Shell publishes Energy Transition Strategy 2024 - CORRECTION
Shell
publishes Energy Transition Strategy 2024-
CORRECTION
The following
sentence in the “More value with less emissions: our actions” –
“Carbon capture and storage (CCS)” section is being re-presented
due to an editorial error: “We are exploring the possibility of
increasing CCS capacity at Scotford, initially by 750,000 tonnes a
year.” The earlier announcement
published at 07:10 on March 14, 2024 incorrectly stated: “We are
exploring the possibility of increasing CCS capacity at Quest,
initially by 750,000 tonnes a year.”
All other details
remain unchanged. The full updated announcement is set out
below.
The above change
has been reflected in the Energy Transition Strategy 2024 (ETS24)
which is available on the Shell website and has been marked with a
footnote in the ETS24 itself. An updated version of the ETS24 has
also been filed with the NSM.
---
-
Shell will
continue its drive to halve emissions from its operations (Scope 1
and 2) by 2030, compared with 2016 on a net basis. By the end of
2023, Shell had achieved more than 60% of this target. Shell also
reduced the net carbon intensity of the energy products it sells by
6.3% compared with 2016, the third consecutive year it hit its
target.
-
To help drive the
decarbonisation of the transport sector, Shell has set a new
ambition to reduce customer emissions from the use of its oil
products by 15-20% by 2030 compared with 2021 (Scope 3, Category
11) [A].
-
Shell confirms it
will invest $10-15 billion between 2023 and the end of 2025 in
low-carbon energy solutions, making Shell a significant investor in
the energy transition.
London, 14 March
2024 – Shell plc (Shell) has published its first energy transition
update since the launch of its Powering Progress strategy in 2021.
At our Capital Markets Day in June 2023, we outlined how our
strategy delivers more value with less emissions, emphasising the
“more value” part. In this energy transition update, we are
focusing on how the same strategy delivers “less
emissions”.
Our target to
achieve net-zero emissions by 2050 across all our operations and
energy products is transforming our business. We believe this
target supports the more ambitious goal of the Paris Agreement to
limit global warming to 1.5°C above pre-industrial levels. Shell’s
strategy supports a balanced and orderly transition away from
fossil fuels to low-carbon energy solutions to maintain secure and
affordable energy supplies.
“Energy has made
an incredible contribution to human development, allowing many
people around the world to live more prosperous lives. Today, the
world must meet growing demand for energy while tackling the urgent
challenge of climate change. I am encouraged by the rapid progress
in the energy transition in recent years in many countries and
technologies, which reinforces my deep conviction in the direction
of our strategy,” said Wael Sawan, Shell’s Chief Executive
Officer.
“Shell has a very
important role to play in providing the energy the world needs
today, and in helping to build the low-carbon energy system of the
future. Our focus on performance, discipline and simplification is
driving clear choices about where we can have the greatest impact
through the energy transition and create the most value for our
investors and customers. We believe this focus makes it more, not
less, likely that we will achieve our climate targets. By providing
the different kinds of energy the world needs, we believe we are
the investment case and the partner of choice through the energy
transition,” said Sawan.
Our energy
transition plans cover all our businesses. Liquefied natural gas
(LNG) is a critical fuel in the energy transition, and we are
growing our world-leading LNG business with lower carbon intensity.
We are cutting emissions from oil and gas production while keeping
oil production stable, and growing sales of low-carbon energy
solutions while gradually reducing sales of oil products such as
petrol, diesel and jet fuel. As one of the world’s largest energy
traders, we can connect the supply of low-carbon energy to demand,
as we have done for many years with oil and gas.
We have made good
progress against our climate targets:
-
By the end of
2023, we had achieved more than 60% of our target to halve
emissions from our operations by 2030, compared with 2016. This
goes above and beyond the targets set by signatories to the Oil and
Gas Decarbonization Charter agreed at COP28.
-
We continue to be
an industry leader in reducing methane emissions. We were one of
the first companies to set a target to achieve near-zero methane
emissions by 2030. In 2023, we achieved 0.05% methane emissions
intensity – significantly below our target of 0.2%. And in 2023 we
also contributed to the World Bank’s Global Flaring and Methane
Reduction Fund – further supporting industry-wide action to drive
down methane emissions and flaring.
-
In 2023, we
achieved our target to reduce the net carbon intensity of the
energy products we sell, with a 6.3% reduction compared with 2016 –
the third consecutive year we hit our target.
As Shell
transforms into a net-zero emissions energy business, we aim to
take the lead in the energy transition where we have competitive
strengths, see strong customer demand, and identify clear
regulatory support from governments. To help drive the
decarbonisation of the transport sector, we have set a new ambition
to reduce customer emissions from the use of our oil products by
15-20% by 2030 compared with 2021 (Scope 3, Category
11).[A]
Our focus on
where we can add the most value has led to a strategic shift in our
integrated power business. We plan to build our power business,
including renewable power, in places including Australia, Europe,
India and the USA, and have withdrawn from the supply of energy
directly to homes in Europe.
In line with this
shift to prioritising value over volume in power, we will focus on
select markets and segments. This includes selling more power to
commercial customers, and less to retail customers. Given this
focus on value, we expect lower total growth of power sales to
2030, which has led to an update to our net carbon intensity
target. We are now targeting a 15-20% reduction by 2030 in the net
carbon intensity of the energy products we sell, compared with
2016, against our previous target of 20%.
We will continue
to transparently report our progress against our targets and
ambitions every year.
Driving
towards a net-zero future
We are investing
$10-15 billion between 2023 and the end of 2025 in low-carbon
energy solutions, making us a significant investor in the energy
transition. And in 2023, we invested $5.6 billion on low-carbon
solutions, more than 23% of our total capital spending.
These investments
include electric vehicle charging, biofuels, renewable power,
hydrogen and carbon capture and storage. Our investments in new
technologies are helping to reduce emissions for Shell and our
customers. We aim to help scale new technologies to make them an
affordable choice for our customers and are focusing our advocacy
on key areas which we believe are critical to the energy
transition: policies that support national net-zero ambitions
including carbon pricing, supplying the secure energy the world
needs, driving changes in demand and growing low-carbon
solutions.
[A] Customer
emissions from the use of our oil products (Scope 3, Category 11)
were 517 million tonnes carbon dioxide equivalent (CO2e) in 2023
and 569 million tonnes CO2e in 2021.
ENDS
Notes to
Editors
-
For full details
of updates to our climate targets, ambitions and performance please
read the full report, online here: www.shell.com/ets2024pdf
-
Shareholders will
have an advisory vote on the Energy Transition Strategy at Shell’s
2024 AGM.
-
Shell’s net
carbon intensity is the average intensity, weighted by sales
volume, of the energy products sold by Shell. It is tracked,
measured and reported using our Net Carbon Footprint (NCF)
methodology.
-
We have set a new
ambition to reduce customer emissions from the use of our oil
products by 15-20% by 2030 compared with 2021 (Scope 3, Category
11). That is more than 40% compared with 2016 reported emissions.
Customer emissions from the use of our oil products (Scope 3,
Category 11) were 517 million tonnes carbon dioxide equivalent
(CO2e) in 2023, 569 million tonnes CO2e in 2021 and 819 million
tonnes CO2e in 2016. Of the 40% reduction by 2030, around 8
percentage points are related to volumes associated with additional
contracts being classified as held for trading purposes, impacting
reported volumes from 2020 onwards.
-
Reducing the net
carbon intensity of the products we sell requires action by both
Shell (Scope 1 and 2 emissions) and our customers (Scope 3
emissions). While we can encourage the uptake of low-carbon
products and solutions, we cannot control the final choices
customers make. Support from governments and policymakers is
essential to create the right conditions for changes in demand. In
2023, we invested $5.6 billion in low-carbon energy solutions, more
than 23% of our total capital spending. This includes the
acquisition of Nature Energy, which makes Shell one of the largest
producers of renewable natural gas in Europe. And our ongoing
investment in Sprng Energy, one of India’s leading renewable power
platforms, demonstrates our determination to invest in growing
renewable capacity in areas that play to our strengths and add most
value. We are also pioneering efforts to scale up low-carbon
solutions, such as by starting construction in late 2022 of Holland
Hydrogen 1 in Rotterdam, which is anticipated to become one of the
largest renewable hydrogen plants in Europe.
-
Find out more
about Shell’s 2023 Capital Markets Day online: www.shell.com/ets2024pdf
Enquiries
UK /
International Media Relations: +44 20 7934 5550
Shell
plc – Energy Transition Strategy
Chair's
message
This
energy transition update marks an important moment for Shell. It
comes three years after we launched our Powering Progress strategy,
and builds on our Capital Markets Day in June 2023 when we set out
our plans to create more value with less emissions.
Our
target to become a net-zero emissions energy business by 2050
remains at the heart of our strategy and is transforming our
operations and energy products. We believe this target supports the
more ambitious goal of the Paris Agreement, to limit the rise in
the global average temperature to 1.5°C above pre-industrial
levels.
As we
work towards net zero, we are reducing emissions from our
operations and energy products while becoming an increasingly
successful organisation. Our energy transition plans cover all
our businesses: Integrated Gas, Upstream and Downstream,
Renewables and Energy Solutions. In this publication, we set out
pathways to net zero for our two biggest customer sectors –
transport and industry – based on where we believe we have the
competitive advantages to provide our customers with the products
they need through the transition.
Helping
reduce emissions for our customers
We want
to lead in the decarbonisation of transport using the strength of
our brand, deep customer relationships and global reach. We aim to
grow our public charging network for electric vehicles, and remain
one of the world’s largest blenders and distributors of biofuels
[A]. As the energy transition progresses, we expect to sell
more low-carbon products and solutions, and less oil products
including petrol and diesel.
To
measure our progress, we have set a new ambition to reduce customer
emissions from the use of our oil products by 15-20% by 2030
compared with 2021 (Scope 3, Category 11) [B].
- Includes
volumes from our joint venture Raízen
- Customer
emissions from the use of our oil products (Scope 3, Category 11)
were 517 million tonnes carbon dioxide equivalent
(CO2e)
in 2023 and 569 million tonnes CO2e
in 2021.
The world
needs a balanced and orderly transition away from fossil fuels
to maintain secure energy supplies, while accelerating the
transition to affordable low-carbon solutions. We are growing our
world-leading liquefied natural gas (LNG) business so that we can
continue to provide a critical fuel in the energy transition.
Our investments in carbon capture and storage, hydrogen and
renewable energy will help us produce LNG with lower carbon
intensity in the future.
Through
our world-class trading business, we can connect the supply of
low-carbon energy to demand, as we have done for many years
with oil, gas and LNG.
As we
work towards net zero, we are making clear choices about where we
can add most value for our investors and customers. We expect
renewable power will be critical for helping our commercial
customers decarbonise, and plan to build our integrated power
business in places including Australia, Europe, India and the USA.
We have withdrawn from the supply of energy directly to homes in
Europe because we do not believe we have a competitive position
there.
Technologies
of the future
We are
increasing our investments in research and development, and
investing in the fuels of the future. We aim to scale up new
technologies to create affordable options for our customers into
the 2030s. We are building Holland Hydrogen 1, one of the largest
renewable hydrogen plants in Europe, close to our Energy and
Chemicals Park Rotterdam in the Netherlands. We are also investing
in carbon capture and storage technology to reduce emissions from
our own operations such as refineries and LNG plants, and, in the
longer term, to help our industrial customers reduce their
emissions too.
I saw
first-hand the potential of some of the exciting new technologies
we are developing when I visited Oman in January 2024. We are part
of a group exploring a project to produce green ammonia and
liquefied synthetic gas from renewable hydrogen. These technologies
are still in the early stages, but they could help to decarbonise
industry and commercial road transport in the future.
More
value with less emissions
At our
Capital Markets Day, we said we would deliver more value with less
emissions. We have made good progress in our first year under our
new Chief Executive Officer Wael Sawan. In 2023, we returned 42% of
our cash flow from operations to our shareholders, the upper
end of our 30-40% range through the cycle. We also reduced carbon
emissions from our operations by 31% compared with 2016 levels,
putting us well on the way towards our target of a 50% reduction by
2030 on a net basis. We achieved our short-term target to reduce
the net carbon intensity of the energy products we sell, with a
6.3% reduction against our target of 6-8% compared with
2016.
Transparency
and shareholder support
In 2021,
89% of our shareholders voted in support of our Energy Transition
Strategy. Since then, we have published two progress reports, which
our shareholders have also supported. Along with other Board
members, I met with many of Shell's largest institutional
shareholders following those votes. I appreciate their time
and feedback and look forward to our next engagement in
April 2024.
The
publication of our Energy Transition Strategy brings increased
transparency, and better dialogue with our institutional investors.
We heard that following Capital Markets Day, for example, some
wanted us to be clearer about how we will deliver both more value
and less emissions, and we are showing exactly that in this
update.
This
year, we are again asking our shareholders to vote
at our Annual General Meeting on our Energy Transition
Strategy. As before, this vote is purely advisory, and not binding
for our shareholders. The legal responsibility for approving or
objecting to Shell's strategy lies with the Board and
Executive Committee.
We
believe our strategy will transform Shell into a net-zero emissions
energy business, creating value for our shareholders, customers and
wider society. We will offer shareholders an advisory vote at the
2024 Annual General Meeting based on the energy transition plans
described in this publication and our Annual Report and Accounts
2023. The Board recommends that shareholders vote in favour of the
Resolution asking them to support those plans.
Sir
Andrew Mackenzie
Chair
Chief
Executive Officer's introduction
This is
our first update to the Energy Transition Strategy that
we published in 2021. It is an opportunity to take stock of
our progress, to reflect on what we have learned, and to look
forward as we transform Shell into a net-zero emissions energy
business by 2050.
Over the
past three years we have seen the critical importance of secure and
affordable energy for economies and people's lives. As the world's
population grows by an estimated 2 billion people by 2050, and the
benefits of energy are extended to the hundreds of millions who do
not have it today, demand for energy will only
grow.
At the
same time, the world must achieve an orderly transition away from
fossil fuels to low-carbon energy to achieve net-zero emissions.
