OIL and gas major Shell has set out a strategy for achieving net zero energy transformation by 2050, which it says will be powered by growth in its customer-facing businesses.
The company claims that the strategy will help accelerate towards net-zero but environmentalists and energy experts have expressed doubts about its efficacy.
Shell’s target is comprehensive, covering emissions from its operations and from the use of its energy products, as well as emissions from oil and gas from other producers that Shell sells to its customers. Through Powering Progress, the company supports the most ambitious goal of the Paris climate agreement, to limit global temperature rise to 1.5°C. Powering Progress sets out a plan for accelerating Shell’s net-zero transition.
To achieve its net-zero goal the company will act on various fronts including continuing with short-term goals aimed at driving down carbon emissions towards its target. This includes new sets of targets for reducing carbon intensity as follows: 6–8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050, with 2016 intensity acting as the baseline. In 2016, Shell’s net carbon footprint was estimated as 79 gCO2e/MJ.
Shell will also seek to access an additional 25m t/y of carbon capture and storage (CCS) capacity by 2035. The company is currently involved in three key CCS projects: Quest in Canada (in operation); Northern Lights in Norway (sanctioned); and Porthos in the Netherlands (planned), which according to Shell totals about 4.5m t of storage capacity.
Additionally, the company aims to use nature-based solutions (NBS) to offset emissions of around 120m t/y by 2030; work with emissions initiatives such as Science Based Targets Initiative and Transition Pathway Initiative to develop industry standards, and align with those standards; and to develop an energy transition plan for an advisory vote with the aim of updating it every three years.
As part of delivering a portfolio suitable for the energy transition, Shell will work to build material low-carbon businesses of “significant scale” by the early 2030s. In the near-term, the company’s strategy is to rebalance its portfolio by investing in three pillars, Growth (US$5bn–6bn), Transition (US$8–9bn), and Upstream (about US$8bn).
Shell says upstream will continue to deliver vital energy supplies.
The company confirmed expectations that carbon emissions peaked in 2018 at 1.7 Gt/y, and that oil production peaked in 2019. That year, total liquid production was about 1.7m bbl/d. Shell expects that there will be a gradual reduction in oil production of about 1–2%/y, including divestments and natural decline.
Ben van Beurden, CEO of Shell, said: “We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”
Commenting on Shell’s recent announcement, Head of Greenpeace UK’s oil campaign Mel Evans said that Shell’s “customer first” strategy blames customers for climate change and the company is “brazenly” dodging oil production cuts by letting output dwindle.
Evans added: “Without commitments to reduce absolute emissions by making actual oil production cuts, this new strategy can’t succeed nor can it be taken seriously.”
Meanwhile, according to the Financial Times, Jeffries energy analyst Giacomo Romeo said that the strategy “does not introduce significant changes in its energy transition strategy”. Jeffries is a financial services company. It is also reported that he called the introduced carbon emissions goals “one of the most stringent carbon reduction plans in the sector”. But he questioned how Shell would achieve its goal, which he said remained “unclear”.
As well as Shell, several oil and gas companies have announced net-zero ambitions in the past few years, including BP, Repsol, Total, and Petronas. However, despite apparent good intention, the actions of majors seem to be falling behind their goals. In October 2020, thinktank Carbon Tracker released a report that showed that US and European companies had work to do to ensure they are prepared for the energy transition challenge.
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