This story was originally published by Guardian and is reproduced here as part of the Climate Desk collaboration.

Shell’s profits have climbed to $14 billion for the first half of 2024 after its decision to focus on fossil fuels over low-carbon energy delivered stronger than expected earnings for a second consecutive quarter.

Europe’s biggest oil and gas company rewarded its shareholders with a further $3.5 billion in share buybacks after reporting adjusted earnings of $6.3 billion in the three months to the end of June.

The latest results, which have taken the company’s total profits for the first half of the year to $14 billion and its share buybacks to $7 billion, have angered climate campaigners as Shell continues to grow its global gas business and pull back on investment in low-carbon energy.

“People in the Caribbean devastated by the impacts of Hurricane Beryl are left to pick up the pieces, while rich shareholders and fossil fuel CEOs get to rake in the profits, removed from the chaos they’ve played a leading role in creating,” McIntosh said.

Shell delivered its results days after BP topped forecasts by reporting profits of almost $2.8 billion for the second quarter and set out plans to develop an oil hub in the Gulf of Mexico.

Together the companies have reported combined profits over the last year amounting to £31.2 billion, or more than the combined gross domestic product of six of the Caribbean countries affected most by the record-breaking destruction of Hurricane Beryl, according to the NGO Global Justice Now.

Izzie McIntosh, a climate campaigner at Global Justice Now, said Shell’s profits laid bare “the shameful inequity at the heart of the fossil fuel economy”.

“People in the Caribbean devastated by the impacts of Hurricane Beryl are left to pick up the pieces, while rich shareholders and fossil fuel CEOs get to rake in the profits, removed from the chaos they’ve played a leading role in creating,” McIntosh said.

Shell watered down a climate pledge this year by reframing a target to reduce the carbon emissions intensity of the energy it sells by 15-20 percent by the end of the decade, compared with its previous target of 20 percent.

This will enable Shell to slow the pace of its emissions reductions while growing its global liquified natural gas (LNG) business in a decade that climatologists have warned is crucial in averting a climate catastrophe.

The new targets emerged months after Shell’s chief executive, Wael Sawan, said the company would cut hundreds of jobs from the oil company’s low-carbon division as part of a plan to increase the company’s profits.

Shell, which is headquartered in the UK, revealed this week that it plans to retreat from the ageing North Sea oil basin in favour of more lucrative opportunities in its global portfolio.

The company said it has sold 11 North Sea gas fields – which it owned alongside US giant ExxonMobil – to independent North Sea operator Viaro. It has also sold one of the UK’s most important gas import terminals.

Sawan said the strong financial results, coupled with the decision to hand shareholders $3.5 billion in buybacks, demonstrated the company was “delivering more value with less emissions”.

Shell had warned investors to expect an impairment charge of up to $2 billion in its quarterly results after it was forced to halt work on Europe’s largest biofuel project, in Rotterdam, which was expected to convert waste into sustainable aviation fuel; and sell off a Singapore refinery.

This story was originally published by Guardian and is reproduced here as part of the Climate Desk collaboration.

Shell’s profits have climbed to $14 billion for the first half of 2024 after its decision to focus on fossil fuels over low-carbon energy delivered stronger than expected earnings for a second consecutive quarter.

Europe’s biggest oil and gas company rewarded its shareholders with a further $3.5 billion in share buybacks after reporting adjusted earnings of $6.3 billion in the three months to the end of June.

The latest results, which have taken the company’s total profits for the first half of the year to $14 billion and its share buybacks to $7 billion, have angered climate campaigners as Shell continues to grow its global gas business and pull back on investment in low-carbon energy.

“People in the Caribbean devastated by the impacts of Hurricane Beryl are left to pick up the pieces, while rich shareholders and fossil fuel CEOs get to rake in the profits, removed from the chaos they’ve played a leading role in creating,” McIntosh said.

Shell delivered its results days after BP topped forecasts by reporting profits of almost $2.8 billion for the second quarter and set out plans to develop an oil hub in the Gulf of Mexico.

Together the companies have reported combined profits over the last year amounting to £31.2 billion, or more than the combined gross domestic product of six of the Caribbean countries affected most by the record-breaking destruction of Hurricane Beryl, according to the NGO Global Justice Now.

Izzie McIntosh, a climate campaigner at Global Justice Now, said Shell’s profits laid bare “the shameful inequity at the heart of the fossil fuel economy”.

“People in the Caribbean devastated by the impacts of Hurricane Beryl are left to pick up the pieces, while rich shareholders and fossil fuel CEOs get to rake in the profits, removed from the chaos they’ve played a leading role in creating,” McIntosh said.

Shell watered down a climate pledge this year by reframing a target to reduce the carbon emissions intensity of the energy it sells by 15-20 percent by the end of the decade, compared with its previous target of 20 percent.

This will enable Shell to slow the pace of its emissions reductions while growing its global liquified natural gas (LNG) business in a decade that climatologists have warned is crucial in averting a climate catastrophe.