Today, fossil fuels meet around 80% of global energy demand, with
an even greater reliance in many developing countries. We support a
balanced energy transition, one that maintains secure and
affordable energy supplies as the world moves to net
zero.
I am
encouraged by the rapid progress in the energy transition in many
countries and technologies in recent years, including the continued
growth in demand for liquefied natural gas (LNG), a critical fuel
in the energy transition, and for low-carbon energy solutions such
as solar and wind power, and electric vehicles. This progress
reinforces my deep conviction in the direction of our
strategy.
Shell has
an important role to play in providing the energy the world
needs today, and in helping to build the low-carbon energy system
of the future. There are exciting opportunities to use the
strength of our innovation capabilities in the areas where we can
have the greatest impact. Our purpose – to provide more and
cleaner energy solutions – sets the direction for everything we
do.
Progress
towards our targets
Since we
launched our Powering Progress strategy, we have made good progress
against our climate targets, and learned where we have competitive
strengths. By the end of 2023, we had achieved more than 60% of our
target to halve emissions from our operations by 2030, compared
with 2016. We achieved this by adapting our portfolio, including by
repurposing refineries, and making changes to our operations such
as powering some oil and gas platforms with renewable
energy.
We
continue to be one of the leaders in reducing emissions
of methane, a potent greenhouse gas that can be released
during oil, gas and LNG production. We were one of the first
companies to set a target to achieve near-zero methane emissions by
2030. In 2023, we continued to keep our methane emissions intensity
well below 0.2%. We made good progress towards our target to
eliminate routine flaring from our upstream operations, compared
with 2016 [A]. We also met our short-term target to reduce the net
carbon intensity of the energy products we sell, with a 6.3%
reduction against our target of 6-8% compared with 2016.
More
value, less emissions
At our
Capital Markets Day in June 2023, we outlined how our Powering
Progress strategy delivers more value with less emissions,
emphasising the "more value" part of our strategy. In this
energy transition update, we are focusing on how the same
strategy delivers "less emissions".
Our
energy transition plans cover all our businesses. In Integrated
Gas, we are growing our world-leading LNG business with lower
carbon intensity. In Upstream, we are reducing emissions from
oil and gas production. In Downstream and Renewables and Energy
Solutions, we are growing sales of low-carbon products and
solutions such as biofuels, electric vehicle charging and
renewable power, while investing in hydrogen and other fuels of the
future.
Our focus
on performance, discipline and simplification is driving clear
choices about where we can create the most value for our investors
and customers through the energy transition. Our ability to raise
and invest capital depends on delivering strong returns to
shareholders, shaping the role that Shell can play on the journey
to net zero. We believe this focus makes it more, not less, likely
that we will achieve our climate targets and ambitions.
Reducing
emissions from production
We
believe the world will continue to need oil and gas for many years
-- produced with much lower emissions -- alongside cleaner energy
such as advanced biofuels, renewable power and hydrogen.
We expect
LNG will play a critical role in the transition. It continues
to provide a secure supply of energy in many European countries. It
also offers flexibility to electricity grids as wind and solar
power grow, and opportunities to lower carbon emissions from
industries such as cement and steel by replacing
coal.
In the
future, by powering our LNG plants with renewable electricity, and
adding carbon capture and storage, we aim to lower the carbon
intensity of our LNG plants. Our LNG joint venture in Canada
(Shell interest 40%), for example, the largest private-sector
investment in the country's history, will use natural gas and
renewable electricity to reduce emissions from the plant
by more than one-third compared with the world’s best
performing facilities.
The Vito
platform in the Gulf of Mexico (Shell interest 63.1%)
is reducing emissions from oil and gas production. The
platform started production in 2023 and is expected to produce
around 80% less carbon dioxide emissions over its
operating life,
compared with the original design. We are using the same concept
for two more platforms in the Gulf of Mexico, Whale (Shell interest
60%) and Sparta (Shell interest 51%).
Supporting
our customers as they decarbonise
We aim to
lead in the energy transition where we have competitive
strengths, see strong customer demand, and identify clear
regulatory support from governments. The transport sector is a
good example.
We are
building on our customer relationships and expertise to help
drive the decarbonisation of passenger cars, heavy-duty trucks,
planes and ships. We aim to grow our public charging network for
electric vehicles, and stay a leader in biofuels including
sustainable aviation fuels or renewable diesel made from waste. By
repurposing our remaining integrated refineries to focus on
four regional energy and chemicals parks, we are creating
the low-carbon production hubs of the future.
As we
grow sales of low-carbon fuels we expect to reduce sales of oil
products such as petrol and diesel. We have set a new ambition
to measure our progress, to reduce customer emissions from the use
of our oil products by 15-20% by 2030 compared with 2021 (Scope 3,
Category 11) [B]. Our ambition is in line with the European Union's
climate goals for transport, which are among the
most progressive in the world.
Our focus
on value has led to a strategic shift in our power business towards
select markets and segments. One example is selling more power
to commercial customers, including renewable power, and less
to retail customers. As a result, we expect lower growth
in sales of power overall. We have updated our net carbon
intensity target to reflect that change, with a 15-20%
reduction by 2030, compared with 2016, against 20%
previously.
Towards
net zero
In total,
we invested $5.6 billion in low-carbon solutions in 2023, which was
23% of our capital spending. We are spending $10-15 billion on
low-carbon solutions between 2023 and 2025, making us a significant
investor in the energy transition. With our focused approach, we
believe our investments will have an important impact, allowing us
to develop low-carbon solutions at increasingly affordable
prices for our customers.
Shell
will provide the different kinds of energy the world needs. We will
invest in producing LNG with lower carbon intensity,
in reducing emissions from oil and gas production, and in
providing cleaner energy solutions. As we transform Shell
into a net-zero emissions energy business, we believe we
are the investment case and the partner of choice through
the energy transition.
Wael
Sawan
Chief
Executive Officer
- Subject
to the completion of the sale of Shell Petroleum Development
Company of Nigeria Limited (SPDC
- Customer
emissions from the use of our oil products (Scope 3, Category 11)
were 517 million tonnes carbon dioxide equivalent
(CO2e)
in 2023 and 569 million tonnes CO2e
in 2021.
Our
Energy Transition Strategy 2024
Our key
beliefs have informed our strategy, enabled our progress, and will
allow us to deliver on our updated targets and
ambitions.
1 Today, the
world must meet growing demand for energy while tackling the urgent
challenge of climate change. There needs to be a balanced and
orderly transition away from fossil fuels to low-carbon energy
solutions to maintain secure and affordable energy
supplies.
2 Our target to
achieve net-zero emissions by 2050 across all our operations and
energy products is transforming our business. We believe this
target supports the more ambitious goal of the Paris Agreement, to
limit the rise in the global average temperature to 1.5°C above
pre-industrial levels.
3 At our Capital
Markets Day in June 2023, we outlined how our Powering Progress
strategy delivers more value with less emissions, emphasising the
"more value" part of our strategy. In our Energy Transition
Strategy 2024, we are focusing on how the same strategy delivers
"less emissions".
4 By the end of
2023, we had achieved more than 60% of our target to halve Scope 1
and 2 emissions from our operations by 2030, compared with 2016,
and reduced our total methane emissions by 70%.
5 We believe
liquefied natural gas (LNG) will play a critical role in the energy
transition, replacing coal in heavy industry. It also has a
continued role in displacing coal in power generation, helping to
reduce local air pollution and carbon emissions. LNG helps to
provide the flexibility the power system needs, at a time when
renewable generation is growing rapidly.
6 Investment in
oil and gas will be needed because demand for oil and gas is
expected to drop at a slower rate than the natural decline rate of
the world’s oil and gas fields, which is 4-5% a year.
7 We expect rapid
growth in electric vehicles, including electric trucks, and believe
biofuels and natural gas will also play a role in reducing
emissions from heavy-duty transport. To help drive the
decarbonisation of transport, we have set a new ambition to reduce
customer emissions from the use of our oil products by 15-20% by
2030 compared with 2021 (Scope 3, Category 11).That is more than
40% compared with 2016 reported emissions. [A]
- Customer
emissions from the use of our oil products (Scope 3, Category 11)
were 517 million tonnes carbon dioxide equivalent
(CO2e)
in 2023, 569 million tonnes CO2e
in 2021 and 819 million tonnes CO2e
in 2016. Of the 40% reduction by 2030, around 8 percentage points
are related to volumes associated with additional contracts being
classified as held for trading purposes, impacting reported volumes
from 2020 onwards.
8 We believe
carbon abatement technologies such as carbon capture and storage
will be needed for the world to reach net-zero emissions. We
believe once key regulations, technologies and standards are in
place, a large-scale business for carbon credits will
emerge.
9 Our focus on
performance, discipline and simplification is driving clear choices
about where we can create the most value for our investors and
customers. We believe renewable energy will be an essential part of
a net-zero world. In line with our strategic shift to prioritise
value over volume in power, we are concentrating on select markets
and segments. As a result, we expect lower growth of power sales
overall. We are now targeting a 15-20% reduction in the net carbon
intensity of the energy products we sell by 2030, compared with
2016, against 20% previously.
10 We are
investing $10-15 billion in low-carbon energy solutions between
2023 and the end of 2025, making us a significant investor in the
energy transition. By providing the different kinds of energy the
world needs, we believe we are the investment case and the partner
of choice through the energy transition.
Our
journey towards net zero
2023
-
Invested $5.6
billion in low-carbon solutions, of our total capital spending of
$24.4 billion in 2023. This included the acquisition of Nature
Energy, one of the largest producers of renewable natural gas in
Europe.
-
Our Timi platform
in Malaysia, mainly powered by solar and wind energy, started
production. The Vito platform in the US Gulf of Mexico also started
production, with 80% less CO2
emissions
expected over its lifetime compared with the original
design.
-
The Hollandse
Kust Noord wind park off the coast of the Netherlands became
operational.
-
Shell’s
management team hosted its first Capital Markets Day in New York
and set out Shell’s strategy to deliver more value with less
emissions.
-
Achieved our
target to reduce the net carbon intensity of the energy products we
sell by 6-8% by the end of 2023 compared with 2016.
-
Reduced our
operational emissions (Scope 1 and 2) by 31% by the end of 2023
compared with 2016, more than halfway towards our target to reduce
them by 50% by 2030 on a net basis.
-
Won majority
shareholder support (80% of votes) for our energy transition
progress at our Annual General Meeting.
2022
-
Completed the
acquisition of renewable power company Sprng Energy, and took a
final investment decision on Holland Hydrogen 1 and LNG expansion
projects in Qatar.
-
Introduced three
new metrics in the annual bonus scorecard to reflect Shell’s role
in the energy transition.
-
Simplified our
share structure, allowing us to manage our portfolio with greater
agility through the energy transition.
2021
-
Completed the
divestment of our Permian assets in the USA and bought solar
company Savion in the USA.
-
Offered
shareholders an advisory vote on our energy transition strategy.
The strategy was overwhelmingly supported.
-
Introduced target
to become a net-zero emissions energy business by 2050, and a
target to halve Scope 1 and 2 under our operational control by 2030
on a net basis (2016 reference year).
2020
-
Announced
ambition to become a net-zero emissions energy business by
2050.
-
Extended the
energy transition performance metric to around 16,500 employees
through the Performance Share Plan (PSP).
2019
Published our
first Industry Associations Climate Review, which reviewed
alignment between Shell’s climate-related policy positions and 19
key industry associations.
2018
Signed a joint
statement with Climate Action 100+ investor group announcing steps
taken by Shell demonstrated alignment with the goals of the Paris
Agreement.
2017
Announced
ambition to reduce the carbon intensity of the energy products we
sell by around half by 2050 (Scope 1, 2 and 3).
Our
updated targets and ambitions
Net-zero
emissions by 2050 (Scopes 1, 2 and 3)
Emissions from
our own operations (Scope 1 and 2)
Target
Halving Scope 1
and 2 emissions by 2030 [A] under operational control (2016
reference year)
Target
Eliminating
routine flaring from Upstream operations by 2025 [B]
Target
Maintain methane
emissions intensity below 0.2% and achieve near-zero methane
emissions by 2030
Emissions from
the products we sell (Scope 3)
Target
Updated
Net carbon
intensity (NCI) Introducing a range of 15-20% for our target to
reduce NCI by 2030 (2016 reference year)
Ambition
New
Oil products
ambition Reduce customer emissions from the use of our oil products
by 15-20% by 2030, Scope 3 Category 11 [C] (2021 reference
year)
- On a net basis.
- Subject to completion of the
sale of SPDC.
- Customer emissions from the
use of our oil products (Scope 3, Category 11) were 517 million
tonnes carbon dioxide equivalent (CO2e)
in 2023 and 569 million tonnes CO2e
in 2021.
Carbon
performance at a glance
Reducing
Scope 1 and 2 emissions under our operational
control
Scope 1
and 2 operational emissions [A]
Million tonnes
CO2e
2016
[B]
|
2021
|
2022
|
2023
|
2030
|
2050
|
83
|
68
|
58
|
57
|
41
|
0
|
50% target
reduction by 2030
2023: More than
60% of our 2030 target
Methane
emissions intensity [A] [E]
%
|
2016
|
2021
|
2022
|
2023
|
Assets
with marketed gas [F]
|
0.1
|
0.06
|
0.05
|
0.05
|
Assets
without marketed gas [g]
|
0.03
|
0.01
|
0.01
|
0.001
|
Total routine
flaring [A] [H]
Million
tonnes of hydrocarbons flared
2016
|
2021
|
2022
|
2023
|
1.1
|
0.2
|
0.1
|
0.1
|
Reducing
emissions associated with our customers’ use of energy
products
Net
carbon intensity (NCI) [C]
g CO2e/MJ
[C]
2016
[B]
|
2021
|
2022
|
2023
|
2024
|
2025
|
2030
|
2050
|
79
|
-2.5%
|
-3.8%
|
-6.3%
|
-9-12%
|
-9-13%
|
-15-20%
|
-100%
|
2021, 2022, 2023:
NCI target achieved for third year in a row [D]
Customer
emissions from the use of our oil products (Scope 3, Category 11)
[I]
million tonnes
CO2e
2021
[B]
|
2023
|
2030
|
569
|
-9%
|
-15-20%
|
We
believe our total absolute emissions peaked in 2018 at 1.73
gigatonnes of carbon dioxide equivalent (GtCO2e).
