground. This means more hazardous air and water pollution in our communities. People living near this new infrastructure for hydrogen and CO2 stand to face additional risks like pipeline leaks and injection well failures, which can be catastrophic.
Confusingly, funding for these hydrogen hubs is partially allocated under the “Justice40” initiative, which aims to address decades of underinvestment in disadvantaged communities. Yet many communities targeted for the hydrogen buildout—the same low-income and/or Black, Brown, and Indigenous communities supposed to benefit from the administration’s environmental justice promises—are organizing against proposed hydrogen projects, because of the dangers they present.
I have had to become an expert on climate solutions out of sheer necessity. I am the fifth generation of my family to call South Louisiana home, and the climate crisis is coming for us in Louisiana faster than anywhere else in the country. At the same time, we’re a target for the nationwide buildout of hydrogen, carbon capture, and other technological false solutions to the climate crisis.
Communities like mine understand all too well that these projects take a toll on our drinkable water, breathable air, bodies, and livelihoods. The projects come with often elusive promises of jobs, but those poised to truly benefit from these projects are fossil fuel and chemical companies.
Impacted communities deserve better. They deserve to be at the table when it comes to finding solutions that work for people and the climate. Just as importantly, they deserve justice for the harms wrought upon them by the fossil fuel industry. We all deserve a livable, breathable, drinkable future. And that future is not found in a hydrogen hub.
Beyond the fossil fuel industry’s expensive hydrogen distraction, there are community-centered solutions that provide jobs and improve lives without jeopardizing communities. There are safe, scalable, proven, and affordable solutions like solar and wind energy, energy efficiency, local and regenerative agriculture, and zero waste programs that empower communities and make the most of limited and dwindling resources.
We need to stop subsidizing the fossil fuel industry, stop harming communities with false hype for hydrogen, and direct funding to real solutions to the climate crisis.
Industry figures held more than 200 meetings with key politicians in the year following Russia’s 2022 invasion of Ukraine, new research finds.
Prime Minister Rishi Sunak tours a Shell gas plant in Aberdeen in July 2023. Credit: Number 10 (CC BY-NC-ND 2.0)
The UK government’s weakening of its windfall tax on energy profits matched the demands of a high-level lobbying campaign by the oil and gas industry, new research reveals.
Trade body Offshore Energies UK (OEUK), formerly Oil and Gas UK, and its operator members including BP, Shell, ExxonMobil, TotalEnergies, and Equinor, met with ministers at least 210 times in the 12 months following Russia’s 2022 invasion of Ukraine.
The meetings – which include in-person talks with the then Business and Energy Secretary Kwasi Kwarteng and his minister Greg Hands (now the Conservative Party chairman) – are revealed in research by Fossil Free Parliament (FFP), a group campaigning against fossil fuel influence on UK politics.
They form part of a lobbying blitz by fossil fuel firms against the windfall tax, conducted through meetings, drinks receptions, letters, parliamentary groups, and a “fiscal forum” with the Treasury attended by the then chancellor (and now prime minister) Rishi Sunak.
The evidence, published in a briefing today (October 24) and shared exclusively with DeSmog, indicates that certain changes requested by the oil and gas industry were accommodated by the government when developing the scope of the levy.
It comes as Sunak faces criticism for delaying some net zero targets and granting 100 new North Sea oil and gas licences, including Equinor’s Rosebank project. As DeSmog reported in March, the Conservative Party received £3.5 million from fossil fuel and polluting interests in 2022.
A spokesperson for OEUK defended its contact with the government: “We will always champion our industry to all parliamentarians on a cross-party basis and do so in an open and transparent manner.”
Caroline Lucas, Green Party MP for Brighton Pavilion, described the research as “shocking”.
“Fossil fuel giants have been committing countless climate crimes, polluting our planet and reaping obscene profits – while everyone else faces sky-high energy bills and a cost of living scandal,” she told DeSmog.
“This research reveals the extent to which the dirty fossil fuel lobby has been aided and abetted by this Tory government – taking their donations, offering privileged access, and handing over staggering tax breaks and subsidies to carry out yet more climate-wrecking damage.”
Windfall Tax ‘Loophole’
The Energy Profits Levy, known as the windfall tax, was announced by the government in May 2022 to tax energy companies’ billions in excess profits due to the global price spike fueled by Russia’s February 2022 invasion of Ukraine.