The new targets emerged months after Shell’s chief executive, Wael Sawan, said the company would cut hundreds of jobs from the oil company’s low-carbon division as part of a plan to increase the company’s profits.

Shell, which is headquartered in the UK, revealed this week that it plans to retreat from the ageing North Sea oil basin in favour of more lucrative opportunities in its global portfolio.

The company said it has sold 11 North Sea gas fields – which it owned alongside US giant ExxonMobil – to independent North Sea operator Viaro. It has also sold one of the UK’s most important gas import terminals.

Sawan said the strong financial results, coupled with the decision to hand shareholders $3.5 billion in buybacks, demonstrated the company was “delivering more value with less emissions”.

Shell had warned investors to expect an impairment charge of up to $2 billion in its quarterly results after it was forced to halt work on Europe’s largest biofuel project, in Rotterdam, which was expected to convert waste into sustainable aviation fuel; and sell off a Singapore refinery.

This story was originally published by the Guardian and is reproduced here as part of the Climate Desk collaboration.

BP’s shareholders can expect a multibillion-dollar payout this year after the oil giant reported better than expected quarterly profits of almost $2.8 billion and set out plans to develop a new oil hub in the Gulf of Mexico.

The oil company has angered green groups by giving the go-ahead to develop potential oil resources of 10 billion barrels from the new Kaskida project 250 miles Southwest of New Orleans, after scaling back its green investments in the last quarter.

At the same time it will raise its dividend payments by 10 percent while buying back stock worth $1.75 billion over the next three months to bring its total buy-backs for the first half of the year to $3.5 billion—and $7 billion for 2024 as whole.

In total BP has paid out $14.8 billion to shareholders since June 2023, the month that marked the start of the world’s first year-long breach of the 1.5 C heating limit, according to an analysis by Global Witness.

Alice Harrison, head of fossil fuel campaigns at the campaign group, said: “While millions of us struggle with high temperatures and high bills, BP are raking in billions of profits, paying out massive dividends, and doubling down on dirty new oil and gas projects.”

The shareholder windfall comes after BP reported better-than-expected profits of $2.76 billion for the three months to the end of June, compared with analyst forecasts of $2.54 billion for the quarter. The shares rose 2 percent in early trading on Tuesday.

“Fossil fuel companies like BP are turning a blind eye to climate breakdown, so now governments must act.”

The company warned investors earlier this month to expect “significantly lower” profit margins from its refining business, which could wipe between $500 million and $700 million from its earnings for the quarter.

It also told investors it would take a $2 billion writedown resulting from a plan to scale back its refining operations at its Gelsenkirchen biofuels refinery in Germany by a third from next year in response to weaker demand.

The chief executive, Murray Auchincloss, said BP was committed to delivering “a simpler, more focused and higher-value company” for shareholders. But the strategy has angered climate campaigners by appearing to scale back its green investments while pushing forward high-value fossil fuel projects.

In addition to cutting investment in its German biofuels refinery the company has also ruled out further investment in offshore wind while driving forward plans for major oil projects.

Auchincloss told the Guardian that BP is committed to transforming the company from an oil company to an “integrated energy company” and has set out plans to build between five and 10 green hydrogen projects this decade to help produce sustainable aviation fuel and decarbonize BP’s refining operations.

He said BP was poised to go ahead with two green hydrogen projects, which produce the carbon-free gas through electrolysis using renewable power, at its Castellón refinery in Spain and at its Lingen plant in Germany.

BP is also leading the world in biofuels, biogas, and electric vehicle charging infrastructure, Auchincloss said. “What the world needs now is construction—not more targets and pathways. That’s what we’re doing. We’re getting things done.”

Although the oil company’s underlying replacement cost profit—the metric most closely observed by City analysts—reached $2.8 billion for the second quarter, its reported result showed a $165 million loss, compared with a reported profit of $2.3 billion in the same quarter last year, because of the refinery writedown.

Harrison said: “Fossil fuel companies like BP are turning a blind eye to climate breakdown, so now governments must act. Rather than propping up the climate-wrecking fossil fuel industry, we need them to make polluters pay for the damage they have already caused, and steer us towards a cleaner, greener future.”

This story was originally published by the Guardian and is reproduced here as part of the Climate Desk collaboration.

The artificial intelligence boom has driven Big Tech share prices to fresh highs, but at the cost of the sector’s climate aspirations.

Google admitted on Tuesday that the technology is threatening its environmental targets after revealing that data centers, a key piece of AI infrastructure, had helped increase its greenhouse gas emissions by 48 percent since 2019. It said “significant uncertainty” around reaching its target of net zero emissions by 2030—reducing the overall amount of CO2 emissions it is responsible for to zero—included “the uncertainty around the future environmental impact of AI, which is complex and difficult to predict”.

It follows Microsoft, the biggest financial backer of ChatGPT developer OpenAI, admitting that its 2030 net zero “moonshot” might not succeed owing to its AI strategy.

