Shell plans to keep investment in its renewables and energy solutions business steady this year after it hit an all-time high in 2022, reports Bloomberg – which describes the move as “a signal that the company’s record profits won’t significantly accelerate its low-carbon ambitions”. Shell invested about $3.5bn in the unit in 2022, which “includes a variety of technologies from wind and solar farms, to carbon offsets, carbon capture and biofuels”, the outlet explains. In a call with reporters yesterday, Shell’s chief financial officer Sinead Gorman said that the spending level will remain steady in 2023: “Our philosophy has been a real pivot toward energy transition investments…But we will make sure that those investments go into the areas where we can see line of sight toward attractive returns to be able to reward our shareholders.” While spending on the renewables and energy solutions business “has risen steadily in recent years”, Bloomberg notes, “even at the record level reached last year, it was still less than half what the company spends on oil and gas exploration and extraction”. The i newspaper notes that “Shell paid out more than £5bn to shareholders in the fourth quarter of 2022, around five times more than its investments in renewables and energy solutions”.

Meanwhile, in an interview with Bloomberg TV, Shell’s CEO Wael Sawan says that the company’s gas business “continues to grow in a world that is desperately in need of natural gas at the moment, and I think for a long time to come”. Sawan said that “gas has a critical role to play in the transition” to lower-carbon energy, Bloomberg reports. He also warned that there was no sign of the tight energy market easing, adding: “What you will have going into 2023, of course, is the return of a significant appetite from China to take up gas…I would not declare an end to the energy crisis. I think we have a way to go.”

Elsewhere, there is continuing coverage of Shell’s record high profits of almost $40bn in 2022, with the Times reporting that “Labour and the Lib Dems both responded by calling for the government to impose a tougher windfall tax on North Sea oil and gas producers”. Reuters quotes Ed Miliband, Labour’s shadow secretary of state for climate change and net-zero, who says: “The government is letting the fossil fuel companies making bumper profits off the hook with their refusal to implement a proper windfall tax.” The New York Times also has the story, while Bloomberg says that Shell’s “blockbuster earnings” are “triggering the ire of British politicians, unions and policy analysts”. The Sun focuses on the comments of Miliband, reporting that he “demanded Britain ditch fossil fuels, then admitted we’ll need them for years”. The paper says: “He U-turned after first saying Labour would use only green renewables by 2030…But he admitted under a Labour government they would carry on using the energy in the North Sea for ‘a long time to come’.” [The newspaper is confusing energy with electricity. Labour’s green growth plan is for almost all of the UK’s electricity to be generated by renewables and nuclear by 2030 – this does not mean the UK will not need fossil fuels for other sectors, such as transport and heating, by 2030.] Repeating its misunderstanding, a Sun editorial follows up to say that Labour’s “policy platform currently hinges on a lightweight who cannot even see he is spouting contradictory nonsense”.

European Central Bank (ECB) president Christine Lagarde said yesterday that Eurozone governments must start to roll back support measures aimed at cushioning the impact of energy prices to avoid feeding inflation, reports Politico. “As the energy crisis becomes less acute, it is important to now start rolling these measures back promptly in line with the fall in energy prices and in a concerted manner,” Lagarde said, adding that a lot of these measures had been signed off on for the full year of 2023 at a time when energy prices were significantly higher than they are today, the outlet reports. Lagarde reiterated previous warnings that measures that are not temporary, targeted and tailored to preserving incentives to consume less energy “are likely to drive up medium-term inflationary pressures, which would call for a stronger monetary policy response”. Politico adds that “the ECB president’s comments came after the central bank raised interest rates by 0.5 percentage points and promised a similar increase in March”.