- Operational
control boundary. Scope 1 and 2 target is on a net
basis.
- Reference
year.
- Shell's
NCI is the average intensity, weighted by sales volume, of the
energy products sold by Shell. Estimated total greenhouse gas (GHG)
emissions included in NCI correspond to well-to-wheel emissions
associated with energy products sold by Shell, on an equity
boundary, net of carbon credits. This includes the well-to-tank
emissions associated with the manufacturing of energy products by
others that are sold by Shell. Emissions associated with the
manufacturing and use of non-energy products are
excluded.
- 2021
target 2-3%, 2022 target 3-4%, 2023 target 6-8%, all achieved.
Acknowledging uncertainty in the pace of change in the energy
transition, we have also chosen to retire our 2035 target of a 45%
reduction in net carbon intensity.
- Our
target is to maintain methane emissions intensity below 0.2% and
achieve near-zero methane emissions by 2030.
- Methane
emissions intensity from all oil and gas assets for which Shell is
the operator that market their gas (including LNG and GTL assets),
defined as the total volume of methane emissions in normal cubic
meter (Nm3) per total volume of gas available for sale in
Nm3.
- Methane
emissions intensity from all oil and gas assets for which Shell is
the operator that do not market their gas (e.g. where gas is
reinjected) defined as the total mass of methane emissions in
tonnes per total mass of oil and condensate available for sale in
tonnes.
- Our
target is to eliminate routine gas flaring from upstream operations
by 2025, subject to the completion of the sale of SPDC.
- We
have set a new ambition to reduce absolute emissions related to the
use of our oil products by 15-20% by 2030, compared with 2021
(Scope 3 Category 11). Customer emissions from the use of our oil
products (Scope 3, Category 11) were 517 million tonnes carbon
dioxide equivalent (CO2e)
in 2023 and 569 million tonnes CO2e
in 2021.
The
energy system: our beliefs
Today,
fossil fuels meet around 80% of the world's primary energy use.
There is even greater reliance in many developing countries
where security of supply and stable prices are critical to
their development.
The
world's primary energy demand is just over 300 million barrels of
oil equivalent per day (mboe/d); with around 250 mboe/d from
fossil fuels. Of this, 100 mboe/d is from oil, 80 mboe/d is
from coal and 70 mboe/d is from gas.
As demand
for energy continues to grow, driven by rising populations and
increased prosperity, the world must transition from fossil fuels
to low-carbon energy in a balanced way to achieve net-zero
emissions. The transition to net zero will not be linear, as
different countries take different approaches and move at
different paces.
Public
policy, developments in technology and infrastructure, and a
functioning carbon market are essential to create the demand
signals for the private sector to invest at scale. This
will require collaboration between policymakers, customers and
private organisations like Shell that have the financial strength,
experience and capabilities to help build the new energy
system.
Developing
our beliefs
We have
developed our beliefs through our engagements with customers,
policymakers, scientists and thought leaders from around the world.
We have used research from our technology programmes, along with
work carried out by the International Energy Agency, the
Intergovernmental Panel on Climate Change and several other
external bodies.
We have
also drawn from the expertise in our own energy security scenarios,
Sky 2050 and Archipelagos, which we published last year. Although
our scenarios are not expressions of our strategy and are not our
business plans, they help inform our beliefs.
Our
scenarios are quantified by our World Energy Models, which are
supplemented with climate analysis done in conjunction with
Massachusetts Institute of Technology. We will continue to
challenge our own beliefs as technology, policy and customer
preferences evolve.
Increasing
demand
Since
2000, annual air mileage has tripled, passenger road mileage has
doubled, and production of steel has more than doubled. We expect
continued growth in the transport and industrial sectors,
driven by rising populations and higher living standards in
emerging and developing countries, where more than a quarter
of the world's population still lack basic energy
provisions.
Oil
demand has grown from 57 million barrels a day (mb/d) to almost 100
mb/d in the last 40 years, with occasional annual declines in
recessions, and the notable decline caused by the Covid
pandemic. In all cases, demand has rebounded. However, we believe
growth in oil demand is set to slow in the second half of this
decade, and could start falling in the 2030s because of increasing
vehicle efficiency and growth in electric vehicles.
Population,
GDP, demand and consumption of energy 2000-2040
|
|
2000-2040
|
Population
|
x1.5
|
GDP
|
x3.4
|
Aviation
(passenger km)
|
x5.3
|
Passenger
road (vehicle km)
|
x3.1
|
Marine
(tonne km)
|
x2.2
|
Heavy
industry (tonne steel equivalent)
|
x2.6
|
Source: Shell
analysis and IEA's Extended energy balances 2023).
Demand
for natural gas has also seen steady growth over the last 40
years, adding an average of about 60 billion cubic metres (bcm) of
new demand a year. Demand for liquefied natural gas (LNG) has grown
much faster, from about 30 million tonnes per annum (mtpa)
in 1983 to more than 400 mtpa in 2023.
Today,
LNG makes up around 13% of the global gas market, a figure
expected to exceed 20% by 2040. The global LNG market will continue
growing at least through the 2030s, mostly driven by industrial
decarbonisation in China, and strengthening demand in other Asian
countries. LNG can help displace the use of coal in industry and
power generation, and can top up supply in regions of
declining domestic gas production such as Europe.
The
prospects for LNG demand are increasingly independent of pipeline
natural gas because the fuel can be transported at short notice,
and can also be used as a substitute for higher-carbon liquid fuels
in shipping.
Global
demand for coal rose by 3.6% from 2013 to the end of 2023, when it
reached a new high. This increase was fuelled by strong demand
in developing economies. Coal demand increased by 35% in India and
by 13% in China during this
10-year
period, due to rising demand for electricity and weak
hydropower output. We believe replacing coal with natural gas, LNG
and renewable power will be a key factor in reducing
emissions.
Primary
energy demand by region and energy source, 2023
(exajoule)
|
Middle
East
|
China
|
Other
Asia Pacific
|
Americas
|
India
|
Rest
of World
|
Europe
|
Oil
|
43%
|
19%
|
34%
|
37%
|
23%
|
30%
|
34%
|
Natural
Gas
|
55%
|
8%
|
20%
|
32%
|
5%
|
32%
|
22%
|
Coal
|
1%
|
58%
|
25%
|
8%
|
45%
|
14%
|
11%
|
Nuclear
& electric renewables [A]
|
1%
|
11%
|
11%
|
15%
|
5%
|
7%
|
20%
|
Bioenergy
[B]
|
0%
|
4%
|
10%
|
8%
|
21%
|
17%
|
12%
|
[A] Electric
renewables are dominated hydroelectricity, wind, and solar. Some of
these sources are also used to generate heat instead of
electricity.
[B] Electric
renewables include hydroelectricity, solar and wind.
Source: Shell
analysis of IEA Extended Energy Balances (2023).
Energy
investment
Significant
investment will be required to keep supplying oil and gas while
low-carbon alternatives are developed and made commercially
available.
This
continued investment is needed because demand for oil and gas is
expected to drop at a slower rate than the natural decline of
the world's oil and gas fields, which is at 4% to 5% a
year.
Worldwide
oil and gas production, outside North America, has been at
around 120 mboe/d from 2013 until the end of 2023, despite
cumulative oil and gas investment of more than $2 trillion
over the same period.
Current
global investment in low- and zero-carbon energy is around
$1.7 trillion a year. To reach net zero by 2050, scenarios suggest
that $3-4 trillion of commercially viable investment in low-carbon
energy is required each year.
Final
energy demand by sector and energy carrier, 2023
(exajoule)
|
Marine
|
Non-energy
use
|
Aviation
|
commercial
road
|
Passenger
road
|
Heavy
industry
|
Light
industry [C]
|
Buildings
|
Liquids
(fossil) [A]
|
99%
|
52%
|
97%
|
|
91%
|
3%
|
18%
|
4%
|
Solids
(fossil) [A]
|
0%
|
7%
|
0%
|
0%
|
0%
|
29%
|
9%
|
3%
|
Gaseous
(fossil) [A]
|
0%
|
40%
|
0%
|
3%
|
4%
|
30%
|
21%
|
29%
|
Electricity
|
0%
|
0%
|
0%
|
0%
|
1%
|
26%
|
38%
|
34%
|
Heat
|
0%
|
0%
|
0%
|
0%
|
0%
|
6%
|
3%
|
6%
|
Bioenergy
[B]
|
1%
|
1%
|
3%
|
4%
|
4%
|
5%
|
10%
|
24%
|
[A] Gaseous is
mostly natural gas; Solids is mostly coal; Liquids is mostly oil.
However, crossovers exist, such as LPG (gaseous oil product) and
CTL (liquified coal).
[B] Bioenergy
includes traditional and modern uses of biomass, biofuels and
biogas.
[C] Includes
rail, less than 5% of this category.
Source: Shell
analysis and IEA’s Extended energy balances (2023).
Global
greenhouse gas emissions in 2023
Carbon
dioxide (CO2)
emissions from the energy system amounted to almost three-quarters
of global greenhouse gas emissions in 2023. Tighter government
policies will help to reduce carbon emissions at a rate consistent
with the temperature goals of the Paris Agreement. Even without
these policies, we expect that the global demand for fossil fuels
would fall from today's level of around 80% to below 70% by 2040.
If the world follows a path to net-zero emissions by 2050, the
figure could go down to 50%. This will be driven by electrification
and the scaling-up of renewable energy generation.
Estimated
net global greenhouse gas emissions, 2023
|
%
|
Heavy industry
[A]
|
20
|
Light industry
[B]
|
14
|
Passenger
road transport
|
7
|
Freight
road transport
|
4
|
Aviation
|
2
|
Marine
|
1
|
Buildings
[C]
|
17
|
Other greenhouse
gases [D]
|
28
|
Land-use change
[E]
|
7
|
[A] Includes
emissions from industrial processes, 18% of total.
[B] Includes
rail, 3.5% of total.
[C] Emissions for
operation of buildings - not construction (which is in industry
sectors).
[D] 70% methane,
from agriculture and fossil production and use; 23% nitrous oxide;
7% others.
[E] land use,
land-use change emissions and forestry (LULUCF).
Source: Shell
analysis and IEA’s Extended energy balances (2023).
Industry
Industry
makes up 44% of the world's final energy use, with oil, gas
and coal meeting almost 64% of this demand.
Today,
industry also uses substantial amounts of power generated by fossil
fuels. The sector includes heavy industry, light industries such as
manufacturing, mining and agriculture, and non-energy use
feedstocks in chemicals.
Heavy
industry
Heavy
industry includes the energy-intensive production
of steel and cement, which use high-temperature processes
that can be hard and expensive to electrify. This sector
represents 17% of final energy use, mainly in the form
of coal, gas and electricity.
Higher
standards of living are built on the output of heavy industry. For
example, the in-use stock per capita of steel in OECD countries
ranges from 10-15 tonnes per person (t/p) compared with a world
average of around 4 t/p [A].
Since
2000, OECD countries have seen a modest decline in energy
demand as industrial output has plateaued. In
non-OECD
countries, demand has nearly tripled, driven by industrialisation.
Much of this increase in demand comes from China, which currently
produces around half the world's steel and cement.
The use
of coal in heavy industry has fuelled much of the industrial
growth in non-OECD countries over the last two decades, while
OECD countries use far less coal and proportionally more gas and
power. In non-OECD countries, gas and electricity have increased
their market share against coal, and we expect this trend to
continue.
We
believe natural gas and LNG will play an important role in
replacing coal in high-temperature heavy industry applications.
They can help address both local air emissions and wider climate
considerations.
More
plentiful and affordable renewable electricity will also play a
role in decarbonising this sector. Once electrification has taken
place, gas will have a back-up role because many industrial
processes require a high reliability of power supply. We also see
potential for hydrogen in the long-term when it becomes cost
competitive.
Light
industry
Light
industry constitutes around 17% of final energy use. Its energy
requirements vary from fuel for heavy equipment to
medium-level heat and electricity for manufacturing
facilities.
The
energy mix for light industry includes coal, oil, gas, electricity
and some commercial biomass. Many areas of light industry
have already switched to electrification. We see this trend
continuing with more action needed to increase efficiency.
Supportive government policies are also needed to decarbonise
the sector.
Non-energy
use
Non-energy
use is dominated by petroleum feedstocks and natural gas, and some
coal in Asia. It represents about 10%
of final
energy use, but there are limited emissions as the feedstocks are
transformed into material goods such as lubricants, plastics and
fertilisers. Many of these products indirectly help reduce
emissions when used in insulation in buildings or in plastics which
reduce the weight of vehicles. We believe bio-feedstocks and
recycling will grow in importance in this sector.
- Source:
International Energy Agency. Iron and Steel Technology Roadmap
reserved.
Energy
consumption in heavy industry (Exajoule/year)
|
OECD
|
Non-OECD
|
|
2000
|
2023
|
2000
|
2023
|
Solid
(fossil)
|
13.12
|
11.96
|
38.04
|
32.34
|
Electricity
from coal [A], [B]
|
11.24
|
6
|
10.09
|
17.85
|
Electricity from
other [A]
|
12.62
|
16.54
|
7.99
|
10.44
|
Electricity from
natural gas [A]
|
5.23
|
9.4
|
8.8
|
7.48
|
Gaseous
(fossil)
|
38.45
|
40.5
|
21.83
|
26.31
|
Other
[C]
|
19.35
|
15.61
|
13.25
|
5.59
|
[A] Includes
heat.
[B] Consists of
nuclear, renewables and oil.
[C] Includes
liquid fossil fuels and bioenergy.
Source: Shell
analysis of IEA's Extended Energy Balances (2023).
Transport
sector
The
transport sector represents nearly 30% of final energy
use, with oil products meeting more than 90% of this
demand.
The
remainder is mostly met by LNG, compressed natural gas and
biofuels. Global CO2
emissions
from transport amount to around 8 gigatonnes (GT) a year,
which is about one-seventh of global emissions.
