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Shell outlines steps to net-zero business by 2050; to cut production of traditional fuels 55% by 2030

Global oil and gas major Shell has outlined how it will achieve its target to be a net-zero emissions energy business by 2050, in step with society’s progress towards achieving net zero. This target covers the emissions from its operations and the emissions from the use of all the energy products it sells. Crucially, it includes emissions from the oil and gas that others produce and Shell then sells as products to customers, making the target comprehensive.

To achieve net zero, Shell:

  • Will continue with short-term targets that will drive down carbon emissions as it makes progress towards the 2050 target, linked to the remuneration of more than 16,500 staff. This includes a new set of targets to reduce net carbon intensity: 6-8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050, using a baseline of 2016;

  • Expects that its total carbon emissions peaked in 2018 at 1.7 gigatonnes per annum;

  • Confirms that its total oil production peaked in 2019;

  • Will seek to have access to an additional 25 million tonnes a year of carbon, capture and storage (CCS) capacity by 2035. Currently, three key CCS projects of which Shell is a part, Quest in Canada (in operation), Northern Lights in Norway (sanctioned) and Porthos in The Netherlands (planned), will total around 4.5 million tonnes of capacity;

  • Aims to use nature-based solutions (NBS), in line with the philosophy of avoid, reduce and only then mitigate, to offset emissions of around 120 million tonnes a year by 2030, with those used being of the highest independently verified quality;

  • Will work with the Science Based Targets Initiative, Transition Pathway Initiative and others to develop standards for the industry and align with those standards;

  • Starting at the 2021 AGM (annual general meeting), submit an Energy Transition Plan for an advisory vote to shareholders, the first in the sector to do so. The company will update that plan every three years and seek an advisory vote on the progress made each year.

Shell serves more than 1 million commercial and industrial customers, and 30 million customers at 46,000 retail service stations daily. Shell uses its world-leading brand, global reach and expertise to be a one-stop shop for both consumer and business customers. A presence across the entire energy system means it can optimize, scale up, and trade products in a way that develops markets, drives down costs, and can help accelerate the energy transition, the company said.

Shell’s aim is to build material low-carbon businesses of significant scale by the early 2030s. Its upstream businesses will continue to deliver vital energy supplies, which will help to generate the cash and returns needed to fund shareholder distributions while accelerating investment in the growth businesses to capture new market opportunities.

In the near term, Shell’s strategy will rebalance its portfolio, investing annually $5-6 billion in its Growth pillar (around $3 billion in Marketing; $2-3 billion in Renewables and Energy Solutions); $8-9 billion in its Transition pillar (around $4 billion Integrated Gas; $4-5 billion Chemicals and Products); and around $8 billion in Upstream. Plans include:

Growth pillar:

  • Marketing. Target to increase Adjusted Earnings to around $6 billion by 2025 (from $4.5 billion in 2020), achieved by improving the already market-leading position of the lubricants business, an increase to 40 million customers at 55,000 retail sites (from 30 million at 46,000 sites today) and growth of global electric vehicle (EV) network from more than 60,000 charge points today to around 500,000 by 2025.

  • Low-carbon fuels. Extend the biofuels production and distribution business, which in 2019 sold more than 10 billion liters of biofuels. The joint venture Raízen, which produces low-carbon fuels from sugar cane in Brazil, recently acquired Biosev. This is set to increase Raízen’s bioethanol production capacity by 50%, to 3.75 billion liters a year—around 3% of global production.

Renewables and Energy Solutions pillar:

  • Integrated Power. Shell aima to sell some 560 terawatt hours a year by 2030—twice as much electricity as it sells today. It expects to serve more than 15 million retail and business customers worldwide. It aims to be a leading provider of clean Power-as-a-Service.

  • Nature-based solutions. Shell expects to invest around $100 million a year in high-quality, independently verified projects on the ground to build a significant and profitable business to help customers meet their net-zero emissions targets.

  • Hydrogen. The company will build on its leading position in hydrogen by developing integrated hydrogen hubs to serve industry and heavy-duty transport, aiming to achieve double-digit share of global clean hydrogen sales.

Transition pillar:

  • Integrated Gas. Extend leadership in liquefied natural gas (LNG) volumes and markets, with selective investment in competitive LNG assets to deliver more than 7 million tonnes per annum of new capacity on-stream by middle of the decade. Continue to support customers with their own net-zero ambitions, with leading offers such as carbon-neutral LNG.

  • Chemicals and Products. Transform the refinery footprint from 13 sites today to six high-value Chemicals and Energy Parks and reduce production of traditional fuels by 55% by 2030. Intention to grow volumes of the chemicals portfolio and increase cash generation from Chemicals by $1-2 billion a year by 2030 compared with the medium term. Will produce chemicals from recycled waste, known as circular chemicals, and by 2025 aim to annually process 1 million tonnes a year of plastic waste.

Upstream:

  • Focus on value over volume, being simpler and more resilient, continuing to provide material cash flow into the 2030s. An expected gradual reduction in oil production of around 1-2% each year, including divestments and natural decline.

Comments

SJC

Extend the biofuels production...
I posted years ago we would see more synthetic and biosynthetic fuels,
we are on our way.

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