Then chancellor Sunak said the windfall tax would raise around £5 billion over the next year to help with cost of living. However, when the levy was passed in July 2022, it included a loophole where companies received 91p tax relief for every pound they invest in UK extraction, in what the independent Institute of Fiscal Studies called a “huge tax subsidy” for energy companies.
As of September 2023 the windfall tax had raised £2.6 billion, just over half of what was promised, and following a year of record profits by five oil majors. Between them, Chevron, ExxonMobil, Shell, BP and TotalEnergies made a total of £195 billion in profits last year.
The new research indicates this ‘loophole’ came about following a surge in meetings and lobbying between OEUK and its member companies with the government,
In June 2022, the month the windfall tax was being consulted on and drafted, meetings between the government and OEUK and its members nearly doubled from 15 to 29, according to the new research.
In the same month, OEUK also wrote letters to Sunak warning the proposed windfall tax would have a negative impact on oil and gas investments in the UK. The letters also called for an emergency summit, including a meeting of the “fiscal forum”, a talking shop between the industry and the Treasury. OEUK describes the fiscal forum as a tool for “facilitating coherent engagement with government authorities to drive the policy agenda”.
On 20 June, the day before the consultation’s launch, the British Offshore Oil and Gas Industry All-Party Parliamentary Group (APPG), which is co-run by OEUK, held a summer reception at the Houses of Parliament. The reception saw speeches from Conservative MP Peter Aldous, the APPG’s chair, and Greg Hands, then a minister in the Department for Business, Energy and Industrial Strategy.
At the reception, OEUK’s then chief executive Deirdre Michie gave a speech claiming the windfall tax could “undermine and disrupt” energy investment at a time when the UK needs to focus on “energy security and working for net zero”.
Three days later, Sunak, Hands and exchequer secretary Helen Whately attended an “Oil and Gas Roundtable”. The meeting, also known as a fiscal forum, was held in Aberdeen, Scotland, with OEUK and members including BP, Shell, Equinor, and TotalEnergies. According to a 28 June letter from Michie, the meeting discussed the “negative impact” of the windfall tax “on investor confidence”, while companies warned of its “damage to the UK’s competitiveness”.
Michie wrote: “While we remain disappointed at the decision to create the EPL [Energy Profits Levy], OEUK and our members want to work constructively with you to help rebuild investor confidence and ensure that the EPL is designed and implemented thoughtfully and is fit for purpose.”
OEUK’s concerns appear to have been taken into account by the government.
For example, in Michie’s 28 June letter she insisted that the windfall must tax end in 2025: “Industry needs certainty that the EPL will be terminated by the end of 2025 at the latest and we would hope that ministerial statements will continue to reinforce the timebound nature of the EPL.” A deadline of 31 December 2025 was later included in the EPL bill.
Michie’s letter also requested that the windfall tax should not apply to the Petroleum Revenue Tax (PRT), a tax break that oil and gas companies receive for decommissioning oil rigs, adding: “[we] have written to your officials with detailed proposals on the changes to the draft legislation and hope you will give this significant consideration”. The final windfall tax bill did not apply to PRT, as Michie had requested.
“This research makes it abundantly clear that our government has an open-door policy when it comes to the fossil fuel industry”, said Carys Boughton, a campaigner with Fossil Free Parliament.
“They ask for special treatment; they get special treatment, and the rest of us pay for it – with obscenely high energy bills, and a worsening climate crisis.”
She added: “Our political leaders should be channelling every effort into a just transition from fossil fuels, but this won’t happen until the industry with a vested interest in keeping us all hooked on oil, gas and coal is kicked out of our politics.”
Jeremy Hunt and the ‘Price Floor’
A tranche of additional documents, obtained by Fossil Free Politics and seen by DeSmog, shed further light on the extent of industry lobbying, which continued beyond the introduction of the windfall tax.
After Liz Truss’s disastrous September mini-budget, newly-installed chancellor Jeremy Hunt used his Autumn statement in November 2022 to extend the windfall tax to 2028 and increase it from 25 percent to 35 percent.
OEUK raised its opposition to these changes with Victoria Atkins MP, Financial Secretary to the Treasury, in a meeting on 17 November 2022.
Minutes of the meeting, obtained via a Freedom of Information request, show the body’s chief executive Deirdre Michie telling Atkins that the windfall tax extension “plays into investors being undermined”, and that the 10 percent increase “will impact companies borrowing and projects”.
Michie also complained of a “lack of engagement” with ministers, and brought up “the previous HMT [Treasury] fiscal forum”.
