Shell boss: US ‘significantly’ more attractive for green energy investment than UK
The US and EU are “significantly” more attractive than the UK for energy investment, the new boss of Shell has warned.
Chief executive Wael Sawan has argued the government should “take a page” from the US and offer more incentives to boost domestic energy generation.
He told The Times that the US Inflation Reduction Act was providing “ten-year clarity and tangible, fixed incentives that people know to bank on”.
The act – passed by the White House last year – is a $391bn package of subsidies and tax cuts to spur green investment Stateside.
Asked how the UK ranked in contrast for terms of attractiveness for energy investments, Sawan argued the US was “ahead significantly” and that the EU was also ahead of the UK.
Shell has committed £25bn to UK energy projects over the current decade – but has warned it will have to look at projects on a “case by case” basis after Chancellor Jeremy Hunt toughened up the windfall tax last year – and is also concerned about planning delays and uncertainties over subsidies.
Sawan revealed he would “think twice about investing in more oil in the UK” as there were “more attractive locations right now”, such as the US Gulf of Mexico.
He argued the Energy Profits Levy, which has increased the tax rate in the North Sea from 40 to 75 per cent, was “fundamentally disincentivising the investment in new supplies which are critical if you want to build energy security for the long term”
Sawan said: “When you have such volatility, it fundamentally saps your conviction around your ability to be able to see the returns that are required on that investment, and therefore you move your capital to the areas where you see healthy returns at lower risk.”
Shell expects to pay more than £417m of tax in the UK following the strengthened levy.
The energy giant made a record £32.2bn profit last year – powered by soaring oil and gas prices following Russia’s invasion of Ukraine.
Shell’s low carbon plans include developing a carbon capture and storage project in Scotland and the world’s first commercial-scale floating wind farm off Scotland.
However, it has so far not been selected to receive subsidies, with Sawan warning it “will only be able to entertain start-ups in the 2030s because of significant permitting requirements and the like”.