Oil
products dominate transport because of their high energy density,
convenience and cost competitiveness. In some markets, such as
Europe and the USA, alternative transport fuels like ethanol are
mandated. In Europe, where road transport fuel taxes are high,
electric vehicles are increasingly cost competitive. However, in
marine and aviation alternatives remain expensive. Bio-alternatives
are at least twice the cost of oil products, and synthetic fuels
manufactured from hydrogen can be up to eight times more
expensive.
Relative
cost of transportation fuels, 2023
|
|
|
USD/boe
|
|
|
Low
|
Blank
|
Tax
|
Delta
|
Aviation
|
E-Kerosene
|
610
|
|
|
244
|
Biojet fuel
[B]
|
214
|
|
|
92
|
Jet Fuel
[B]
|
107
|
|
|
31
|
Marine
|
E-ammonia
|
366
|
|
|
183
|
Bio-LNG
[B]
|
183
|
|
|
153
|
Bunker fuel
[B]
|
61
|
|
|
49
|
Commercial road
transport [A]
|
Biodiesel
[B]
|
0
|
130
|
212
|
122
|
Electricity
[C]
|
166
|
|
|
166
|
Diesel
[B]
|
0
|
111
|
110
|
54
|
Passenger road
transport [A]
|
Electricity
[C]
|
195
|
|
|
195
|
Gasoline
[B]
|
0
|
101
|
238
|
54
|
[A] Noth-west
European retail prices.
[B] Beyond
production costs, taxes significantly increase the price customers
pay for biodiesel, diesel and gasoline.
[C] Electric
costs (0.2-0.6$kWh) adjusted for 2.4x higher efficiency of electric
versus international combustion engine vehicles. Range shown is
home/deport charging to highway fast charging.
Source: Shell
Scenario team interpretations of 2023 market data when Brent crude
oil prices averaged $83/barrel
Passenger
road transport
Today,
there are around 1.3 billion cars on the road, consuming around 25
million barrels of oil per day (mb/d), which is a quarter of the
world's oil production. Biofuels such as ethanol are used in some
markets but currently amount to less than 5% of demand. We expect a
rapid growth in electric vehicles, including plug-in hybrids. Today
there are around 40 million such vehicles on the roads, with
up to 275 million expected by 2030. The availability of
charging points will be critical for the growth in
electric vehicles.
The share
of electric cars in new car sales has increased from less than 3%
in 2018 to 18% in 2023. The most rapid growth is in China, the
world's largest car market, followed by Europe and the USA. In
China, there are a wide range of vehicles for sale at under
$40,000, while in other markets electric vehicles generally sell at
above this price before government subsidies are
applied.
Commercial
road transport
Commercial
road transport, which includes 70 million trucks, uses 16 mb/d. We
believe the shift of commercial road transport towards low-carbon
solutions is less than a decade behind that of passenger cars. We
expect that biofuels and renewable natural gas will keep playing a
role in reducing emissions from trucks. In the long term, we expect
electricity or hydrogen to become the main paths to
decarbonisation, depending on advances in technology, government
policy and customer preferences.
Aviation
Demand
for aviation fuel has rebounded from its Covid lows and is now at
about 7 mb/d. Sustainable aviation fuel (SAF) made from used
cooking oils and other feedstocks is seen as a credible
alternative to jet fuel. Today, SAF represents less than 0.1%
of total demand, but we expect its market share to grow with
support from governments.
Around 11
markets have SAF targets, including Europe and Singapore. Some 25
airlines representing a combined 35% of global aviation emissions
also have SAF targets. Government mandates are essential to
increase demand for SAF because it costs consumers between two
and four times more than conventional aviation fuel. There is
limited evidence that passengers will voluntarily pay a premium to
cover the extra cost. In the long term, advances in technology may
create opportunities to use synthetic fuels such as e-kerosene, but
further research and development is required.
Shipping
Shipping
represents about 6 mb/d of oil demand. About 5% of shipping
gross tonnage in operation today is fuelled by LNG, which can
reduce emissions by up to 23% compared with conventional
fuels. Of the new ships on order, about 25% of gross tonnage
is being designed for LNG. A significant number of the ships in
operation today already have dual fuel capabilities, giving them
the flexibility to run on alternatives. We believe demand for
LNG in shipping will grow, including for liquefied biomethane.
Fuels such as methanol and ammonia could be options for shipping in
the long term, but we see challenges with both of
them.
Buildings
Residential
and commercial buildings represent just under 30% of final energy
use. This energy is used to heat the buildings and power electrical
devices, and around two-thirds of it comes from low-carbon sources.
The global building stock has become about 75% more efficient in
the last 40 years due to improved building standards, better
insulation, and more efficient appliances. Electrification has
helped to decarbonise this sector and we see this continuing, with
an increased use of electric heat pumps and cookers, reducing
demand for natural gas in homes. Supportive policies will
be key to continuing this trend.
Information
technology services, including data centres, artificial
intelligence and cryptocurrencies, are a rapidly growing part of
the building sector. We believe global electricity demand in this
area could double from 2023 to 2026.
Power
Power is
the most rapidly decarbonising part of the energy system. More than
40% of electricity is now generated from renewables and nuclear.
There has been rapid growth in wind and solar generation in the
last 10 years, expanding from 3.5% of total power generation in
2013 to nearly 18% in 2023.
Around
22% of final energy use was electrified by the end of 2023, up from
around 18% in 2010. We think this trend is accelerating, aided by
the adoption of electric vehicles and heat pumps. Electrification
of final energy use could reach 30-40% by 2040.
We expect
that wind and solar will continue to dominate power generation
growth as governments rightly support their scale-up, which
will also require significant expansion of national
electricity grids.
We see
natural gas having a continued role in displacing coal in power
generation, which helps reduce local air pollution and carbon
emissions. Natural gas also helps provide the flexibility the power
system needs, at a time when renewables are growing rapidly, and
its role is especially crucial in managing seasonal
fluctuations
in supply and demand.
Carbon
abatement
We
believe carbon abatement will be an important tool to reach
net-zero emissions. Once key regulations and standards are in
place, a large-scale business for carbon credits
could emerge.
Carbon
credits may be used to compensate for emissions in line
with the mitigation hierarchy of avoid, reduce and
compensate.
The cost
of carbon abatement can be split into three tranches. Abatement for
less than $100 a tonne of CO2
includes
efficiency measures in industry and buildings, changes in
agriculture, forestry and other land use practices, and some
switching from coal to gas or renewables in power
generation.
The
middle tranche of abatement costs between $100 a tonne and $200 a
tonne and includes the use of carbon capture and storage (CCS) in
power generation and industry. The highest abatement costs are at
more than $200 a tonne. These include parts of the transport and
industry sectors, and directly capturing carbon from the
atmosphere.
Carbon
removals are likely to become an important way to limit the
long-term temperature rise. Both of Shell's energy security
scenarios envisage the need for multi-billion tonne a year
carbon removals, which will need to be financed
by emitters purchasing carbon credits.
Demand
for carbon credits in the voluntary carbon market is expected to
grow significantly. CCS also has the potential to make a meaningful
reduction in CO2
emissions.
While there are only around 50 million tonnes per annum (mpta)
of CCS in operation today, there are around 300 mtpa of projects
under
consideration [A]. Many
net-zero scenarios show the industry growing to more than 1,000
mtpa by the mid-2030s.
- Global
CCS Institute, 2023. The Global Status of CCS: 2023.
Australia
Shell's
strategy to 2030
Our
strategy transforms Shell into a net-zero emissions business by
2050 by delivering more value with less emissions. It supports our
purpose
–
to provide more and cleaner energy solutions
Our
beliefs inform our strategy. While the energy transition will move
at different paces in different countries, we expect global growth
in demand for oil will slow this decade, and is likely
to start declining in the following decade. We also expect
global demand for LNG will continue to grow at least
through the 2030s.
We
believe the world needs a balanced energy transition, one that
maintains secure energy supplies, while accelerating the transition
to affordable low-carbon solutions.
Our
strategy supports a balanced transition by providing the oil
and gas people need today, while helping to build the energy system
of the future. As we implement our strategy, we are becoming a
multi-energy business offering our customers more and cleaner
energy solutions.
We are
reducing emissions from our operations, and helping our customers
move to cost-competitive and cleaner energy. Our energy transition
plans cover all our businesses:
-
Integrated
Gas - Growing our world-leading LNG business with lower carbon
intensity.
-
Upstream
- Cutting emissions from oil and gas production while keeping oil
production stable.
-
Downstream,
Renewables and Energy Solutions – Transforming our businesses to
offer more low-carbon solutions while reducing sales of oil
products.
Delivering more value
less emissions
|
|
CFFO
|
|
|
|
NZE
|
|
Grow
leading LNG position
|
~70%
|
Leading
Integrated Gas
|
~25%
|
Achieve near-zero
methane emissions
|
Keep oil
production flat ensuring cash flow longevity
|
Advantaged
Upstream
|
Eliminate
routine flaring
|
High-grade
portfolio
|
~30%
|
Differentiated
Downstream, Renewables and Energy Solutions
|
~75%
|
Decarbonise
our operations
|
Apply
value over volume
|
Reduce
oil product sales
|
Pursue
selective growth
|
Grow
low-carbon offerings
|
|
|
|
|
|
Help
customers decarbonise
|
|
|
|
|
|
|
Decarbonise our
operations
|
Trading and
optimisation capabilities
|
[A] Net absolute
emissions cover the Scope 1, 2 and 3 emissions from our energy
products; these are calculated by product and allocated to
businesses based on final point of sales, so emissions associated
with upstream production are largely included under downstream as
point of sale.
Today,
around 70% of our cash flow comes from our Integrated Gas and
Upstream businesses, with the remaining 30% generated by our
Downstream, Renewables and Energy Solutions businesses.
The
opposite is true for emissions. Around 75% of Shell's recorded
emissions come from our Downstream, Renewables and Energy
Solutions businesses, with the vast majority generated when our
customers use our products. The remaining emissions are
generated within Integrated Gas and Upstream, with a large
proportion also coming from when our customers use our products.
Across all our businesses, more than 90% of our emissions
are reported as Scope 3.
Shell
will reduce emissions over time as our product mix evolves to meet
changing customer demand. We will continue to produce LNG and oil
with less emissions, while the mix of our sales will move more
towards low-carbon solutions such as biofuels, renewable energy and
hydrogen, and away from oil products such as petrol, diesel
and jet fuel into the 2030s.
Estimated
share of energy sales 2016-2030 [A]
|
|
2016
|
2023
|
2030
|
Oil products
[B]
|
57%
|
48%
|
39%
|
LNG
|
14%
|
22%
|
26%
|
Pipeline
gas
|
25%
|
21%
|
21%
|
Electricity
|
3%
|
7%
|
11%
|
Biofuels
|
1%
|
2%
|
3%
|
[A] Share of
energy products sold, aggregated on energy basis (lower heating
value) in final energy equivalents.
[B] Oil products
includes gas-to-liquids (GTL).
Leading
Integrated Gas
Growing
our world-leading LNG business with lower carbon
intensity
We plan
to grow our LNG business by 20-30% by 2030 compared with 2022. We
are developing new projects with lower carbon intensity by using
renewable power and carbon abatement technology in the form of
carbon capture and storage. Beyond our own production, we will
continue to add scale and flexibility to our portfolio by buying
LNG from others.
Our LNG
business will remain a key priority for Shell, meeting continued
strong demand especially in Asia where we send most of our
shipments today. As we grow our LNG business we will be
targeting opportunities which have an internal rate of return
of 11% or higher.
Market
outlook of LNG demand by region
|
Million tonnes
per annum
|
|
2022
|
2040
|
China
|
64
|
127
|
Japan, South
Korea and Taiwan
|
139
|
113
|
South
East Asia
|
19
|
116
|
South
Asia
|
31
|
123
|
Europe
|
121
|
119
|
Rest of
work
|
11
|
39
|
Middle East and
North Arica
|
7
|
14
|
|
391
|
651
|
Source: Shell
internal analysis
LNG
in the energy transition
LNG
provides both energy security and flexibility because it can
be easily transported to places where it is needed most. It
continued to play a vital role in providing energy security
in Europe in 2023.
LNG is
also a critical fuel in the energy transition. It is the
lowest-carbon fossil fuel, producing around 50% less carbon
emissions than coal when used to generate electricity, according to
the International Energy Agency.
Compared
with coal, LNG emits far lower amounts of sulphur dioxide, nitrogen
oxide and other compounds that contribute to local air
pollution.
Air
pollution from gas-fired power plants versus coal-fired power
plants
|
|
coal
emissions
|
natural
gas emissions
|
Sulphur
dioxide
|
0.67
|
0.01
|
nitrogen
dioxide
|
0.7
|
0.02
|
particulate
matter
|
0.09
|
0
|
Source: US
Department of Energy National Enerfy Technology Laboratory
2015
There are
many opportunities for industries to cut carbon emissions by
switching from coal to natural gas and LNG. Coal accounts for
more than 60% of the energy used across Asia to power heavy
industries such as steel.
External
analysis forecasts renewables, supported by gas, will reduce coal's
role in South Asia
|
|
Coal
|
Gas
|
Nuclear
|
Renewables
|
Hydro
|
Other
|
% coal
share
|
% gas
share
|
2022
|
217.7562
|
51.90026
|
10.05807
|
94.57961
|
57.00562
|
23.39897
|
0.660437
|
0.078663
|
2030
|
274.95
|
56.33033
|
26.056
|
246.7605
|
77.28263
|
29.93112
|
0.593944
|
0.054019
|
2035
|
298.448
|
60.00566
|
60.00566
|
394.2921
|
98.74457
|
35.70659
|
0.498706
|
0.047734
|
2040
|
317.593
|
75.56766
|
62.288
|
563.4911
|
100.1202
|
36.49179
|
0.394158
|
0.053103
|
Source; Shell
interpretation of Wood Mackenzie data.
