Oil supermajor Shell PLC (LSE:SHEL, NYSE:SHEL) and British Gas owner Centrica PLC (LSE:CNA) were under pressure for "indefensible" rowing-back on climate promises and profiting while families have struggled to power and heat their homes, with calls ramping up for higher windfall taxes on energy companies.
While Shell reported a big fall in profits, it still generated masses of cash in order to hike its dividend and promise at least US$5.5bn of share buybacks for the six months, while fellow FTSE 100 constituent Centrica also lifted its buyback to £1bn as it swung back to profit.
“There’s no acceptable reality where an energy company should see profits rise by nearly 900% over the same period millions struggle to afford to power and heat their homes. It’s indefensible that firms behind both our soaring bills and the deteriorating state of the planet are still raking in billions in excess profits," said Emi Murphy at Friends of the Earth.
“With the world quite literally on fire, fossil fuel companies should be doing everything they can to ramp up the production of cheap and clean renewable power, not stalling investment and rowing back on their climate commitments as Shell has recently."
She said investing more in the switch to clean energy would also help to bring down energy bills and release countries from the volatility of expensive oil and gas.
The structure of the current energy price cap is allowing energy suppliers to claim greater profits, analysts and campaigners said, with the windfall tax regime also said to be "full of holes".
Richard Neudegg, director of regulation at Uswitch.com, comments: “When looking at profits in the energy retail market, all roads lead back to the price cap... The strong supplier profits now possible under the energy price cap - as part of the current regulatory environment - are driving increasingly fewer incentives for suppliers to innovate and offer cheaper, competitive deals that could bring prices down."
The Labour Party, which is leading in the polls ahead of an expected general election next year, said the UK's current windfall tax was policy was like a “Swiss cheese”.
Ed Miliband, Labour’s shadow climate and net zero secretary, told the BBC: "These are unearned, unexpected profits. This is because Russia launched an appalling invasion of Ukraine and drove gas prices up.
“The only long-term answer is to move off fossil fuels as quickly as we can because even though we imported very small amounts from Russia before the war, we’ve been so badly affected as a country."
The Green Party called for a carbon tax, paid by major polluters. On Centria, Green co-leader Carla Denyer said: “It’s not acceptable that customers struggling through a cost-of-living crisis are facing higher bills because the regulator and British Gas have done a deal allowing it to rake in a 900 per cent increase in profits."
Denyer pointed to the growing public support for nationalisation of utilities and said profits from Centria "very much make the case for the public to take control of this business".
She added: “Fossil fuel companies drive the world’s greenhouse gas emissions, but are still allowed to profit from their damaging activities. A carbon tax would target these big polluters and render coal, oil and gas financially unviable as cheaper renewable energies rise up to take their place."
Shell's focus "solely aimed at profit for shareholders...is immoral and completely irresponsible," said Nine de Pater at Friends of the Earth Netherlands.
With the impact of the climate crisis around the world this summer ranging from wild fires in Greece and heat records in southern Europe, Algeria and India, floods in Italy and Afghanistan, she said the Anglo-Dutch group's profits "clearly show that the company chooses profits over human lives".
As for Centrica, AJ Bell investment director Russ Mould summed up the view in the City, saying the British Gas owner "won’t be winning a popularity contest with the public anytime soon, but shareholders may not be too bothered".