Shell’s spending on renewables falls as firm prioritises shareholder returns
Shell paid out more than £18.7bn to shareholders in 2024 while cutting spending on renewable energy according to its full year results.
The FTSE 100 giant reported a dip in earnings from £23bn in 2023 to £19.1bn in 2024 amid weaker oil prices and lower demand for fossil fuels.
Despite the drop-off in earnings, Shell said on Thursday it had hiked dividends by four per cent in the fourth quarter and announced a £2.8bn share buyback programme, which it expects to be completed by its first quarter results for 2025.
Chief executive Wael Sawan said: “Our continued focus on simplification helped to deliver over $3bns in structural cost reductions since 2022, meeting our target ahead of schedule, whilst also making significant progress against all our other financial targets.”
He added cash flow had remained “solid” at around £32bn for the year.
Shell’s spending on renewables falls
Shell has pledged to become a net-zero energy business by 2050, but last year, it watered down green targets for the end of this decade, holding oil production steady and growing its liquified natural gas business.
Overall, for the year, the company’s capital spending on renewable projects fell from £2.3bn to £2.1bn, although overall external power sales from the division rose 10 per cent to 306 terawatt hours.
The company’s overall cash capital spending fell from £19.6bn to £17bn.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Shell remains at a crossroads torn between the seemingly inevitable pull of the energy transition and the demands of shareholders.
“Its financial strength gives it the firepower to invest for the future as well as make generous distributions, but there are still some major doubts as to how the company plans to adapt to changing shifts in the energy mix.”
Shares in Shell are up more than four per cent over the last 12 months.
Oil prices have broadly steadied over the last year amid falling demand and a surge in the number of motorists buying electric vehicles (EVs).
Shell has outperformed its FTSE 100-listed rival BP, which is undergoing a major cost-cutting programme with a nearly five per cent reduction in its global headcount.