LNG is
the lowest-carbon marine fuel available at scale today and offers
significant greenhouse gas (GHG) emissions reductions compared with
conventional fuels. LNG also offers a long-term decarbonisation
pathway through bio-LNG when the supply is scaled up. Shell
has developed the world's largest LNG fuelling network of ports and
bunker vessels on key trading routes, enabling more customers to
choose LNG.
To
deliver the full GHG benefits of LNG, methane emissions must be
minimised. We are working with partners, industry and universities
to develop and implement technologies that reduce methane emissions
associated with the use of LNG.
Reducing
methane emissions
Methane
emissions from natural gas and LNG contribute to global warming.
Methane is a potent GHG and reducing emissions of methane is
considered one of the most effective near-term actions to keep the
more ambitious 1.5°C goal of the Paris Agreement within
reach.
As we
grow our LNG business, we continue to make the reduction of methane
emissions a priority. We were one of the first companies to set a
target to achieve near-zero methane emissions by 2030 across all
our operations. Through our more efficient new plants, and projects
to reduce methane emissions from existing assets and our shipping
fleet, we aim to deliver LNG with some of the lowest methane
emissions in our industry.
We are
working with others to increase transparency on methane emissions,
improve accuracy of reporting and drive reductions in methane
emissions across our industry.
We have
been enhancing the accuracy of our reported emissions through the
implementation of the United Nations Environment Programme (UNEP)
Oil and Gas Methane Partnership (OGMP) 2.0 reporting framework in
our operated and non-operated assets. In 2023, Shell received
UNEP's recognition for being on track to achieve OGMP 2.0's gold
standard of reporting in its operated assets by the end of 2023 and
non-operated assets by 2025. This would be the third consecutive
year that Shell has achieved this highest standard.
Working
with others
Shell is
a signatory of the Oil and Gas Decarbonisation Charter launched at
COP28, which focuses on driving down Scope 1 and 2, flaring and
methane emissions.
We led
the development of the Methane Guiding Principles Coalition which
brings together industry and civil society to drive reductions in
methane emissions from the natural gas supply chain. Signatories of
the Methane Guiding Principles are engaging with governments and
industry in 20 countries to inform policies and regulations and
disseminate best practice.
Shell is
a contributor to the OGMP 2.0 Methane Reporting Framework which is
the only measurement -based international framework for methane
emissions in the oil and gas sector.
We are
also a member of the Oil & Gas Climate Initiative which has
launched the Aiming for Zero Methane Emissions by 2030
initiative.
Role
of LNG in the energy transition
Supporting
renewable energy: Using LNG for power generation offers flexibility
and the ability to quickly ramp up or down. LNG will
be essential for maintaining grid stability as the share
of renewables increases.
Reducing
air pollution: Gas-fired power generation can help significantly
reduce air pollution when compared to the emissions released
by coal-fired plants.
Industrial
and high-temperature applications: Gas and LNG are important
for sectors where electrification is challenging, such as
high-temperature industrial processes. They provide the necessary
energy intensity and reliability that renewables currently cannot
match, helping industries like cement and steel on their
decarbonisation journeys.
Market
view of India gas demand by sector
|
Billion cubic
metres
|
|
Industry
|
Transport
|
Power
|
Residential and
Commercial
|
2023
|
50
|
7
|
7
|
1
|
2030
|
70
|
16
|
7
|
3
|
2040
|
91
|
25
|
10
|
6
|
Source: Shell
interpretation of Kpler, S&P Global Commodity Insights and FGE
data, Wood Mackenzie and FGW data.
Energy
security: While displacement of coal by renewables is expected to
be dominant in the power sector, gas and LNG will also have an
important role. They will continue to provide the
flexibility electricity grids will need, and energy
security in the coming decades in developed
countries.
Climate
policy and emissions trading: In regions with stringent climate
policies and emissions trading systems, such as the European Union,
gas and LNG can help meet emissions targets by replacing more
carbon-intensive fuels.
Lower-carbon
fuel for transport: In some of the slower-to-abate transport
sectors, such as long-distance commercial road transport and
marine, LNG can help with their decarbonisation journeys. It is a
solution that is both available and more affordable today when
compared with other low-carbon products, and reduces emissions when
compared with oil-based products.
Gas
displacement of coal in US power generation is helping to drive CO2
emissions lower
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
Coal
|
TWh
|
1,986
|
1,756
|
1,847
|
1,733
|
1,514
|
1,581
|
1,582
|
1,352
|
1,239
|
1,206
|
1,149
|
965
|
773
|
898
|
832
|
Natural
Gas
|
TWh
|
883
|
921
|
988
|
1,014
|
1,226
|
1,125
|
1,127
|
1,335
|
1,379
|
1,298
|
1,472
|
1,589
|
1,627
|
1,579
|
1,687
|
Solar
& Wind
|
TWh
|
56
|
75
|
96
|
122
|
145
|
177
|
199
|
216
|
263
|
308
|
336
|
368
|
427
|
493
|
578
|
CO2
Emissions
|
Mtpa
|
2,484
|
2,270
|
2,389
|
2,287
|
2,157
|
2,174
|
2,168
|
2,031
|
1,928
|
1,850
|
1,872
|
1,725
|
1,554
|
1,652
|
1,650
|
Source: US Energy
Information Administration.
Advantaged
Upstream
Cutting
emissions from oil and gas production while keeping oil
production stable
We
continue to focus on more value and less emissions, and expect that
our oil production will remain stable through to 2030. The oil we
are producing will increasingly come from our world-class
deep-water business. Through innovative designs, our deep-water
platforms are producing higher-margin and lower-carbon
barrels.
Maintaining
oil production this decade
Our oil
production peaked in 2019, and by the end of 2023 had fallen
by around 20%. We believe that continued investment will be needed
to maintain oil supplies as existing fields naturally decline
faster than reductions in demand. To keep production of crude oil
and natural gas liquids stable to 2030 at 1.4 million barrels
per day, we are focusing exploration on our existing positions and
basins where hydrocarbons have been discovered already. This
includes our high-margin deep-water positions.
Across
our upstream portfolio we are targeting an internal rate of return
of 15% or higher. We do not anticipate any new frontier exploration
entries after 2025 [A].
From the
beginning of 2023 until the end of 2025, we will have started
projects with a total peak production of more than 500,000 barrels
of oil equivalent a day. Around 40% of these projects are in deep
water. They include the US Gulf of Mexico, where we are the leading
operator and have one of the lowest GHG intensities in the world
for oil production.
As we
continue to meet the world's demand, we will build on the
strengths of our current portfolio to continue to deliver
lower-carbon barrels with higher margins.
- A
frontier entry refers to Shell participating in new exploration
activities (seismic activities, exploratory drilling) outside
countries where hydrocarbons have been discovered already (by Shell
or other companies).
More
value: Shell deep-water unit CFFO exluding working capital compared
with peers
|
|
|
|
|
|
|
2019
|
2020
|
2021
|
2022
|
|
|
|
|
|
|
|
|
|
|
Shell
deep water
|
31.5
|
15.7
|
37.5
|
57.9
|
|
|
|
|
|
|
|
|
|
|
Peer
Range Higher
|
21.6
|
12.2
|
25.9
|
39.3
|
|
|
|
|
|
|
|
|
|
|
Peer
Range Lower
|
17.6
|
8.7
|
17.5
|
36.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less
emissions: intensity of Shell deepwater assets compared to peers
[B]
|
Emissions
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
2024
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030
|
Shell
deep water
|
15.1
|
14.9
|
13.1
|
13.5
|
14
|
14
|
13.9
|
12.7
|
12.8
|
12.7
|
12.5
|
12.8
|
13
|
13.6
|
Top
10%
|
13.2
|
12.4
|
13.1
|
13.5
|
13.2
|
11
|
12.4
|
12
|
11.1
|
10
|
9.4
|
10.4
|
10
|
10.1
|
Average
Emissions
|
23.8
|
23.5
|
24.1
|
21.8
|
20.2
|
19.5
|
18.9
|
17.8
|
17.6
|
16.4
|
15.9
|
15.7
|
15
|
15
|
Bottom
10%
|
37.9
|
39.4
|
39.7
|
39
|
38.5
|
38.1
|
37.7
|
39.1
|
39.6
|
41.1
|
40.6
|
40.9
|
40.7
|
41.1
|
[A] Peer range
comprises BP, TotalEnergies, ExxonMobil, Chevron and represents all
Integrated Gas and Upstream related activities. based on external
reporting and Shell internal analysis including peer working
capital assumptions.
[B] Shell
internal analysis of Woodmac Lens data. Shell deep water includes
both deep-water and ultra-deep-water positions. Peers are the
majors, large- and mid-cap companies and represent all Integrated
Gas and Upstream related activities.
Decarbonising
our operations
As a
responsible energy producer, we are implementing carbon management
plans and reducing carbon emissions from our assets. We are looking
at ways to electrify our offshore oil facilities, and using wind
and solar power to reduce operational emissions. We see carbon
capture and storage (CCS) as a core technology to further capture
emissions from our facilities, reusing our own depleted oil and gas
fields where possible.
We are
working towards our target to eliminate routine flaring from our
upstream operations by 2025, five years ahead of the World Bank's
initiative [A]. Routine flaring burns gas that is not used or
reinjected into wells, which is inefficient and contributes to
climate change.
- Subject
to completion of the sale of SPDC
Demonstrating
progress on eliminating routine flaring
|
million tonnes of
hydrocarbons flared
|
|
(reduction
91%)
|
2016
|
1.1
|
2021
|
0.2
|
2022
|
0.1
|
2023
|
0.1
|
Differentiated
Downstream, Renewables and Energy Solutions
Transforming
our businesses to offer more
low-carbon
solutions while reducing sales
of
oil products
We are
reshaping our Downstream, Renewables and Energy Solutions
businesses with a more focused geographic portfolio of products to
deliver more value with less emissions. We aim to lead in the
energy transition in areas where we have competitive strengths, see
strong customer demand, and identify clear regulatory support from
governments.
We are
starting from a place of strength. Our global customer reach, and
our supply and trading capabilities in low-carbon products, mean we
are well placed to profitably deliver the low-carbon solutions
people and businesses need. We are also able to identify changes in
demand for products so that we can respond quickly.
In the
transport sector, for example, we see attractive growth
opportunities in charging for electric vehicles and in biofuels
for cars, trucks, planes and ships. We are strengthening these
businesses to support our customers as they decarbonise and move
from oil products to lower-carbon alternatives.
As the
energy transition evolves, we expect that growth in demand for oil
products for transport will slow, and then decline. We are
transforming our refinery portfolio and targeting value over volume
in our marketing business. As a result, we will sell less oil
products and more low-carbon products.
Our
strategy is to:
-
Repurpose
our remaining integrated refineries to focus on four regional
energy and chemicals parks, providing cleaner molecules such as
biofuels and hydrogen to help our customers
decarbonise.
-
Transform
our marketing business by gradually reducing exposure to oil
products used for transport, while changing our product mix by
investing in areas such as electric vehicle charging, biofuels, and
integrated power.
-
Use
technology and innovation to develop the business models and fuels
of the future. The strength of our trading capabilities, coupled
with our own production, will help us deliver affordable
and low-carbon solutions
for our
customers.
Focused
on developing low-carbon solutions for today, tomorrow and the
future
-
Delivery today:
Repurposing energy and chemical parks, Mobility and lubricant
offerings
-
Building for
tomorrow (2025+): Electric vehicle charging, low-carbon
fuels
-
Preparing for the
future (2030+): Hydrogen, Carbon removal and storage
-
Supported and
enabled by Integrated Power, trading and optimisation
Delivering
today
Today, we
are repurposing our remaining integrated refineries to focus on
four regional energy and chemicals parks, which we are transforming
into the low-carbon hubs of the future. As part of this process, we
have completed the strategic review of our Energy and Chemicals
Park Singapore with divestment as our preferred option. We are also
high-grading our European energy and chemicals parks. This means
retiring certain units and continuing with some divestments we have
already announced.
We are
looking to strengthen our global retail and lubricants marketing
businesses as the energy transition evolves, meeting the changing
needs of our customers, and making value-driven choices region by
region. That means growing our portfolio of low-carbon fuels and
charging for electric vehicles in markets that meet our investment
criteria such as China, Europe and the USA, and reducing our
presence in others. As an example, we have signed an agreement to
sell our shareholding in Shell Pakistan.
Oil for
lubricants and chemicals
Most of
the oil products sold by Shell are used in the transport sector. We
estimate that 15-20% of the total oil products we sell are used for
non-energy products such as lubricants and chemical products.
Chemicals are used in many parts of modern life, from cosmetics to
household goods. Lubricants are needed for virtually every machine
and engine in operation. As these products are not combusted, their
use does not cause Scope 3, Category 11 emissions. In 2023, Shell
invested $2.3 billion in producing non-energy products including
lubricants, chemicals, convenience retailing, agriculture and
forestry, construction and road.
We are
upgrading our retail network, with expanded electric vehicle
charging and convenience offers, in response to changing customer
needs. In total, we plan to divest around 500 Shell-owned sites
(including joint ventures) a year in 2024 and 2025. We are growing
our premium lubricants portfolio to supply key energy
transition sectors such as transformer oils used for offshore
wind parks, and cooling fluids to support the development of
electric vehicle car batteries.
Supply,
logistics and trading play a crucial role in ensuring we meet
our customers' needs and generate strong returns. Our world-leading
trading and optimisation business generates additional value by
connecting supply and demand, for both conventional and
low-carbon fuels across our global businesses. We will continue to
grow our trading business in low-carbon molecules, carbon
credits and power as the energy transition accelerates.
Building
for tomorrow (2025+)
To build
the businesses of tomorrow, we continue to strengthen our offer of
low-carbon solutions where we see a significant increase in
customer demand and supportive government policies. Between now and
2030, we are focusing on three areas where we have the
potential to positively impact the energy transition by reducing
the cost for our customers – electric vehicle charging, biofuels
and integrated power.
Electric
vehicle charging
We are
growing our electric vehicle charging business to support customers
who choose to change from a petrol or diesel vehicle to an electric
one. We are focusing on offering our customers choices where we see
increasing demand, such as in the fast-growing electric mobility
markets of China and Europe. We aim to increase the number of
public charge points we operate to around 200,000 by 2030, from
around 54,000 today.