Meanwhile, Politico also reports that the “stars are moving into alignment” for the European Union to sign its trade pact with the Latin American Mercosur countries. However, this will be “easier said than done”, the outlet says: “The final stretch of talks – over protecting the Amazon and giving some concessions to South American companies – might be the toughest. And the clock is ticking: The window to sign the deal will soon close, with Argentina heading to the polls in October and the EU holding its own parliamentary election next year.” It adds: “Both sides have managed to somewhat assuage climate campaigners’ opposition to the deal, now that Lula has nominated respected Amazon activist Marina Silva to the post of environment minister and Brussels has created its own rules to ban imports that contribute to deforestation. Even EU climate chief Frans Timmermans is pushing for a swift conclusion of the deal. If the two sides can agree on halting deforestation, Brazil ‘deserves’ the pact and hopes it can be signed by July, Timmermans recently said after a trip to Brazil.”

A government-commissioned report by the Federal Network Agency has found that Germany’s power needs can be met “at all times” between 2025 and 2031, if, reports AFP, the country follows through on plans to “ramp up renewables and expand the energy grid massively”. The newswire quotes the report: “This will also be the case if energy consumption rises significantly because of new consumers, such as electric vehicles and heat pumps, and the coal phase-out takes place by 2030.” Der Spiegel notes that the coal phase-out in the Rhenish mining area is being brought forward by eight years to 2030, but this step is “controversial” in the east German mining areas. Economy minister Robert Habeck had spoken out in favour of an earlier phase-out of coal in the east “by consensus”, says the newspaper. Reuters adds that the German government is due to issue a power plant strategy in the first half of 2023 and wants new gas-fired power plants to be made ready to burn “clean” hydrogen instead of “natural” gas. In addition, it aims to use biomass and biomethane as a future energy source, notes the outlet.

Meanwhile, Die Zeit reports that Habeck has brought up tax breaks for companies investing in climate-friendly technology as an EU response to the US subsidy program for the renewable energy sector, which has been met with strong criticism in the EU for months. “Europe must do its homework”, said the Green politician at the start of a two-day trip to Sweden, adding that “we must remain competitive or become [competitive] again”, says the outlet. EurActiv also covers the story, adding that German industry “largely praised” the European Commission’s approach. The article quotes Tanja Gönner, the chief executive officer of the German Federation of Industries (BDI), commenting on Brussels’ initiative: “The Green Deal Industrial Plan rightly recognises the central role of industry in the transformation to climate neutrality.” However, she stresses that “Europe must focus on the strength of its industrial value chains, not just on individual technologies”. Reuters reports that Germany’s Habeck and French finance minister Bruno Le Maire will head to Washington next week “to press concerns about US climate subsidies and urge a favourable treatment of European businesses”.

Finally, Frankfurter Allgemeine Zeitung (FAZ) reports that the German gas storage facilities were 78.6% full on 1 February, almost twice as full as required by the German Energy Industry Act on this date. The newspaper quotes the president of the Federal Network Agency, Klaus Müller, saying: “This is a great joint achievement by everyone who uses gas sparingly.” However, he adds that Germany now has “the task of refilling the storage facilities in the summer for the next winter without Russian pipeline gas”.

China Daily writes that the “estimated minimum climate adaptation investment required by 2030 in a 1.5C warming scenario is $8.1bn (54.4bn yuan) for China”, citing a study recently issued by the bank Standard Chartered. The study says that China is one of the markets that is “less at risk of climate damage under the 1.5C warming scenario, explaining its relatively low requirement for adaptation investment as a proportion of GDP”, the state-run newspaper adds. The study continues that China’s economic strength and “historically strong” investment in climate adaptation “drives an economic benefit of $14 for every one dollar invested – one of the highest in the study”.

Separately, China Dialogue says that “local governments across China have begun to set policy goals for 2023 in their local sessions”, ahead of the “two sessions” in early March when the central government will “reveal its annual policy plans”. A number of governments have “emphasised the green energy transformation” and provinces from the south-east coastal region are “planning to further develop renewable energy and the accompanying storage”, the article adds.  

Meanwhile, a Bloomberg article quotes US National Security Council spokesman John Kirby, who says that the US-China relationship is the “most consequential bilateral relationship in the world”, adding that the two sides “would look for modest gains – such as expanded contacts over climate change and between their militaries”. The outlet highlights that while the US “wants to pressure China over national security issues, it’s far from certain that it can do so and also get China’s help on pressing global issues such as climate change”. France 24 writes, citing a report by AFP, that a senior Ukrainian lawmaker called on Wednesday for the US to impose secondary sanctions on China and India if they keep buying Russian energy, urging total solidarity against Moscow’s invasion.

