Once again, people are angry about oil company profits. Certainly, it makes a good headline to contrast the high profits of Shell and BP with the rising bills of the ordinary voter. Some are concerned that oil profits will make the transition to renewable energy more difficult. President Biden has taken the opportunity to criticise oil company share buybacks, even whilst admitting that we’ll be relying on oil and gas for a while yet. This is all so much hand wringing, with so little genuine concern. To move to renewables is a big, complicated task that requires more widespread change than you will get from legacy oil companies. Criticising big profits in a year of rising prices doesn’t help much with that change.

Nor will these articles tell you that most oil companies lost money in 2020

​​The progressive economist Noah Smith has written about the fact that share buybacks just don’t make that much difference to anything. It’s not an evil scheme to give a windfall to shareholders. Companies give money to shareholders, either through buybacks or dividends, and if you limit buybacks the dividend will probably go up. This is a good thing: investors can take that money and invest it in renewable companies. For the many pensioners invested in Shell and BP, they can use it to pay their heating bills. Nor will any of the articles complaining about these profits tell you that most oil companies lost money in 2020. This is how the industry works.

Now we get to the argument that profits for oil jeopardise the future of renewables. The FT has quoted an executive saying that fossil fuels are the future, suggesting the transition to renewable energy is less of a priority for these companies than it once was. The Guardian voiced similar concerns that oil companies have no plans to move to renewables. This is overstated. In 2010 the UK generated 3.5 per cent of its energy from renewable sources. In 2020 it was more than 14 per cent. Globally, oil is dropping as a share of energy consumption, whilst renewables rise. Most of the increase in energy demand comes from non-OECD countries, whilst most of the renewable generation comes from within the OECD. The IEA’s latest report says that all the new demand for electricity in the next three years — equivalent to all the electricity consumed by Japan — will be met with renewables and nuclear power. According to its executive director, Fatih Birol, this suggests we are close to a tipping point for power sector emissions. It predicts 35 per cent of global power generation will come from renewables by 2025.

Progress requires investment. Oil companies can be part of that investment, and they are: BP is planning to invest $60bn in the coming years. There is a role for the government and other businesses, too, however. In 2021, BP reported paying £5.4bn in corporate taxes — money that could be used to invest in new green energy. Of course, the people who criticise oil companies don’t simultaneously criticise the state, but they should. There is a lot of talk about reaching Net Zero, but bureaucracy and regulation are slowing the process down more than anything else.

A single objection can veto a new onshore turbine

One of the best things we can do to shift to green energy is to develop battery storage. No one likes to say it amongst the profit-hating community, but Elon Musk ought to be one of the biggest environmental heroes in the world. Here in the UK, companies like Kona are developing batteries that could store energy on the grid. This is vital because in high-wind conditions, turbines are sometimes turned off for fear of producing too much electricity. It often takes years to get new battery capacity connected to the grid, however. In a recent talk, the CEO of Octopus energy criticised National Grid for taking seven years to connect a new wind farm. It takes four years to get approval for a new offshore wind farm. 

Appallingly, only two onshore wind turbines have been built in the last three years in the UK. A single objection can veto a new onshore turbine. Who is the more evil person here, the oil companies making money after a period of downturn — a lot of which is used to pay taxes and fund renewable projects — or the small number of NIMBYs who have limited our ability to generate renewable energy? What do we think of the government that brought that ban into place in 2015? 

With this context, oil companies making a profit seems less like corporate greed and more like the outcome of a system which many people have had a hand in creating, including voters. Oil companies are doing what they have always done, only with more focus on renewables. Government and its agencies aren’t moving fast enough to enable a new generation of technology to compete. The more we are able to create a market for renewable energy, the less oil companies will matter. Increasing grid battery capacity, streamlining offshore wind farm approvals, and allowing the construction of onshore wind turbines are essential to producing more cheap green energy. 

If you want to do something to help the world use less fossil fuels, ignore the worrying about profit margins and sign the petition to remove the egregious onshore wind turbine law.