Scaling
our network of public EV charging points
|
Thousands
|
|
2020
|
2021
|
2022
|
2023
|
2025
|
2030
|
Other
|
0.5
|
0.002
|
0.022
|
0.021
|
~70
|
~200
|
Asia
|
0.5
|
0.068
|
0.27
|
1.002
|
|
|
China
|
0
|
1.964
|
17.55
|
32.576
|
|
|
Europe
|
0
|
5.021
|
8.937
|
16.579
|
|
|
Americas
|
0
|
0.044
|
0.07
|
3.605
|
|
|
We are
focusing on public charging, rather than home charging, because we
believe it will be needed most by our customers. We have a major
competitive advantage in terms of locations, as our global network
of service stations is one of the largest in the world. We have
other competitive advantages, such as our convenience retail
offering which allows us to offer our customers coffee, food and
other convenience items as they charge their cars. As we grow our
business offering charging for electric vehicles, we expect an
internal rate of return of 12% or higher.
Biofuels
We are
expanding our world-leading biofuels business to meet growing
customer demand and where we can use the strength of our supply and
trading positions. Aviation and shipping remain some of the
slower-to-decarbonise sectors and will require low-carbon molecular
solutions such as biofuels and synthetic hydrogen-based fuels at
scale in the future.
Shell is
already one of the world's largest energy traders and blenders of
biofuels selling significantly more low-carbon fuels than we
produce. We expect to continue to grow both our own production
and sales of biofuels in the coming years.
We are
focusing on producing premium biofuels such as sustainable aviation
fuel, renewable diesel and renewable natural gas (RNG).
These fuels will help to reduce emissions in commercial
road transport. To support our production of biofuels,
we are investing in new feedstocks through investments
and partnerships while using the strength of our trading
business to expand sales beyond our production
volumes.
Through
our Raízen joint venture in Brazil we are already the largest
producer of second-generation ethanol and the leading sugar-cane
ethanol producer globally. To support growing demand for biofuels
this decade, we are developing more second-generation technologies.
We are also developing technologies and feedstocks that aim to
allow continued and sustainable growth in biofuels while
minimising impacts on the environment and food
supplies.
Following
the 2023 acquisition of Nature Energy, one of the largest
producers of RNG in Europe, we have a strong position in RNG. We
are actively looking for more opportunities to meet emerging demand
for RNG, especially in north-west Europe. We expect to generate an
internal rate of return of more than 12% from our new investments
in low-carbon fuels.
Integrated
power
We will
continue to grow our integrated power business with selective
investments in renewable power generation. We will also use
the strength of our trading and optimisation capabilities to meet
the growing need for flexible power storage solutions such as
batteries. We already have a significant presence in battery and
storage through both our ventures programme and investments in
research and development.
We are
making disciplined choices to create value from our power
portfolio, stepping back from activities that do not fit
our strategy or that do not generate enough returns. We have
exited renewable projects in Ireland and France, and sold our home
energy businesses in the UK and Germany. We are focusing on selling
power, including renewable power, to business customers. We are
also using renewable power to decarbonise our own
operations.
Over
time, we will also use our renewable power capacity to produce
low-carbon molecules such as hydrogen. We expect returns from power
generation to be in line with the market, at around 6-8%
ungeared, with opportunities to create higher returns from areas
such as trading and optimisation.
Flexible
power generation capacity demand is projected to grow
significantly
|
|
2025
|
2030
|
2035
|
2040
|
2045
|
2050
|
|
|
|
|
|
|
|
Gas
|
2.1
|
2.2
|
2.4
|
2.6
|
2.9
|
3.4
|
Hydrogen
|
0
|
0.1
|
0.3
|
0.5
|
0.7
|
1
|
Batteries
|
0.2
|
0.4
|
0.5
|
0.8
|
1.1
|
1.7
|
Other
|
0.4
|
0.3
|
0.3
|
0.4
|
0.4
|
0.5
|
[A] Gas includes
both open-cycle and combined-cycle gas turbine power
generation.
Source: McKinsey
Energy Solutions Global Energy Perspective 2023.
Preparing
for the future (2030+)
This
decade, we are also focusing on developing integrated energy hubs,
select carbon capture and removal businesses, such as CCS, and
fuels of the future, such as hydrogen, to prepare to meet our
customers' needs after 2030.
We plan
to create integrated energy hubs around our energy and chemicals
parks in North America and north-west Europe, and other locations
where we see significant potential for high growth in demand in the
future. These include Australia, Brazil, China and India. We will
be focusing our investments in these hubs as we integrate our
businesses and trading capabilities to deliver affordable
low-cost solutions to our customers.
We are
researching the development of fuels such as liquefied synthetic
gas (LSG), which is produced when renewable hydrogen is combined
with captured carbon dioxide (CO2)
to create natural gas, which is then liquefied. This low-carbon gas
can be directly used in existing gas networks and
infrastructure, including LNG plants.
Carbon
capture and removal
We are
developing technologies related to carbon capture and storage (CCS)
and carbon removals, which are necessary to reduce emissions where
there are few low-carbon alternatives. For the rest of this decade,
we will direct most of our investments in CCS towards decarbonising
our own operations.
We are
also looking to turn this into a profitable business for Shell by
helping other companies decarbonise their operations in the future.
However, in many countries CCS still lacks a clear business model.
To address this challenge, Shell advocates policy mechanisms to
enable CCS, and supports industry partnerships dedicated to the
growth of commercially viable CCS projects.
Direct
air capture (DAC) technology can also play a key role in the
energy transition. We are aiming to make it more affordable and
scalable through several pilot projects. DAC extracts
CO2
from the
air to provide a carbon feedstock for synthetic products, or when
coupled with transport and storage, to enable it to be stored
underground.
In
combination with carbon capture and removal technologies, a
functioning global carbon market will be a critical enabler
of an accelerated energy transition. We are actively
participating in carbon markets, and building and managing
a diverse portfolio of high-quality carbon credits, including
nature-based and non-nature based solutions, to help our
customers decarbonise.
Our
transitions plans cover all our businesses
Leading
Integrated Gas
Advantaged
Upstream
Differentiated
Downstream, Renewables and Energy Solutions
Focused
decarbonisation pathways
We have
identified pathways to net zero for our two biggest customer
sectors, transport and industry. These two sectors make up more
than 70% of global final energy demand and more than 55% of global
carbon emissions today. Our pathways are based on where we believe
we have the competitive advantages to provide our customers with
the affordable productions they need though the
transition.
Passenger
road transport:
Between now and
2030: Oil products, Biofuel solutions and electric
charging
Between 2030
& 2040: Electric charging, biofuel solutions and oil
products
From 2040
onwards: Electric charging and oil products
Commercial road
transport:
Between now and
the mid 2030’s: Oil products, Biofuel solutions, liquified natural
gas and electric charging
From the mid
2030’s onwards: Biofuel solutions, electric charging, oil products
and green hydrogen
Aviation:
Between now and
the end of the 2030’s: Oil products, biofuels solutions and
synthetic fuels
From the end of
the 2030’s onwards: Biofuel solutions, synthetic fuels and oil
products
Marine:
Between now and
the mid 2030’s: Oil products, liquified natural gas and biofuel
solutions
From the mid
2030’s onwards: Oil products, biofuel solutions, liquified natural
gas and hydrogen and derivatives
Industry
and Services:
Pathway 1:
Between now and the mid 2030’s: Liquified natural gas with carbon
capture and storage and renewable natural gas. From the mid 2030’s
onwards: liquified natural gas with carbon capture and storage,
renewable natural gas and hydrogen and derivatives
Pathway 2:
Between 2030 and 2040: Blue hydrogen. From 2040 onwards: Blue
hydrogen and green hydrogen
Pathway 3:Direct
electrification and batteries and flex storage
Carbon
abatement and removal:
Between now and
2030: Nature based solutions and carbon capture and
storage
From 2030
onwards: Carbon capture and storage, nature based solutions and
direct air capture
Note: The order
of each item within the pathway sections above indicate their
likely relative prominence within that section of that pathway.
Significant uncertainty remains on the shape of these future
pathways.
Leading
to our strategic decarbonisation areas for this
decade
Electric vehicle
charging
Biofuels
infrastructure
Integrated power
positions
Co2
capture and
removal value chains
Enabled by our
strengths and competitive advantages
Trading
capabilities and infrastructure networks
Technology and
innovation
Policy and
advocacy
More
value with less emissions: our actions
Putting
our strategy into action across all
our businesses
Our
beliefs about the energy transition inform our strategy
to deliver more value with less emissions. Our strategy is
based on the areas where Shell has unique competitive
strengths, allowing us to be a successful business through
the energy transition.
Growing
our world-leading LNG business with lower carbon
intensity
As we
grow our world-leading liquefied natural gas (LNG) business by
20-30% by 2030, we will continue to reduce the carbon
intensity
of our
operations.
Our LNG
joint venture in Canada (Shell interest 40%,
non-operated)
will use natural gas and renewable electricity to reduce
emissions from the plant by more than one-third compared with the
world’s best performing facilities when it starts up. The
commissioning process is expected to begin in 2024 and will
continue into 2025.
In Qatar,
Shell is a partner in the North Field Expansion, the largest LNG
project in the world. It comprises the North Field East (Shell
interest 6.25%) and North Field South (Shell interest 9.375%)
projects.
By using
carbon capture and storage, these projects will help provide LNG
with a lower-carbon footprint to our customers. Shell's share of
these projects will be around 3.5 million tonnes per annum (mtpa)
of LNG when production starts later this decade.
Shell is
working with shipping companies to help decarbonise the marine
sector. Parts of the marine sector uses LNG to power some of its
ships, with the aim of switching to liquefied biomethane
or liquefied e-methane, a hydrogen-based fuel, in the longer
term.
Artificial
intelligence for LNG
Artificial
intelligence (AI) is helping us reduce carbon emissions at LNG
plants by using information from sensors to calculate the most
efficient settings for equipment. At one LNG facility, we estimate
these technology developments are reducing carbon dioxide emissions
by around 340,000 tonnes a year. We have used these automation
and optimisation technologies to reduce emissions at multiple LNG
facilities.
Reducing
methane emissions
We
continue to enhance the accuracy of our reported methane emissions
and reduce emission sources across Shell-operated assets. By the
end of 2023, around 80% of fugitive-emission sources at our
operated oil, gas and LNG production facilities used leak detection
and repair programmes to tackle leaks and monitor
equipment.
Shell
works with others to share our learnings and drive industry-wide
action on methane operations. We are a founding signatory of
the Oil and Gas Methane Partnership (OGMP) 2.0 reporting framework
and have been implementing the framework in our operated and
non-operated assets, engaging with our non-operated joint-venture
partners to achieve improved accuracy or reporting beyond our
operations.
We test
and use latest technologies to monitor our emissions. In 2023, we
successfully completed a pilot with GHGSat, a pioneer in methane
detection, to test satellite capabilities for monitoring methane
emissions from offshore facilities. The aim is to use this
technology more widely in the future.
We have
also been using drones and satellites to monitor the methane
emitted during the production and processing of natural gas, and
the export of LNG. This has helped us reduce wells maintenance
periods and carefully control gas dryness during processing to
limit venting. We have reduced vented methane emissions at our
QGC business in Queensland by more than 2,800 tonnes
since 2017.
Consistently
ahead of the industry leading average [A]
|
Methane
emissions intensity %
|
|
|
|
|
|
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
Industry
leading average
|
0.25
|
0.23
|
0.21
|
0.18
|
0.15
|
|
Shell
[B]
|
0.08
|
0.08
|
0.06
|
0.06
|
0.05
|
0.05
|
[A] Aggregated
average performance of Oil and Gas Climate initiative
companies.
[B] Methane
emissions intensity from all oil and gas assets for which Shell is
the operator that market their gas (including LNG and GTL assets)
defined as the total volume of methane emissions in normal cubic
meter (Nm3) per total volume of gas available for sale in
Nm3)
Cutting
emissions from oil and gas production in our Upstream
business
In our
Upstream operations, we are cutting emissions from oil and gas
production to meet our targets, which are some of the most
ambitious in our industry. Reducing operational emissions is a key
factor in the development of new projects.
Our Vito
deep-water platform (Shell interest 63.1%) in the Gulf of
Mexico is one of our newest platforms and has a peak production of
100,000 barrels of oil equivalent a day. The platform is expected
to reduce carbon dioxide (CO2)
emissions by around 80% over its operating life, compared with
its original design. In addition to the reduced
emissions, Vito also cost 70% less than the anticipated cost of the
original design, an example of creating more value with less
emissions.
Vito's
design is being replicated in two other deep-water platforms in the
Gulf of Mexico: Whale and Sparta. The Shell-operated Whale project
(Shell interest 60%) is expected to start production towards the
end of 2024 and is expected to operate with less emissions than
Vito. A final investment decision for the Sparta project (Shell
interest 51%) was announced in December 2023, with production due
to begin in 2028. Shell will use the experience of the Vito and
Whale projects to enhance the design and energy efficiency
capabilities of Sparta.
We are
reducing the carbon intensity of new projects elsewhere. Timi in
Malaysia (Shell interest 75%) is our first wellhead platform to be
powered by a solar and wind hybrid power system. This unmanned
platform, which delivered its first gas in August 2023, is around
60% lighter than a conventional tender-assisted drilling wellhead
platform, helping to reduce the emissions needed to develop
the project.
Reducing
routine flaring
We are
working to reduce routine flaring, which is inefficient and
contributes to climate change. Our target is to eliminate
routine flaring from our upstream operations by 2025 [A]. This
commitment challenges us to move faster than the World Bank's
Zero Routine Flaring by 2030 initiative.
In 2023,
around 10% of our greenhouse gas emissions from flaring occurred at
facilities where there was no infrastructure to capture the gas,
which is similar to the 2022 figure. Overall flaring decreased to
2.8 million tonnes of carbon dioxide equivalent
(CO2e)
in 2023 from 3 million tonnes of CO2e
in 2022.
-
Subject
to the completion of the sale of SPDC.
