SHELL’S new boss, Wael Sawan, has come under fire from environmental groups after revealing that the company intends to remain “committed” to its fossil fuel business by maintaining oil output at current levels of 1.4m bbl/d until 2030, and by growing its LNG business – a path that will allow the firm to reward its shareholders “today, and well into the future,” Sawan said.
Speaking at its Capital Markets Day 2023 event, Sawan said hydrocarbons will be critical for energy security for a long time to come, and warned of “dismantling the current energy system faster than we are able to build the clean energy system of the future.”
With a belief that LNG will play an even bigger role in the future than it plays today, Sawan said Shell would invest around US$40bn in its integrated gas and upstream businesses to “secure energy that the world needs.”
Spending on low-carbon energy solutions such as biofuels, hydrogen, electric vehicle charging and CCS in the same period however would be distinctly less than that of oil and gas, and would amount to around US$10-15bn.
Shell said that in 2022, 40% of its total R&D spend went to proving and scaling low-carbon products and services. Going forward, it would only spend money where it had adjacencies, a track record and where it saw the right environment to invest. “In short, we will deliver more value, with less emissions,” Sawan said – a phrase that underscored Shell’s presentation.
When it comes to its renewables and energy solutions business, Shell said it would take “a measured approach”, by selectively taking development risks in renewable generation projects. The energy giant said it would also make investments to decarbonise its own hydrogen and CCS assets first, before helping its customers to decarbonise.
Despite talk of low carbon fuels, discussions around wind and solar were scant. Instead, Shell remained emphatic that hydrogen was the way forward.
The lack of wind and solar, and a nod to achieving emission reduction targets early did not go unnoticed by those listening at the event. Shell said it had achieved a decline in its oil production of around 1-2% a year earlier than expected, and was on track for halving scope 1 and 2 emissions by 2030, and for achieving near-zero methane emissions by 2030. However the figures did little to placate outspoken environmentalists.
“Shell’s production cut was always a joke, allowing oil production to fall more slowly than natural decline while boosting gas production at the same time – now they’re showing their true colours,” Charlie Kronick, senior climate advisor at Greenpeace UK, said, according to the Telegraph.
“From wildfires in Canada to drought and flooding in East Africa, the effects of climate change are already devastating lives and livelihoods around the world. Yet Shell and their competitors remain determined to squeeze every last drop of profit from their dirty oil and gas operations. The writing is on the wall for oil and gas but Wael Sawan is refusing to read it.”
Shell is not the first company to backtrack on previously pledged climate commitments.
Back in February, after raking-in billions in profits from fossil fuels, BP announced it would scale back its climate goals and deepen its investments in oil and gas to meet current demands.
The firm had declared it would aim for a 35-40% reduction in emissions by the end of this decade, but downgraded its ambitions in March 2023 to a target of 20-30% instead.
Similar to Shell, BP’s spending on renewables was also scrutinised, when in 2019 it spent just US$500m–750m on renewable investments, compared to more than US$14bn on its oil and gas businesses. The firm has said though that it expects investment in bioenergy, EV charging, hydrogen and renewables and power to be above 40% of total bp investment in 2025, and around 50% in 2030.
Saudi Aramco also announced earlier this year that it will increase oil and gas production over this decade, as the world aims to achieve an “unrealistic” transition away from fossil fuels. And even Exxon has walked away from its most heavily publicised climate solution – renewable fuels made from algae – having spent US$350m over 12 years researching its potential.
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