So will tech be able to bring down AI’s environmental cost, or will the industry plough on regardless because the prize of supremacy is so great?

Why does AI pose a threat to tech’s green goals?

Data centers are a core component of training and operating AI models such as Google’s Gemini or OpenAI’s GPT-4. They contain the sophisticated computing equipment, or servers, that crunch through the vast reams of data underpinning AI systems. They require large amounts of electricity to run, which generates CO2 depending on the energy source, as well as creating “embedded” CO2 from the cost of manufacturing and transporting the necessary equipment.

According to the International Energy Agency, total electricity consumption from datacentres could double from 2022 levels to 1,000 TWh (terawatt hours) in 2026, equivalent to the energy demand of Japan, while research firm SemiAnalysis calculates that AI will result in datacentres using 4.5 percent of global energy generation by 2030. Water usage is significant too, with one study estimating that AI could account for up to 6.6 billion cubic metres of water use by 2027—nearly two-thirds of England’s annual consumption.

What do experts say about the environmental impact?

A recent UK government-backed report on AI safety said that the carbon intensity of the energy source used by tech firms is “a key variable” in working out the environmental cost of the technology. It adds, however, that a “significant portion” of AI model training still relies on fossil fuel-powered energy.

Indeed, tech firms are hoovering up renewable energy contracts in an attempt to meet their environmental goals. Amazon, for instance, is the world’s largest corporate purchaser of renewable energy. Some experts argue, though, that this pushes other energy users into fossil fuels because there is not enough clean energy to go round.

“Energy consumption is not just growing, but Google is also struggling to meet this increased demand from sustainable energy sources,” says Alex de Vries, the founder of Digiconomist, a website monitoring the environmental impact of new technologies.

Is there enough renewable energy to go around?

Global governments plan to triple the world’s renewable energy resources by the end of the decade to cut consumption of fossil fuels in line with climate targets. But the ambitious pledge, agreed at last year’s COP28 climate talks, is already in doubt and experts fear that a sharp increase in energy demand from AI data centers may push it further out of reach.

The IEA, the world’s energy watchdog, has warned that even though global renewable energy capacity grew by the fastest pace recorded in the past 20 years in 2023, the world may only double its renewable energy by 2030 under current government plans.

The answer to AI’s energy appetite may be for tech companies to invest more heavily in building new renewable energy projects to meet their growing power demand.

How soon can we build new renewable energy projects?

Onshore renewable energy projects such as wind and solar farms are relatively fast to build—they can take less than six months to develop. However, sluggish planning rules in many developed countries alongside a global logjam in connecting new projects to the power grid could add years to the process. Offshore windfarms and hydro power schemes face similar challenges in addition to construction times of between two and five years.

This has raised concerns over whether renewable energy can keep pace with the expansion of AI. Major tech companies have already tapped a third of US nuclear power plants to supply low-carbon electricity to their data centers, according to the Wall Street Journal. But without investing in new power sources these deals would divert low-carbon electricity away from other users leading to more fossil fuel consumption to meet overall demand.

Will AI’s demand for electricity grow for ever?

Normal rules of supply and demand would suggest that, as AI uses more electricity, the cost of energy rises and the industry is forced to economize. But the unique nature of the industry means that the largest companies in the world may instead decide to plough through spikes in the cost of electricity, burning billions of dollars as a result.

The largest and most expensive data centers in the AI sector are those used to train “frontier” AI, systems such as GPT-4o and Claude 3.5, which are more powerful and capable than any other. The leader in the field has changed over the years, but OpenAI is generally near the top, battling for position with Anthropic, maker of Claude, and Google’s Gemini.

Already, the “frontier” competition is thought to be “winner takes all,” with very little stopping customers from jumping to the latest leader. That means that if one business spends $100 million on a training run for a new AI system, its competitors have to decide to spend even more themselves or drop out of the race entirely.

Worse, the race for so-called “AGI”, AI systems that are capable of doing anything a person can do, means that it could be worth spending hundreds of billions of dollars on a single training run—if doing so led your company to monopolize a technology that could, as OpenAI says, “elevate humanity.”

Won’t AI firms learn to use less electricity?

Every month, there are new breakthroughs in AI technology that enables companies to do more with less. In March 2022, for instance, a DeepMind project called Chinchilla showed researchers how to train frontier AI models using radically less computing power, by changing the ratio between the amount of training data and the size of the resulting model.

But that didn’t result in the same AI systems using less electricity; instead, it resulted in the same amount of electricity being used to make even better AI systems. In economics, that phenomenon is known as “Jevons’ paradox,” after the economist who noted that the improvement of the steam engine by James Watt, which allowed for much less coal to be used, instead led to a huge increase in the amount of the fossil fuel burned in England. As the price of steam power plummeted following Watt’s invention, new uses were discovered that wouldn’t have been worthwhile when power was expensive.