Elsewhere, the South China Morning Post reports that Ecoceres, which is part of a “local gas” distributor called Hong Kong and China Gas (Towngas), will “soon start building a second plant to turn waste oil into low-carbon fuel for aircraft and vehicles, tapping strong demand for such fuels in Europe”. Towngas CEO Philip Siu Kam-shing says that the European Union has “promoted green fuel adoption via regulation in recent years to meet its climate-mitigation ambitions”, which has “created ample opportunities” for Ecoceres, the outlet notes. Finally, Bloomberg reports that Pakistan has inaugurated a “$2.7bn China-designed nuclear reactor, providing some relief as the nation grapples with an energy crisis”. 

Finally in China-related media, the South China Morning Post publishes a climate-sceptic opinion piece by Richard Harris – an investment manager and “professional geologist back in the 1970s”. Harris argues that “today’s extreme weather is not extreme – it is the norm. And looking at the swings in the Earth’s long history, a few generations will not tell us what ‘extreme temperatures actually are”. [Harris offers no evidence to support his claims.]

New research details the decline of butterflies in the UK, with the distribution of 58 native species falling 42% since the 1970s and “those that are only found in particular habitats, such as wetlands or chalk grassland, [faring] even worse, declining in distribution by 68%”, reports the Guardian. The State of the UK’s Butterflies 2022 report, led by Butterfly Conservation and using 23m butterfly records, says there needs to be a “massive step-change” to reverse what it described as disastrous declines in insect populations, the paper continues. The i newspaper says that “the exact causes of the decline in common butterflies are unclear, but it’s probably linked to a combination of pollution, pesticides, heavy fertiliser use and manicured gardens”. Scotland is the only country in the UK to have had an increase in its number of butterflies since the 1970s, as a result of climate change, reports the Times. The report says that there has been a 37% increase in the insects north of the border between 1979 and 2019, and a marginal increase in their distribution, the paper explains. However, the report warns that although some widespread species have increased, “habitat specialists” have greatly declined, the paper adds: “Across the UK, numbers have fallen by 80% and half of all remaining species are at risk of extinction. In England, the insects have suffered a decline of 45%, driven largely by a 75% reduction in the distribution of habitat specialists. In Wales there was an 8% drop and Northern Ireland saw a decline of 17%.” MailOnline also has the story.

A climate-sceptic minister in Rishi Sunak’s government who has been a fierce opponent of climate action received £10,000 from the chair of the “UK’s main climate science denial group” last month, reports DeSmmog. It continues: “Wycombe MP Steve Baker stepped down as a trustee of the Global Warming Policy Foundation (GWPF) in September, when then prime minister Liz Truss made him minister of state for Northern Ireland – a post he still holds under Rishi Sunak, Truss’s replacement. But the latest MPs’ register of interests shows that Baker received £10,000 in January from Neil Record, a Conservative Party donor and chair of the GWPF’s campaign arm, Net Zero Watch.” The register “does not say what the donation was for”, the outlet notes. 

The UK government may “scrap” many of the large road schemes being planned from 2025, reports Forbes. Giving evidence to parliament’s transport committee on Wednesday, Dame Bernadette Kelly, permanent secretary at the Department for Transport (DfT), said that inflationary pressures meant that many large roads projects would likely be delayed until 2030 or beyond, and that “headroom for new projects will be very limited”, the outlet reports: “There are 32 schemes included in the government’s road investment strategy for 2025 and beyond, known as RIS3. Several schemes could be cut from the program, including the controversial tunnel underneath the Stonehenge ritual landscape.”

