Home: News

BP, Shell, Exxon and co. bag £1bn handout as profits soar

Exclusive: Government giveaway of CO2 permits helped fossil fuel giants achieve record-breaking profits

Lucas Amin
6 February 2023, 11.00pm

Alamy Stock Photo

Energy giants including Shell and BP were handed more than £1bn worth of free pollution permits last year, openDemocracy can reveal.

The handouts came as oil and gas companies racked up record profits, while soaring fuel prices threatened to push millions into poverty.

Climate change rules now require the biggest polluters in Britain to buy permits – sold at government auction – for every tonne of carbon dioxide they emit.

But data obtained by openDemocracy reveals the government gave away 13.9 million of the permits in 2022 without charging polluters a penny.

Help us uncover the truth about Covid-19

The Covid-19 public inquiry is a historic chance to find out what really happened.

The average cost of one permit last year was £79.20, giving them an approximate total value of £1.1bn.

The government claims issuing free permits helps stop firms relocating to countries that do not have carbon pricing mechanisms.

But Labour MP John McDonnell said the news revealed a “staggering dereliction of duty by the government” on tackling climate change.

He told openDemocracy that the “shocking scale of [government] giveaways to their friends in the oil industry warrants an independent inquiry into how these decisions were made, by whom and what influences were brought to bear.”

Last week, ExxonMobil declared profits of $56bn (£46.6bn) for 2022 – a historic high in the Western oil industry – yet the government nonetheless gave the company free CO2 permits worth £160m.

Shell, which announced $40bn (£33.3bn) in annual profit last week, also won around £35m in free permits. And BP, whose profits doubled to $27.7bn (£23bn) last year according to reports on Tuesday, was handed free permits worth roughly £30m.

Green MP Caroline Lucas told openDemocracy the government was “forcing the cash-strapped public to pick up the tab” for “greedy fossil fuel companies”. She said these companies are “climate criminals” and that “our government is acting as their accomplice”.

Ministers, Lucas said, must “bring an end to these free pollution permits immediately, and make fossil fuel giants pay for the climate-wrecking damage they’re causing”.

Oil companies owned by foreign governments also received free pollution permits worth tens of millions of pounds.

SABIC UK Petrochemicals, which is controlled by the Kingdom of Saudi Arabia, was given £51m in permits to cover its emissions from a petrochemicals plant on Teesside.

TAQA Bratani, which is controlled by the government of Abu Dhabi, was given free permits worth around £17m to cover its emissions at six North Sea oil rigs.

The Chinese government received permits through multiple joint ventures it holds with Ineos and Repsol – while the China National Oil Company (CNOOC) also directly received permits worth around £10m.

Harriet Fox, an energy analyst at the think tank Ember, told openDemocracy: “The government is making a mockery of the ‘polluter pays’ principle.”

Fox said that “stringent climate conditions” should be attached to free permits to ensure they “incentivise industry to reduce their greenhouse gas emissions, not line the pockets of some of the largest emitters in the UK already making billions from the energy crisis.”

openDemocracy first revealed the issuance of free permits to big polluters via the UK Emissions Trading Scheme last October.

The government has consulted twice on ending the free allocation of permits by 2025 but has not announced a policy change.

The Department for Business, Energy and Industrial Strategy did not respond to a request for comment.

Updated, 7 February 2023: This article was amended to include reference to BP’s annual profits, announced today.

Ukraine's fight for economic justice

Russian aggression is driving Ukrainians into poverty. But the war could also be an opportunity to reset the Ukrainian economy – if only people and politicians could agree how. The danger is that wartime ‘reforms’ could ease a permanent shift to a smaller state – with less regulation and protection for citizens.
Our speakers will help you unpack these issues and explain why support for Ukrainian society is more important than ever.

We’ve got a newsletter for everyone

Whatever you’re interested in, there’s a free openDemocracy newsletter for you.

Had enough of ‘alternative facts’? openDemocracy is different Join the conversation: get our weekly email


We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram WhatsApp yourData