Fossil fuel ‘superprofits’ could have funded international climate finance needs several times over

The study, published in Climate Policy, analysed the revenues the top oil and gas companies reported in 2022. Following Russia’s invasion of Ukraine in February that year, international energy prices soared and fossil fuel companies reaped tremendous profits as a result.

The researchers collated the reported earnings over 2022 from 93 of the largest fossil fuel companies around the world and subtracted their reported expected earnings projected at the beginning of the year from their actual earnings at the year’s end.

They found that across all the companies studied, fossil fuel companies netted nearly half a trillion US dollars ($490 billion) in profits above their expectations, dubbed ‘superprofits’ by the team. Almost $300 billion went to private companies predominantly headquartered in the developed countries that pledged to mobilise $100 billion annually from 2020 onwards to support developing countries in mitigating emissions and adapting to climate change; the remainder went to companies, predominantly elsewhere, with majority government control.

The researchers say that the scale and structure of fossil fuel profits should be part of international climate finance discussions at this year’s climate COP and G20 meeting, including considering the enhanced taxation of future superprofits by fossil fuel companies.

The researchers note that these superprofits, arising from activities that drive climate change, amount to five times the $100 billion per year commitment for supporting the climate actions of developing countries set at the 2009 Copenhagen Climate Summit. In addition, they add that superprofits should be considered as negotiations on the next round of international financial climate contribution targets – dubbed the New Collective Quantified Goal (NCQG) – comes under discussion at COP29. They also note that the superprofits amounted to 700 times the initial $700 million endowment to the Loss and Damage fund which was inaugurated at last year’s COP in Dubai.

In their analysis, the researchers split out the superprofits based on country of origin, as well as if the fossil fuel company was private or government-owned.

Of the total superprofits, approximately $208 billion, or 42%, was amassed by government-controlled companies. The other $281 billion was made by private companies, of which 95% went to privately controlled companies headquartered in countries contributing to the global climate finance target. Of this, over half of the private superprofits ($143 billion) went to companies headquartered in the United States, while a further 37% ($103 billion) of private superprofits were earned by countries based in the United Kingdom, France and Canada.

Of the $208 billion that went to government-controlled companies, 70% ($146 billion) went to companies headquartered in nations that do not have historical commitments to contribute to international climate finance, while the remaining 30% ($62 billion) were made by companies controlled by countries committed to contributing to climate change funding.

In total, in 2022 fossil fuel companies saw total profits of $1,243 billion or about 2.6 times that of the previous year, with approximately $490 billion in addition to the projected $753 billion that had been expected if the energy crisis had not occurred. They noted also that nearly all fossil fuel companies reported earning significant profits above projections, which is unusual in itself.

The researchers also noted that these figures are based on companies that reported their earnings. A number of major fossil fuel companies, including ones from Russia, Iran, South Africa and Venezuela do not report their earnings and are not included in these figures, thus making them a minimum estimate for the profits of oil and gas companies globally.

Additional material

• Paper: Harnessing oil and gas superprofits for climate action
• Professor Michael Grubb's academic profile
• Professor Florian Egli’s academic profile
• Dr Anna Stünzi’s academic profile
• Technical University of Munich
• University of St. Gallen

Media contact

Mike Lucibella

• E: m.lucibella@ucl.ac.uk

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Unsplash: Adam Smigielski