Reflecting on Shell’s record $40bn profit in 2022, the Guardian’s financial editor Nils Pratley writes that “the infuriating thing about Shell is the refusal to contemplate even a modest course-correction in favour of a faster energy transition”. By Shell’s “broader metric, the greener stuff came out at only one-third of the whole – and, critically, exactly the same ratio is pencilled in for this year”, says Pratley, and this lack of greater ambition of renewables is “maddening”. He continues: “[I]t was striking that [Shell CEO] Sawan sounded only mildly excited by the green subsidies on offer in the US under President Biden’s Inflation Reduction Act. Some potential projects may become more attractive, he said, and it was ‘definitely an interesting stimulus’. Only interesting? The rest of the world sees the subsidies as lavish and an open goal for ambitious companies. Sawan is obviously right that governments also need to move faster in practical ways. His grumble about the slowness of planning and permitting processes on renewables infrastructure is echoed by others. But it is also fair to expect companies that claim to be in the ‘transition’ business to raise their own sights when given the financial resources to do so. The world has changed. Shell could move faster.”

In other comment on Shell, the Financial Times Lex column says that the company’s “big bet on natural gas” is now paying off “handsomely”. The FT’s business columnist Helen Thomas says Shell’s record profits is causing a “use-of-cash flow crisis”. She writes: “Not long ago the concern was that major oil companies didn’t have the cash flow to invest in fossil fuels, grow in green businesses and give shareholders the returns demanded. Now the reverse is true, in spades. It’s not much clearer how they want to handle it.” Bloomberg opinion columnist Javier Blas says that Shell – as with other oil-and-gas companies – is “caught between needing to prove their environmental commitments while making most of their money from dirty hydrocarbons – a dilemma that will get worse in the coming years”. The Independent’s associate editor Sean O’Grady writes: “Imagine if almost all our energy was from a mix of sustainable sources, with a base load of nuclear power for when the sun doesn’t shine and the wind doesn’t blow. And the energy giants are the people with the expertise to make it happen. Then they’d be heroes, but it’s for government to push them in the direction of building a green paradise. At the moment they do quite nicely out of selling us the gas we crave.” Finally, Emma Powell – editor of the daily Tempus column in the Times – says Shell’s payments under the windfall tax “barely touched the sides last year”. She writes: “The total UK tax bill amounted to $134m and is expected to rise to at least $500m this year after the levy. That sum looks paltry in the context of the cash that analysts expect Shell to generate. Naturally, a tougher approach by the UK government could make the levy more of an issue for the group.”

The forthcoming “Green Football Weekend” (a national campaign to “unleash[] the power of football to tackle climate change”) raises “awkward questions about the game’s readiness to start taking genuinely ambitious action”, writes the Guardian’s sportswriter Jonathan Liew. He describes the event as “one of those initiatives with a shiny website and a hashtag and a mixture of the well-meaning and faintly gimmicky. Middlesbrough are planting a tree for every goal they score against Blackpool. Wolves are wearing green armbands against Liverpool. It’s that sort of vibe.” Liew speaks to a few clubs in the English Football League (EFL) that are making significant changes, including Swindon Town, which is hoping to redevelop their stadium “with an environmental focus”, including “a new roof on the Stratton Bank stand [that] will be fitted with solar panels” and “electric charging points in the car park”. However, Liew notes: “Unlike the EFL, the Premier League isn’t even taking part in Green Football Weekend. Its environmental sustainability strategy, scheduled to launch in 2022, is yet to materialise. And while it has its own goals – halving emissions by 2030, going net-zero by 2040 – perhaps the reason it has been so taciturn on the subject is the sort of questions it might invite. Questions about short-haul flights. About its official oil partner. About airline sponsorships, cryptocurrency partnerships, clubs funded by some of the world’s biggest fossil fuel producers. Awkward questions.”

A new study finds that the amount of water in Earth’s rivers by mid-century may be lower than models currently predict. Using observations and weather data from more than 9,500 catchments around the world, researchers quantify how the flow of each river relates to drivers such as precipitation and groundwater storage. They find that streamflow is more sensitive to changes in precipitation than previously thought, particularly in Africa, Australia and North America. The authors conclude: “Our estimate points towards the possibility that a future water crisis could be more severe than anticipated.”