A few weeks later, on 9 December, Hunt hosted a fiscal forum in Edinburgh with OEUK and its members BP, Shell, Equinor, TotalEnergies and others. There he promised “more regular fiscal forum meetings in future”, according to a Treasury press release.
Ahead of the meeting, OEUK said it would urge the government to “scrap the windfall tax on homegrown energy when oil and gas prices fall back to normal levels”. This would mean that if prices drop below a certain point, the windfall tax could be removed before 2028.
Ahead of the Spring Budget in March 2023, OEUK repeated this demand, reportedly writing to Hunt to call for a “trigger price” which “switches off” the windfall tax.
Lobbying continued through the spring. In a meeting on 15 March with Treasury’s Exchequer Secretary James Cartlidge, OEUK’s new chief executive David Whitehouse told Cartlidge that the industry was “extremely disappointed that oil and gas did not get a mention in the budget” and called for more engagement and “a public signal” to “shore up confidence”.
On 9 June, OEUK got its wish. Hunt introduced a “price floor” to the windfall tax, which meant the tax would end before 2028 if wholesale energy prices fall back to normal levels – as OEUK and member companies had been requesting.
‘Cosy Relationship’
When contacted by DeSmog, OEUK did not address the evidence of lobbying specifically on the windfall tax. A spokesperson said the industry body was “proud” to provide a secretariat function to the all-party parliamentary group for offshore oil and gas.
“The offshore sector is a crucial part of the UK economy, supporting over 200,000 jobs in communities across the country and in nearly every parliamentary constituency,” they said.
“Our industry is playing a vital role in the UK’s low-carbon energy future and paid £11 billion in production taxes in 2022/23. It has paid a total of £400 billion in taxes over the lifetime of the basin.”
Shell referred DeSmog to OEUK for comment. All other companies named in this story were also approached but had not responded by publication.
The Conservative Party, Cabinet Office, and the Department for Energy Security and Net Zero were also contacted for comment.
Tessa Khan, executive director of Uplift, a North Sea campaign and research group, said the findings revealed the latest in the industry’s “long enjoyed unwarranted influence over our politics”.
“This is an industry that has made obscene amounts of money while millions of ordinary people – older and disabled people, families with young children – have struggled to heat their homes,” she said. “That they then lobbied in private against a windfall tax designed to claw back some of these profits, is disgusting if unsurprising.”
“The cosy relationship between government and profiteering oil and gas companies needs to end, not just for the sake of everyone facing unaffordable energy bills, but for a liveable climate too.”
Image of InBedWithBigOil by Not Here To Be Liked + Hex Prints from Just Stop Oil’s You May Find Yourself… art auction. Featuring Rishi Sunak, Fossil Fuels and Rupert Murdoch.
Extinction Rebellion activists block the Utrechtsebaan of the A12 highway in The Hague to protest against fossil fuel subsidies, 26 November 2022 – Credit: Extinction Rebellion / Provided – License: All Rights Reserved
A majority of the Tweede Kamer adopted on Tuesday afternoon a motion from Suzanne Kroger (GroenLinks) and Raoul Boucke (D66) that calls for a possible phase-out plan for fossil fuel subsidies. GroenLinks-PvdA, D66, PvdD, SP, ChristenUnie, Volt, Bij1, Denk, VVD and CDA voted in favor.
NOS reported prior to the vote on Tuesday that the CDA would vote in favor of the motion, meaning a parliamentary majority would be reached. CDA MP Derk Boswijk told NOS prior to the vote that his party would eventually vote in favor because “we, as CDA, want to pass on a cleaner world to the next generation.” He believes it’s wise to explore how fossil subsidies can be phased out “in a sensible manner.”
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The climate activist group, Extinction Rebellion[NL], blocked the A12 highway in The Hague for several consecutive days, pushing the Dutch government to abandon policies that support the fossil fuel industry. They suspended the blockades on Friday in anticipation of the parliamentary vote on Tuesday.
The organization announced on Tuesday prior to the vote that they will stop demonstrations on the A12 highway until Christmas, Nu.nl reported.
“Civil disobedience works,” the climate activist group stated on Tuesday. A spokesperson describes the vote as a significant step. “Recently, with the A12-blockades, we caused shockwaves in society and made people look differently at fossil fuel subsidies. That social change has translated into politics today. And that is what we always wanted,” she said.
She added that the XR will now look at the implementation of the bill. “Of course we will look critically at what happens next. Should it turn out that politics fails again, we will come back with much more,” she said.
