Shell announces plans for major change as it aims for net zero by 2050
Shell has announced a major new plan to increase investments in low carbon and carbon capture technologies and to align its business with decarbonisation goals. In the same announcement, the company says that its oil and gas production has already peaked.
The Anglo-Dutch firm recently reported record-breaking losses of around £16bn following a very challenging year for the oil and gas industry, having been hit hard by a rapid demand decline triggered by the covid pandemic and associated disruption.
Shell CEO Ben van Beurden says that he plans to reshape the organisation to better integrate its business strategy, portfolio, and environmental ambitions under a single 'Powering Progress' umbrella, as part of an "accelerated strategy" to drive down emissions while delivering value for shareholders.
"We must give our customers the products and services they want and need - products that have the lowest environmental impact," he said. "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."
The firm has announced a suite of new short-term new goals, based on a 2016 starting point, to reduce its carbon intensity by six to eight per cent by 2023, 20 per cent by 2030, 45 per cent by 2035, and 100 per cent by 2050.
Shell's announcement exemplifies the growing competition between European oil majors to bolster their social license to operate in decarbonising economies. Rivals BP last year announced their expanded efforts to deliver net zero emissions by 2050 under its new CEO Bernard Looney.
However, environmental campaigners and some investors and analysts remain sceptical of oil industry players' abilities to limit their emissions given ongoing investment in fossil fuel projects.
As part of its announcement, Shell said that it will continue to operate its oil and gas businesses in order to generate cash for returns to shareholders and to fund investment in new low carbon growth areas for its business.
It aims to invest $2-3bn per year in renewables and energy solutions, still significantly below the $16-17bn per year ti says it will continue to spend on its fossil fuels and chemicals business.
Shell says it aims to grow its electricity business, planning to double the amount it sells currently, while serving around 15 million retail and business customers worldwide. The company's hydrogen business is considered another key pillar of its strategy, while it also aims to expand interests in nature-based solutions, particularly forestry, as well as EV recharging and renewable biofuels.
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