THE Scottish Greens have called for a more “meaningful” windfall tax as Shell reported its second highest quarterly profit on record.
The energy giant said underlying profits reached $9.5 billion (£8.2bn) in the third quarter, compared to $4.2bn during the same period last year.
Oil and gas prices have surged since the Russian invasion of Ukraine with many major energy companies reporting huge profit increases at a time when many governments are having to step in to support consumers with bills.
The Scottish Greens environment spokesperson Mark Ruskell said: “The oil and gas giants are having a devastating impact on household bills and the world around us.
“They have been instrumental in fuelling the climate breakdown and cost of living crisis that they are profiting from.
“Their executives may be toasting their eye watering results, but, all across Scotland and beyond, there are millions of people who are being hit by skyrocketing energy costs and are struggling to make ends meet.”
When he was chancellor, Rishi Sunak introduced a temporary Energy Profits Levy on firms' “extraordinary profits”.
A windfall tax is a one-off levy which targets companies who are benefiting from something they are not responsible for, in this instance a sharp rise in oil prices.
However, the government’s tax only applies to profits made in the UK which, for most oil and gas companies, only represents a small part of their operations.
Ruskell continued: “We can’t go on like this. The climate crisis is the biggest crisis facing this generation and all future generations.”
The MSP called for a “full-scale restructuring” of the energy sector and for a move away from fossil fuels towards renewable energy sources.
He added: “A vital way of funding and accelerating that transition would be a meaningful windfall tax on the obscene profits of companies like Shell.
“It can’t be like the one that Rishi Sunak introduced as chancellor, which was totally unfit for purpose and actually rewarded companies for new drilling operations.”
When it was first announced, the Energy Profits Levy was accompanied by a measure which allows energy companies to apply for tax savings worth 91p of every £1 invested in fossil fuel extraction in the UK.
Shell's bosses have confirmed they have avoided paying any extra windfall tax.
Finance boss Sinead Gorman told reporters the company had done enough in recent months to avoid the tax.
“Heavy capex (capital expenditure) has meant that we haven’t had extra tax coming through in this quarter yet,” she said.
“I do expect to see that extra tax … to happen quite early in the first quarter of 2023, but we’ll see what plays out with prices as well.”
She added: “We simply are investing more heavily than we have, and therefore we don’t have profits which we can be taxed against.”
First Minister Nicola Sturgeon also called for an “enhanced” windfall tax in her first letter to Sunak since he took over as Prime Minister.
Shell’s profits have been met with widespread concern from environmentalists as well as politicians.
Director of Uplift – an organisation which advocates for a fossil fuel-free UK – Tessa Khan said: “Shell is making eye-watering profits off the back of the energy crisis, while many millions of people in this country are forced into fuel poverty.
“It’s nothing short of immoral. Meanwhile, the UK Government is just sitting on its hands, instead of trying to claw some of that money back.
“How can Rishi Sunak talk of compassion and ask people to trust him and not immediately replace the pitiful windfall tax he introduced in May with a credible one.
“This means back staging it and closing the gaping loophole, which will see UK taxpayers effectively handing Shell a £200 million subsidy to develop a North Sea gas field called Jackdaw.”
The proposed Jackdaw gas field proposed to be developed in the North Sea has also been met with fury from campaigners.
In August, a petition signed by tens of thousands was delivered to No 10 calling on the UK Government to halt the approval of Jackdaw.
Khan added: “It is beyond time that this government stood up to profiteering oil and gas companies like Shell.
“We need a windfall tax and the money used to support those in need this winter, alongside a mass insulation programme to reduce gas demand, and a rapid switch to cheaper renewables.”
Greenpeace also called for a “proper tax” on profits while Friends of the Earth Scotland said the figures showed the “scale of the pain” being inflicted on people.
Shell chief executive Ben van Beurden said: “We are delivering robust results at a time of ongoing volatility in global energy markets.
“We continue to strengthen Shell’s portfolio through disciplined investment and transform the company for a low-carbon future.
“At the same time we are working closely with governments and customers to address their short – and long-term energy needs.
“Today we are announcing a new share buyback programme resulting in an additional four billion dollars of distributions, which we expect to complete by our Q4 (fourth quarter) 2022 results announcement.”
On Thursday, Tory party chairman Nadhim Zahawi did not rule out an additional windfall tax although stressed it was important companies still invest in the UK.
He said: "I would not preempt any decisions but absolutely the Chancellor and the Prime Minister will look at every decision and will, on November 17, stand up at the despatch box [...] and deliver an Autumn Statement that demonstrates we have an energy plan that delivers energy security because what you can't do is create a tax system that disincentivises investment."
