Why Don’t More Headlines Warn Us About Energy Profitability Windfalls?
Headlines warn us about natural disasters, record heat, wildfires with smoke that envelops entire sections of the country, a hurricane storm surge that damaged 97% of a seaside community.
The evidence is all around us: the climate crisis looms, and we’ve caused it by the burning of fossil fuels.
Coal, oil, and gas have serious competitors now in solar and wind power. Installers can’t be trained fast enough to meet heat pump demand. Automakers who once shrugged at the idea of EVs now produce nearly weekly press releases touting the new and innovative electric additions to their catalogs.
Yet, continually, headlines warn about the uncertainty of renewables, particularly the transition to EVs. What’s the motive behind such clear misinformation?
Who Wins When the Headlines Warn Consumers Away from EVs?
Last week’s announcement that 722 of the world’s top corporations made combined windfall profits of $1 trillion per year in 2021 and 2022 failed to stir much outcry. We’re accustomed now to a paradigm in which the Survival of the Richest, to coin Douglas Rushkoff’s new book title, is all.
“Leadership is a privilege to better the lives of others,” states Mwai Kibaki, a Kenyan statesperson. “It is not an opportunity to satisfy personal greed.”
Oil companies and their C-suite officers don’t seem to be listening.
45 energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022.
Even the International Monetary Fund (IMF) recently conceded that corporate profiteering has been a major contributor to price increases that have fueled cost-of-living crises worldwide. Last month, IMF economists estimated that “rising corporate profits account for almost half the increase in Europe’s inflation over the past two years as companies increased prices by more than spiking costs of imported energy.”
Oxfam and ActionAid, who commissioned the energy profitability analysis, argued that governments should “claw back gains driven by profiteering” by imposing a 50–90% windfall tax on the profits of major corporations. The groups are quoted as saying that such a windfall tax would generate hundreds of billions of dollars a year in revenue that could be used to lift people out of poverty, reduce hunger, slash energy bills, and support Global South nations on the frontlines of the climate crisis.
In his budget proposal for fiscal year 2024, US President Joe Biden called for a tax on the unrealized gains of the ultra-wealthy—an idea previously put forth by Senator Ron Wyden (D-OR). But the measure is unlikely to get through the Republican-controlled House, which is currently looking to slash taxes for the wealthiest in the US.
“Enough is enough,” says Arthur Larok, secretary-general of ActionAid. “Government policy should not allow mega-corporations and billionaires to profiteer from people’s pain. Governments must tax windfall profits of corporations across all sectors—and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few.”
The Richest among the Rich — Fossil Fuel Companies & their Subsidiaries
Fossil fuel companies for years have denied the existential problem of the climate crisis — a problem they caused — and policymakers have been reluctant to enact the policies needed to force real change. “Great wealth makes it all too easy to surround yourself with people who tell you what you want to hear, validating your belief in your own brilliance,” suggests New York Times columnist Paul Krugman, resulting in “a sort of intellectual version of the emperor’s new clothes.”
Profit is the pivotal variable. Pledges over the next few decades to decrease hydrocarbon production and increase renewable energy generation will require 3 of the world’s oil and gas majors — BP, Shell, and Total — to wear the dueling masks of fossil fuel producers and renewable energy innovators over the next few years. Each carries with it respective economic dynamics. What is the dividing line?
It’s not happening soon. Shell’s CEO has claimed that transitioning to renewable energy sources would endanger the world. Wael Sawan told the BBC that the world’s energy system “continues to desperately need oil and gas,” contrary to evidence put forward by the International Energy Agency, the Intergovernmental Panel on Climate Change, United Nations Secretary-General António Guterres, and other experts.
It’s is not coincidental that Shell reported record-breaking profits of nearly $40 billion for 2021.
Sawan insists that his concern is not with his own company’s future but, rather, that of the Global South—where people are suffering disproportionately from the effects of the climate crisis and planetary heating, despite causing a tiny fraction of the fossil fuel pollution that originates in wealthier countries. He said the distribution of benefits from the use of renewable energy must be “globally responsible” so the Global North doesn’t hoard energy sources such as solar and wind power.
“Let’s be clear, companies like Shell are fueling both the climate crisis and the soaring cost of energy,” Jamie Peters of Friends of the Earth told the Guardian. “They are profiting from the misery of ordinary people while destroying the planet, and they’re making a cynical case to continue locking us into the volatile fossil fuel markets that are the root cause of the energy crisis.”
Christiana Figueres, former executive secretary of the UN Framework Convention on Climate Change (UNFCCC), wrote in a recent op-ed that her former conviction that the global economy could not be decarbonized without the constructive participation of the fossil fuel industry was misplaced. In her willingness to support the transformation of their business model, she had failed to predict the industry’s unprecedented profits. The fossil fuel industry “could and should” be pouring its money into the global renewable energy transition, she knows now.
“Instead, what we see,” Figueres acknowledges, “is international oil companies cutting back, slowing down or, at best, painfully maintaining their decarbonization commitments, paying higher dividends to shareholders, buying back more shares and — in some countries — lobbying governments to reverse clean energy policies while paying lip service to change.”
Imploring the industry to act responsibly and realizing such action is unlikely. Figueres argues, “The fossil fuel industry will have powered human development in the 20th century and then destroyed it in the 21st.”
Cutting the impact of the climate crisis requires remaking a multi-trillion-dollar industry that lies at the center of the economy and people’s lives. The obstacles facing energy projects around the world are innumerable, with challenges deeply embedded in engineering, politics, and finance. It’s time to demand windfall tax relief so that, when headlines warn of fossil fuel duplicity, we stand up and notice. Renewable energy is the substantive change we need and should demand.
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