In
Norway, Shell is the operator of the Ormen Lange gas
field (Shell interest 17.8%). This is an underwater facility
connected to Nyhamna, an onshore processing and export plant. The
Ormen Lange is powered by renewable hydroelectricity provided by
the Norwegian grid. This same source of renewable hydroelectricity
provides around 93% of the energy needed for Nyhamna. We are
installing further underwater compression units to increase
gas recovery from the Ormen Lange field, which will also
be powered by the same renewable hydroelectricity.
Within
our Upstream portfolio we have made divestments, including the sale
of our interest in the Malampaya gas field in the Philippines
in 2022 and our Permian business in the USA in 2021. These sales
were strategic moves, which also resulted in reducing our Scope 1
and 2 emissions.
Downstream,
Renewables and Energy Solutions businesses: offering more
low-carbon solutions
We are
reducing emissions associated with our refineries
by transforming them into energy and chemicals parks. This
transformation is under way at Norco in the USA, Scotford in
Canada, Pernis in the Netherlands and Rheinland in
Germany.
In
January 2024, we took a final investment decision to convert the
hydrocracker of the Wesseling site at the Energy and Chemicals Park
Rheinland into a production unit for Group III base oils to produce
high-quality engine and transmission oils. The repurposing of this
refinery is a significant step towards serving our growing
lubricant customer base with premium base oils, delivering more
value with less emissions. The Wesseling site will stop processing
crude oil into petrol,
jet fuel
and diesel by 2025.
When it
starts operations in the second half of this decade, the production
unit will be highly electrified and is expected to cut Shell's
Scope 1 and 2 emissions by around 620,000 tonnes a year. This is
the latest development in the transformation of Rheinland, which
includes investments in a 10-megawatt electrolyser to produce
renewable hydrogen and a biomethane liquefaction
plant.
Biofuels
We are
developing biofuels such as sustainable aviation fuel, renewable
diesel and renewable natural gas (RNG) to help our customers
decarbonise without having to change their cars, trucks,
planes or ships. Shell is one of the world's largest traders and
blenders of biofuels, meeting around 6% of global demand. In 2023,
around 9.7 billion litres of biofuels went into our petrol and
diesel worldwide, compared with 9.5 billion litres in
2022.
Raízen,
our joint venture in Brazil (Shell interest 44%), is one
of the world's biggest bioethanol producers, delivering some
of the lowest carbon intensity biofuels available today. The
majority of the ethanol and cellulosic ethanol produced by Raízen
is sold unblended to international customers in markets such as
Europe, Japan and the USA. It is used in the transport,
pharmaceutical and manufacturing industries, among
others.
Raízen
produced around 3.12 billion litres of ethanol in 2023, up from
around 3 billion in 2022. Raízen's Costa Pinto plant produced 30
million litres of second-generation ethanol made from inedible
agricultural waste in 2023, up from 26 million in 2022. In
2023, the joint venture also commissioned the first of eight
advanced biofuel plants which it aims to build in
Brazil.
In
February 2023, we completed the nearly $2 billion acquisition of
Nature Energy, making us one of the largest producers of renewable
natural gas (RNG) in Europe. RNG, produced by turning organic
material such as agricultural waste into renewable energy, is a
low-carbon fuel that can power trucks and ships. With our partners,
Nature Energy owns and operates 13 biogas plants in Denmark
and one plant in the Netherlands.
The
biofuels plant at the Shell Energy and Chemicals Park Rotterdam in
the Netherlands is expected to be one of Europe's biggest once
operational in the latter half of the decade. It is expected to be
capable of producing 820,000 tonnes of biofuels from waste each
year. This facility will have the capacity to produce enough
renewable diesel to avoid 2.8 million tonnes of carbon
emissions a year.
Sustainable
aviation fuel (SAF) could account for more than half of the
plant's biofuels capacity, with the rest being renewable diesel.
Shell can adjust this mix to meet changing customer demand. SAF
currently accounts for less than 0.1% of global aviation fuel.
Shell's investment will help increase SAF production, which is
vital if aviation is to cut carbon emissions.
To
support our biofuel production capacity, we are also investing in
new feedstocks for biofuels. In 2022, Shell acquired waste
recycling company EcoOils which produces advanced biofuels
feedstock at its facilities in Malaysia and Indonesia. This will
enable the production and supply of low-carbon fuels like SAF to
customers. We also invested in agroforestry company Investancia
Group (Shell interest 30%) in 2022. Together, Shell and Investancia
are using degraded cattle land in Paraguay to plant pongamia
oil trees to grow sustainable feedstock to make
biofuels.
Lower-carbon
race fuel for Scuderia Ferrari
Shell has
developed a race fuel containing 10% of second-generation
bioethanol for Scuderia Ferrari to use in its Formula 1 racing
cars. We use digital simulation to predict the combustion behaviour
and performance of each fuel blend to significantly reduce the
development time, and maximise performance and efficiency. The team
is now working on a 100% sustainable race fuel, which includes
several different sustainable fuel components, to meet
requirements for the 2026 Formula 1 season.
Electric
vehicle charging
Shell is
well positioned to become a profitable leader in public charging
for electric vehicles, meeting the growing demand from drivers who
need to charge on the go.
At the
end of 2023, we had around 54,000 public charge points for electric
vehicles at Shell forecourts, on streets and at locations such as
supermarkets. This was up from 27,000 in 2022. We expect to have
around 70,000 public charge points by 2025 and around 200,000 by
2030. Shell Recharge, our public charging network, currently
operates in around 33 countries.
We opened
our largest electric vehicle charging station
in the world in China, the world's largest market for
EVs, in September 2023. The 258 fast-charging points at the Shell
Recharge Shenzhen Airport EV Station serve thousands of drivers
every day. The charging points are partially powered by rooftop
solar panels with the capacity to generate 300,000 kilowatt
hours of renewable electricity a year.
The
charging station, a joint venture between Shell and Chinese
electric car manufacture BYD (Shell share 80%),
has a utilisation rate of two-and-a-half-times the local
average. China is one of the most important growth markets for our
Mobility business.
In March
2023, we completed the acquisition of Volta Inc. in the USA.
We now operate one of the largest public electric vehicle charging
networks in the country, with more than 3,000 charge points
across 31 states and more than 3,400 additional charge points
in development.
Integrated
power positions
Our power
business brings together our expertise in generation, trading and
marketing. We are making selective investments in renewable
generation, batteries and other grid-flexibility technologies, to
provide low-carbon solutions to our commercial and industrial
customers, and to decarbonise our own operations. We aim to
profitably deliver more renewable power solutions, by growing our
portfolio in select markets such as Australia, Europe, India and
the USA.
At the
end of 2023, we had around 2.5 gigawatts (GW) of renewable capacity
in operation, 4.1 GW under development and around 40 GW of
potential capacity in our pipeline globally, including
utility-scale solar and integrated wind-to-hydrogen projects. In
2023, Shell sold around 279 terawatt-hours (TWh) of electricity,
which is more than enough to meet the annual needs of
Australia.
In the
USA, the solar, wind and battery company Savion, which we acquired
in 2021, has started to develop new solar plants. Once operational,
they will generate around 500 megawatts (MW) of renewable
power.
We are
also investing in growing our renewable energy capacity elsewhere.
In 2022, we acquired Sprng Energy in India and in 2023 we acquired
Isemaren in Spain. We are also developing our own positions,
such as our Pottendijk and Koegorspolder solar farms in the
Netherlands.
In 2023
in the Netherlands, the Hollandse Kust Noord offshore wind farm
(Shell interest 79.9%), which has a generating capacity of 759 MW,
became operational. Hollandse Kust Noord will eventually produce
the equivalent of almost 3% of electricity demand in the
Netherlands. Ecowende (Shell interest 60%), our joint venture with
Eneco, announced plans to develop a 760 MW wind farm nearby called
Hollandse Kust West.
We are
also developing utility-scale battery storage systems
in select markets. In March 2023, we entered into a
partnership to deliver a battery storage system in Australia. Shell
will have access to 100% of the battery system's offtake over a
20-year period. Completion of the project is expected in late
2024.
Hydrogen
We
continue to invest in the production of hydrogen, looking for ways
to expand the technology and reduce costs so that it becomes
an affordable and available low-carbon option for the
future.
To
deliver the full low-carbon potential of hydrogen, we continue to
learn about where emissions, including methane, can occur during
production and use. We are also identifying opportunities to
address them in collaboration with others. We see a role for
hydrogen as a feedstock, for example to make synthetic fuels, and
as an energy carrier across industry and transport.
At the
end of 2022, we started to build Holland Hydrogen 1 in the
Netherlands, which will be one of the largest renewable hydrogen
plants in Europe when it becomes operational in the second half of
the decade. The 200 MW electrolyser will be powered by renewable
energy from the Hollandse Kust (noord) offshore wind
farm.
Holland
Hydrogen 1 will help to decarbonise the production of our
petrol, diesel and aviation fuel at the Shell Energy and Chemicals
Park Rotterdam. In the longer term, the plant could also supply
hydrogen to help reduce emissions in transport
and industry.
In Oman,
we acquired a 35% interest in Green Energy Oman, which will produce
hydrogen from seawater, powered by up to 25 GW of solar
and wind energy. Shell is the lead operating partner. The project
is expected to be operational by the early part of the next
decade and aims to produce around 1.8 million tonnes of hydrogen a
year at full capacity.
As a
founding member of the H2 Accelerate consortium, Shell continues to
work with partners to enable the use of hydrogen to decarbonise
long-haul road transport across Europe. The consortium is
trying to develop a programme to make hydrogen a commercially
viable fuel for the trucking sector.
Carbon
capture and storage (CCS)
Shell
continues to work with governments, customers and partners to
unlock the potential of CCS to reduce emissions where there are few
low-carbon alternatives.
CCS
technologies are necessary to meet the temperature goals of
the Paris Agreement. However, in many countries CCS lacks a
clear business model. To address this challenge, Shell advocates
for policy mechanisms and supports industry partnerships dedicated
to the growth of commercially viable CCS projects.
By the
end of 2023, the Quest CCS facility at the Scotford upgrader in
Canada (Shell interest 10%) had captured and safely stored more
than 8.8 million tonnes of CO2
since it
began operating in 2015. We are exploring the possibility
of increasing CCS capacity at Scotford, initially by
750,000 tonnes a year [A].
Our
Northern Lights CCS project (Shell interest 33.3%) in Norway signed
contracts in 2023 to transport and safely store 1.2 million tonnes
of CO2
a year.
The CO2
will be
shipped from two of Ørsted's biomass power plants in Denmark and a
Yara ammonia and fertiliser plant in the Netherlands. It will then
be stored 2,600 metres below the seabed in the North
Sea.
In
Australia, the Gorgon CCS project (Shell interest 25%, operated by
Chevron) reported it had stored more than 9 million tonnes of
CO2
equivalent
by the end of 2023. In addition to these significant emission
reductions, Chevron has confirmed it had acquired and surrendered
carbon credits to address historical injection shortfalls. The
project started operating in 2019 and is the largest CCS operation
in the world.
Construction
of Porthos, Europe's largest CCS facility, will begin at the
port of Rotterdam in 2024. Shell will be the biggest customer,
supplying 1 million tonnes of CO2
a year.
The captured CO2
will be
transported to empty gas fields under the North Sea around 20
kilometres off the Dutch coast. This will reduce the
Netherlands' annual CO2
emissions by
around 2% for 15 years from 2026.
[A]
Corrected on March 20, 2024 due to an editorial error.
In 2023,
Shell and Esso were jointly awarded three licences in the UK's
first-ever carbon storage licensing round. The joint venture (Shell
interest 50%) will evaluate three sites in the North Sea for the
potential storage of CO2
captured
and transported from industrial facilities in the UK.
Also in
2023, Shell's CANSOLV® carbon capture technology won a bid for
deployment at a CCS plant in Abu Dhabi, UAE. The plant will capture
and permanently store 1.5 million tonnes of CO2
a
year.
Direct
air capture
Shell's
research programmes have been developing technology to directly
remove carbon from the atmosphere for several years. In 2023, we
took the decision to build a direct air capture (DAC)
demonstration unit at our technology research centre
in Houston, Texas, USA. The aim of the project, which has a
targeted start-up date of 2025, is to prove the viability of
Shell's solid sorbent technology. The unit is being developed by a
diverse team of Shell scientists, engineers and technical experts
across the globe.
Integrated
energy hubs
As part
of our approach to the energy transition, we are developing
integrated energy hubs to reduce our own emissions and those of the
products we sell. At our Energy and Chemicals Park Rotterdam
in the Netherlands, for example, we are integrating biofuels,
hydrogen and CCS into our existing facilities.
We have
started to build Holland Hydrogen 1 which will help to
decarbonise fuel production at the nearby energy and chemicals
park once operational. The hydrogen plant will be powered
by renewable energy from the Hollandse Kust (noord) offshore
wind farm.
Some of
the emissions from the energy hub will be captured and stored
under the North Sea by two CCS projects once they are in operation.
These are Porthos, where we are the biggest customer, and
Aramis, a joint venture.
As the
market develops, we will seek opportunities for future projects and
use our customer relationships to meet increasing demand for
low-carbon solutions.
Holland
Hydrogen 1
Power: Hollandse
Kusst (noord) wind farm - 759MW to Data centres and Shell Holland
Hydrogen 1 - 200MW
C02:
Shell Energy and
Chemicals Park Rotterdam to Aramis CCS- 5 mpta store and Porthos
CCS- 2.5 mpta store
Hydrogen: From
Shell holland Hydrogen 1 200MW to Shell
Carbon
credits
Carbon
credits can make an important contribution to our target to become
a net-zero emissions energy business. They may be used by
Shell and its customers to compensate emissions in line with the
mitigation hierarchy of avoid, reduce and compensate.
We are
clear that carbon credits need to have a robust carbon benefit
and deliver a positive impact on ecosystems and communities. We
work closely with local partners to ensure that the carbon credits
projects we invest in are of a high quality.
