BP announced this morning (February 7) it had seen annual profits of £23 billion in 2022, double that of the previous year, citing the increase in gas prices as a result of Russia’s invasion of Ukraine as the reason for its fortune.
Accompanied by news in recent weeks from other energy firms of similar increased profit – Shell reported £32bn in 2022 – the announcement has led many to call for a higher tax on fossil fuel companies to fund policies to help people reduce their energy consumption, such as insulating homes and fitting more energy efficient heating systems.
The Energy Profits Levy was introduced last year to tax profits made by companies like Shell and BP, but many say it isn’t tough enough.
Labour’s shadow climate change and net zero secretary Ed Milliband said: “What is so outrageous is that as fossil fuel companies rake in these enormous sums, Rishi Sunak still refuses to bring in a proper windfall tax that would make them pay their fair share.”
In a statement, Milliband explained the Labour Party would impose an increased windfall tax – up from the 35 per cent the Energy Profits Levy is currently set at – to stop companies making exorbitant profits from British people struggling to heat their homes.
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“When it comes to oil and gas interests, Rishi Sunak is too weak to stand up for the British people,” Miliband said, adding that the Labour Party would “cut bills for good and make Britain a clean energy superpower”.
BP accompanied its record profits announcement with a new climate strategy which involved cutting its emissions goals and further investment in oil and gas projects until 2030, which it said was required to meet global energy demands.
The company’s new target will be to reduce carbon emissions from oil and gas production by 20 to 30 per cent by 2030. Its previous target had been a 35 to 40 per cent reduction.
Chief executive Bernard Looney has put forward £6.6bn of investment in oil and gas, matching the investment for energy transition projects.
Offshore oil rig, location unknown. BP currently has seven oil rigs in the North Sea. (Image: Grant Durr/Unsplash)
“Not only will BP’s new strategy fail to deliver much needed energy security in the UK but it will ensure that people across the globe already battling devastating droughts, floods and heatwaves, will continue losing their lives and livelihoods,” Greenpeace UK’s head of climate justice, Kate Blagojevic, said.
Blagojevic said BP, whose profits last year were the biggest the company has seen in its 114-year history, is “mining gold out of the vast suffering caused by the climate and energy crisis”.
“This is precisely why we need governments to intervene to change the rules,” she added.
“Cost of living crisis? Not if you’re a BP exec. Fossil fuel companies shouldn’t be able to reap such massive profits while people are paying exorbitant energy costs,” Connor Schwartz, climate campaigner at FOE, said.
Schwartz criticised the scaling back of BP’s climate promises too. He said: “It’s clear that heating our homes will continue to cost the Earth in more ways than one.”
IPPR researcher Joseph Evans called for the government to look to the examples of Canada and the United States, both of which are “already taking action on excessive shareholder payouts”, adding that the “surplus cash” could be redirected into the lowering bills and the transition to green energy.
Fiona Duggan, policy lead at Ashden, said BP’s “enormous profits” were “particularly shocking”, agreeing with Evans that the money should be taken through taxation and used to “reduce the cost of living crisis”.
The current ‘windfall tax’ only applies to profits made from extracting UK oil and gas and BP said its UK business accounts for less than 10 per cent of global profits (approximately £2.3bn).
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