Shell reduces renewable energy pipeline, raises shareholder payouts

The figures are included in the energy major’s Q4 2023 results, which confirm a 29% year-on-year frop in profits in 2023 to $28bn. This comes after the company posted record annual profits of almost $40bn in 2022, amid the global spike in gas prices.

Shell also stated that reduced production volumes and diminishing margins from its refinery operations contributed to a decrease in profits.

Despite the profit slump, Sawan spoke of “another quarter of strong performance”, with profits higher than initial forecasts.

Sawan forged ahead with plans to boost shareholder dividends by 15% per share by 2030. The results confirm plans for Shell to raise its dividend by 4% this year, returning $3.5bn to investors in share buy-backs during Q1 2024.

Shell’s results also confirm that its total renewable energy pipeline (covering projects already operational, under construction and in the planning process) has shrunk from 51.3GW to 46.8GW.

Reclaim Finance estimates that Shell is spending nine times as much on shareholder rewards than on clean energy technologies.

The group’s director, Lucie Pinson, is urging sustainability-minded investors to call this out. She said: “Financial players must no longer endorse these decisions, and must commit to suspending any further support for Shell until the company has given up developing new fields and significantly reducing its hydrocarbon production.

“As for the company’s investor shareholders, who want to take action against climate change, they will reject these outrageous dividends and sanction the group’s management for its climate inaction.”

Strategic changes

When Sawan took the reins at Shell last year, he reversed a plan to cut absolute oil and gas production by up to 2% each year this decade. Implemented under predecessor Ben van Beurden, this plan was intended to reduce emissions and free up investment in low-carbon technologies.

Sawan, instead, has expanded Shell’s oil and gas production by 200,000 barrels of oil equivalent a day on 2022 levels. He intends to grow this figure to 500,000 barrels a day by 2025.

He has also led the company to take a “much more selective approach” to renewables investment as part of plans to cut costs and “get leaner”.

Shell cut 200 jobs in its low-carbon solutions division in October 2023 and is considering further redundancies which would, in total, lead to a 25% reduction in headcount at this division.

The decisions have sparked ire from climate groups and from within Shell’s own workforce.

Last year, an open letter from two staff – Lisette de Heiden and Wouter Drinkwaard – expressed “deep concern” over the scaling back of renewables investments and the push for greater oil and gas production. They cited climate impacts but also the company’s potential to attract and retain talented staff with a passion for accelerating the energy transition.

Shell competitor BP has also scaled back its energy transition commitments. This time last year, it stated that it is no longer likely to meet a previous pledge to reduce oil and gas production by 40% by 2030 against a 2020 baseline.

BP argued that near-term demand for oil and gas is higher than it previously expected and stated that additional fossil fuel earnings can “support investment” in the energy transition.

Yet a week prior to this announcement, BP educed its predictions for the likely global demand of oil and gas in the coming years, accounting for increased energy transition and energy efficiency spending from governments and private sources to combat the cost-of-living crisis.

Comments (1)

  1. Richard Phillips says:

    Oh, come on! Profit first, the environment second; Goodness Gracious Me!!!

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