We select
projects that are certified under credible and independent carbon
credit standards. These include the Verified Carbon Standard, Gold
Standard and the American Carbon Registry. We do this to ensure
that the carbon credits are real and verifiable, and that issues
such as permanence, additionality and leakage have been adequately
considered.
We also
help develop and buy carbon credits generated by other nature-based
projects and by technologies. We carefully source and screen the
credits we purchase and retire from the market.
In 2023,
Shell's net carbon intensity (NCI) accounted for 20 million carbon
credits, of which 4 million were linked to the sale of energy
products. Of the 20 million tonnes of carbon credit retirements
included in Shell's NCI metric for 2023, 85% were certified by
Verra, 9% by the American Carbon registry, 6% by Gold
Standard, and less than 1% via Australian Carbon Credit
Units.
Tracking
SAF with blockchain
We are
using new technologies to power our Upstream and Downstream assets,
improve our trading and supply operations, and deliver compelling
new materials and molecules.
Avelia, a
business model developed in partnership with Accenture and
American Express Global Business Travel, uses blockchain to help
our customers securely and transparently track emissions reductions
and the environmental attributes of the sustainable aviation
fuel they acquire, tracing it from production through
to delivery into aviation fuelling networks.
Technology
and innovation
Built on
more than 125 years of technological innovation, our company's
future performance depends on the successful development,
demonstration and commercial deployment of new technologies and new
products. In 2023, research and development expenditure on projects
that contributed to decarbonisation was around $628 million, up
from around $440 million in 2022. The 2023 figure represents around
49% of our total expenditure on research and development,
up from around 41% in 2022.
A
leading investor in research and development (R&D)
[A]
|
% EBITDA
spend on R&D (average 2021-2022)
|
Peer
1
|
1.6
|
Shell
|
1.3
|
Peer
2
|
1.2
|
Peer
3
|
0.8
|
Peer
4
|
0.6
|
[A] Shell
analysis of data published by peer companies (TotalEnergies,
ExxonMobil, BP and Chevron) in annual reports with the note that
definitions of R&D vary between companies.
Our
technology and innovation portfolio helps to deliver Shell's
strategy by:
-
Achieving
more value with less emissions across our core businesses today.
For example, the Just Add Water System, developed by Shell, uses a
software system to reduce fuel costs for marine vessels and the GHG
emissions they emit.
-
Creating
the low-carbon products and solutions of tomorrow, such as our
CANSOLV® carbon capture technology which will be deployed on the
world's largest CCS plant in Abu Dhabi.
-
Exploring
the transformative technologies of the future, such as renewable
hydrogen, direct air capture, and heat and power storage
solutions.
The
technologies and business models we are developing will shape the
products and services we offer our customers in the transport and
industry sectors.
At our
Zhuhai plant in China, which produces lubricants and greases, we
have introduced a thermal energy storage system. This system
replaces diesel fuel with renewable electricity to generate the
process steam required for manufacturing lubricants. The storage
system will optimise steam production and is expected to reduce the
use of diesel by 300 tonnes and CO2
emissions
by more than 900 tonnes a year. By demonstrating the benefits of
this type of system on a Shell facility, we are in a position to
encourage and support the decarbonisation of our
customers.
We invest
in the latest energy technologies through our partnerships with
start-ups and leading academic institutions. For example, we are
working with Imperial College London in the UK to develop new
technologies, with a particular focus on electric
vehicles, lubricants, energy storage, CCS,
and materials.
Powering
industry through investments
Shell
Ventures invests in start-ups and bigger companies that seek to
electrify energy systems, decarbonise transport, gain data-based
insights and provide innovative customer solutions.
In 2023,
we invested in a German company called Kraftblock, which has
created energy storage systems to help the industry sector
switch from fossil fuels to renewable energies. The technology also
allows customers to recycle waste heat.
Shell
Ventures is a partner with Norwegian company Corvus Energy, a
leading supplier of safe, innovative and reliable energy
storage solutions for the maritime industry. The company's battery
storage systems replace diesel and bunkering oil, thereby reducing
emissions. The storage systems are used on vessels in Shell's
operations in the Gulf of Mexico.
Climate
policy engagement
Comprehensive,
coherent and consistent policies are a crucial part of the
journey to net zero. With the right policy and regulatory
conditions, we can profitably increase our investments through the
energy transition. We advocate robust policies, legislation and
regulations in areas where we can best support the decarbonisation
of our customers and reduce our own emissions.
Our
advocacy, directly to governments, and indirectly through industry
associations and coalitions, is a key part of our strategy. Shell
engages with governments, regulators and policymakers in different
ways to help shape policy, legislation and regulation.
Our
public policy positions serve as a framework for our advocacy
with governments, international organisations, industry
associations, and other stakeholders, globally, regionally and
within countries. In using the positions, we recognise that the
pace of the energy transition will vary around the
world.
In the
table below, we show how our advocacy focuses on four key areas
which we believe are critical to the energy transition and will
support Shell's strategy.
Policy
and advocacy
Advocacy
Themes:
A
Achieving net-zero emissions
Cross-sector
policies that support the achievement of national net-zero
ambitions through comprehensive policy frameworks and carbon
pricing, and which seek to ensure a just transition
B
Supplying the secure energy the world needs
Policies that
support energy security, such as clear and predictable regulatory
frameworks that enable the production of hydrocarbons with lower
emissions
C Driving
changes in demand
Policies that
support changes in customer demand in transport and industry, such
as vehicle standards, mandates for sustainable aviation fuel, and
demand for low-carbon products
D Growing
low-carbon solutions
Policies that
encourage the development of low-carbon solutions, including
incentives for biofuels, flexibility in feedstock choices, and
effective regulatory frameworks for hydrogen and carbon capture and
storage (CCS)
Sector
|
|
Policy
Positions
|
Advocacy
Theme
|
Cross cutting
themes
|
|
|
|
|
|
|
|
Translate
targets into net-zero policy frameworks to achieve national
net-zero emissions goals
|
A
|
|
Put a
price on direct carbon emissions, integrate credits into carbon
markets and support international cooperation
|
A
|
|
Regulatory
frameworks that enable the production of hydrocarbons with lower
emissions and the responsible management of end-of-project
liabilities
|
B
|
|
Aim for
near-zero methane emissions and an end to routine flaring as soon
as possible and no later than 2030
|
B
|
|
Recognise
the role of gas in facilitating the energy transition and in
securing stable and flexible energy supplies
|
B
|
|
Maintain
liberalised power markets, enable uptake of power purchase
agreements, and accelerate permitting and grid
connections
|
D
|
|
Drive
demand for low-carbon fuels through mandates and fuel standards,
and allow flexibility in feedstock choice while meeting strong
sustainability standards
|
D
|
Transport
|
Road
transport
|
Establish
policy frameworks for road transport that support the widespread
adoption of low-emission vehicles and support investment in
infrastructure through simplified and faster permitting and grid
connections
|
C
|
Aviation
|
Incentivise
production of sustainable aviation fuel and set mandates to drive
demand
|
C
|
Marine
|
Establish
a global carbon intensity standard for marine fuels to drive
lower-carbon fuel uptake
|
C
|
Industry
and services
|
|
Encourage
low-carbon energy use in industry through mandates and low-carbon
product demand, and support investment in infrastructure networks
and industrial hubs
|
C
|
|
Support
production and demand for low-carbon hydrogen and accelerate
infrastructure planning and investment
|
D
|
Carbon
abatement and removal
|
|
Recognise
the role of carbon credits and ensure quality and integrity through
standards and frameworks
|
A
|
|
Provide
incentives for CCS, ensure efficient permitting and licensing of
CCS infrastructure, and create regulatory frameworks that support
storage and international transport and trading of
CO2
|
D
|
Read more
about our policy positions on
Shell.com/advocacy-and-political-activity
Advocacy
in action
Advocating
policies that encourage demand for and incentivise investment in
low-carbon solutions is a key part of our engagement with
governments and regulators.
In the
USA, for example, we advocate permits for projects to be granted
faster and with fewer hurdles. Delays, caused in part by prolonged
litigation, negatively impact the delivery of projects.
We
believe reform of the permit system will help to deliver new
projects relating to the Infrastructure Investment and Jobs Act and
the Inflation Reduction Act. To achieve this reform, we have
constructively engaged in legislative negotiations in the House of
Representatives and Senate to advance bipartisan legislative
solutions.
In the
EU, Shell is advocating policies to enable commercial investments
in the energy transition, notably the creation of demand for
low-carbon solutions.
We
supported the Fit for 55 package, including binding targets for the
use of renewable hydrogen and advanced biofuels. We supported
policies to accelerate the electrification of road transport and
frameworks that help the business case for carbon abatement and
removal.
In
Brazil, we advocate the establishment of a national emissions
trading system (ETS), which is a form of carbon pricing. We believe
this would incentivise decarbonisation at the lowest cost, and
support the long-term development of a global carbon market. The
ETS is awaiting a final review by the Federal Senate, after which
it is expected to be written into law.
In the
Asia-Pacific region, Shell is working with local and national
governments to develop policy and regulatory frameworks for CCS.
The creation of cross-border CCS hubs in the region could
benefit multiple industries across the region.
In 2024,
Shell and ExxonMobil were selected to work with the Singapore
government as lead developers for a cross-border CCS project that
could store at least 2.5 million tonnes of carbon dioxide a year by
2030.
Energy
transition in action
Selection of
portfolio developments [A]
|
Country
|
Development
|
Leading
Integrated Gas
|
Canada
|
LNG
Canada T1-2
|
Indonesia
|
Masela
PSC/Abadi divestment
|
Nigeria
|
NLNG
T7
|
Qatar
|
QatarEnergy
LNG NFE(2)
|
Advantaged
Upstream
|
Brazil
|
Mero-2
start-up
|
Mero-3
|
Mero-4
|
Malaysia
|
Marjoram/Rosmari
|
United
Kingdom
|
Pierce
redevelopment
|
Jackdaw
|
USA
|
Aera
Energy divestment
|
Sparta
FID
|
Vito
start-up
|
Whale
|
Malaysia
|
Baram
Delta divestment
|
Timi
start-up
|
Nigeria
|
Nigerian
onshore (SPDC) divestment agreed
|
Differentiated
Downstream, Renewables and Energy Solutions
|
China
|
EV
growth
|
Denmark
|
Nature
Energy acquisition
|
Germany
|
FID to
repurpose Energy and Chemicals Park Rheinland
|
Shell
home energy retail divestment
|
India
|
Sprng
Energy investment funnel
|
Netherlands
|
CrossWind/HKN
|
HEFA
Biofuels Plant Rotterdam
|
Holland
Hydrogen I
|
Ecowende/HKW
|
Norway
|
Northern
Lights JV (Phase 1)
|
Pakistan
|
Shell
Pakistan Limited divestment agreed
|
Singapore
|
Aspired
divestment of Energy and Chemicals Park Singapore
|
United
Kingdom
|
Shell
home energy retail divestment
|
Acorn
CCS
|
Three CCS
licenses
|
USA
|
Volta
acquisition
|
Savion
investment funnel
|
Renewable
natural gas investments
|
Atlantic
Shores - Project 1
|
-
These
developments include acquisitions, investments, projects,
divestments and withdrawals, at various stages of maturity and with
different levels of Shell interest from minority investment to full
ownership.
Targets,
ambitions and performance
Our
target is to become a net-zero emissions energy business by
2050
It
includes net-zero emissions from our operations, as well as
net-zero emissions from the end-use of all the energy products we
sell. In the short and medium term, we have set climate targets for
emissions that we are able to control, namely our Scope 1 and 2
emissions, methane emissions, and flaring.
We have
also set climate targets and ambitions for emissions that are
outside our control. These include our ambition to reduce the Scope
3, Category 11 customer emissions from the use of our oil products,
and our target to reduce the net carbon intensity of all the energy
products we sell.
Targets
and ambitions
Net-zero
emissions by 2050 (Scopes 1, 2 and 3)
Emissions from
our own operations (Scope 1 and 2)
Target
Halving Scope 1
and 2 emissions by 2030 [A] under operational control (2016
reference year)
Target
Eliminating
routine flaring from Upstream operations by 2025 [B]
Target
Maintain methane
emissions intensity below 0.2% and achieve near-zero methane
emissions by 2030
Emissions from
the products we sell (Scope 3)
Target
Updated
Net carbon
intensity (NCI) Introducing a range of 15-20% for our target to
reduce NCI by 2030 (2016 reference year)
Ambition
New
Oil products
ambition Reduce customer emissions from the use of our oil products
by 15-20% by 2030, Scope 3 Category 11 [C] (2021 reference
year)
- On a net
basis.
- Subject
to completion of the sale of SPDC.
- Customer emissions from the
use of our oil products (Scope 3, Category 11) were 517 million
tonnes carbon dioxide equivalent (CO2e) in 2023 and 569 million
tonnes CO2e in 2021.
Reducing
our absolute Scope 1 and 2 emissions
In
October 2021, we set a target to halve the emissions from our
operations (Scope 1), plus the energy we buy to run them (Scope 2),
by 2030 compared with 2016 levels on a net basis.
To
decarbonise our operations, we are focusing on:
-
making
portfolio changes such as acquisitions and investments in new,
low-carbon projects. We are also decommissioning plants, divesting
assets, and reducing our production through the natural
decline of existing oil and gas fields;
-
improving
the energy efficiency of our operations;
-
transforming
our remaining integrated refineries into
low-carbon
energy and chemicals parks, which involves decommissioning
plants;
-
using
more renewable electricity to power our operations; and
-
developing
carbon capture and storage (CCS) for our facilities.
If
required, we may choose to use high-quality carbon credits to
offset any remaining emissions from our operations, in line with
the mitigation hierarchy of avoid, reduce, and
compensate.
The chart
below shows our progress since 2016 in reducing our Scope 1
and 2 emissions and gives an indication of how we expect to
achieve our target in 2030. The actions we will take to achieve our
target will depend on the evolution of our asset portfolio and the
continued development of technologies that reduce carbon
emissions.
We expect
that on a net portfolio basis, new investments across our portfolio
will increase our Scope 1 and 2 emissions between 2024 and 2030,
but this increase will be outweighed by planned divestments and
natural decline. