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Activists from Greenpeace set up a mock petrol station price board displaying Shell’s net profit for 2022 as they demonstrate outside the company’s headquarters in London on February 2. Oil companies should use their financial clout to accelerate the transition towards renewable energy. Photo: AFP
Opinion
The View
by Quentin Parker
The View
by Quentin Parker

Oil giants must wake up to the urgency of climate change, or they will be forced to

  • Oil companies’ record takings for 2022 give them a chance to pivot faster away from fossil fuels to renewables. At a time when public opinion and political pressure are turning against them, they must seize that opportunity
Quentin Parker
Quentin Parker
Why you can trust SCMP
Against the backdrop of the vicious war in Ukraine, the terrible earthquake in Turkey and Syria, the Covid-19 pandemic and the Western cost-of-living and energy crises, oil companies have been posting their annual profit reports for 2022.

It makes for arguably obscene reading. Shell and BP alone have just reported profits of US$40 billion – more than double the previous year’s profits – and a record US$28 billion, respectively. The world’s five largest oil majors alone amassed more than US$150 billion in profits last year.

But this is not all these companies announced. They will continue to invest heavily in more oil and gas fields from exploration, drilling and extraction in the next 10 years with all the attendant environmental impacts while at the same time not reducing their carbon emissions by as much as previously planned.

In a sane world, this would be like allowing them to throw kerosene on your house when it is already burning down and could be saved. The constant drip-feed of climate extremes and severe weather events around the world continue unabated.

People around the world cannot help but notice as more of us are being directly affected in multiple ways. They are taking action, regardless of what their politicians and lawmakers are doing.
Groups such as Just Stop Oil and Extinction Rebellion, both headquartered in the UK, are good examples of non-violent direct action, gaining legions of followers and attention globally. It is an irony that both Shell and BP also have their global headquarters in London.
Climate action group Extinction Rebellion blocks the A12 between the Ministry of Economic Affairs and Climate and the temporary House of Representatives in The Hague, the Netherlands, on January 28. Photo: EPA-EFE
At the same time, major British bank NatWest reported on February 9 that it would immediately stop all reserve-based lending for any new customers financing oil and gas. Some companies are clearly aware of what is at stake and what their customers want.

Nevertheless, it is true that for the moment we still need fossil fuels. Oil and gas continue to provide vital heat, energy and transport facilitation around the world, especially in less-developed economies which do not have the capacity or funding to transition easily to renewable alternatives. These commodities are also vital in manufacturing, especially of plastics.

As news of these massive oil company profits reverberate, many governments are ramping up their transition to alternative renewable energy sources such as solar, wind, hydro, tidal, geothermal and even nuclear fission.

Nuclear fusion power is the holy grail of global clean energy, but it is likely to remain tantalisingly out of reach for at least another decade. Significant strides are being made, though, including in China. Last January, China’s Experimental Advanced Superconducting Tokamak confinement fusion reactor broke the world record with nuclear fusion sustained for more than 17 minutes. There is hope.

02:37

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However, the global optics towards oil companies have been changing for a while as the public mood shifts, led usually by the younger generation who are not scared to act. Governments are taking note and many are phasing out heavily polluting diesel and petrol vehicles while others are actively promoting electric vehicles with incentives and tax breaks, though the charging infrastructure is often lagging. More needs to be done on shorter timescales with massive investment needed.
The world cannot wait much longer for more vigorous, concerted and global action to address the drivers of climate change. This carries on from the arguably pivotal Paris agreement of COP21 to the Sharm El Sheikh meeting of COP27 last year, and other planned future UN climate change meetings.

However, the key is not fine words, promises and good intentions but actual solid, verifiable actions. This is so we stand a chance of avoiding the worst impacts of the changes that are afoot.

Going back to these eye-catching oil company profits, what should they do with them? I believe they need to diverge more rapidly from their current business model. These profits present these companies with a golden opportunity to seriously pivot away from fossil fuels at an accelerated rate.
A man walks past a small solar panel he uses for back-up, outside his house on Karampuang Island, in West Sulawesi, Indonesia, on December 22. Photo: AP

Instead, they can invest a significant fraction of their profits in renewables and carbon capture technologies. This is so they shift from being mainly oil companies to mainly renewable energy companies with a sustainable green agenda.

They should invest their huge financial clout around the world for massive wind and solar farms and other renewables wherever their impact can be greatest, including down to practical and affordable solar arrays and wind turbines for small villages in Africa and Asia. If they do not change internally, they will be changed externally by circumstances and politics and will wither.

We might not be too far from the point when the will of the people and the resultant politics that flow will mandate stronger actions against the fossil fuel industry with all its greenhouse gas emissions and pollution it does not pay for. It is much better, responsible and in the industry’s own long-term self-interest for it to grasp the opportunity that these enormous profits present to be a better global citizen, show green leadership and point to a safer and better future for us all.

Quentin Parker is director of the Lab for Space Research at the University of Hong Kong and vice-chairman of the Orion Astropreneur Space Academy

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