by Polly Bindman

UK oil major BP has reported that in 2023 it raked in $13.8bn (£10.93bn) in profits. This represented its second-highest annual profit in a decade – despite it being nearly half the record-breaking $27.7bn BP amassed in 2022 after oil prices spiked following Russia’s invasion of Ukraine.

Days earlier, Shell also reported better-than-expected profits of more than $28bn, following a record-breaking $40bn in 2022. Yet both oil majors’ spending on renewables has flatlined, finds Energy Monitor‘s analysis of the companies’ filings.

Shell’s annual results show that investment in “renewables and energy solutions” fell from $3.5bn in 2022 to just $2.7bn last year. The company spent just 11.7% of its total capital expenditure (capex) on renewables in 2023 compared with 15.3% in 2022.

By contrast, bp slightly increased its spending on “low carbon energy” from $1.02bn in 2022 to $1.26bn in 2023, although as the chart below shows, spending on renewables by both companies has flatlined over the past five years.

Last year, Shell backed away from plans to reduce oil and gas production by 1–2% a year, while bp scaled back its target of cutting emissions by 2030, from 25–40% to 20–30%, citing the need to keep investing in fossil fuels in order to meet demand.

In 2023 Shell invested 4.7 times as much in oil and gas as "renewables and energy solutions", finds analysis from the think tank Common Wealth. The oil major's shareholder payouts were 8.9-times as much as investment in "renewables and energy solutions". 

Similarly, the think tank finds that bp’s investments in oil and gas were seven-times higher than its investments in "low carbon energy" last year, while the company’s shareholder payouts were ten-times higher. 

Reality of oil majors' renewables spend flatlining

"[Our analysis] adds to the mounting evidence that despite its rhetoric on the energy transition, and investor backlash over net zero, Shell is doubling down on fossil fuels as the climate crisis intensifies,” said Common Wealth in a press release.

“[Shell’s] doubling down on oil and gas investment guarantees deepening climate crisis and volatile, eye-watering energy bills,” added Common Wealth’s director Mathew Lawrence. "And while the sums for renewables investment are dangerously inadequate, the corporation still found billions to reward their investors.”

Reacting to bp’s results on Tuesday, Sophie Flinders, a data analyst at Common Wealth, added: “The last two years’ energy price boom has seen oil giants like bp and Shell and their investors emerge as winners – at the expense of people and the planet. bp has U-turned on climate targets and instead has committed to increasing their oil and gas production.”

This article was first published by MEED's sister site Energy Monitor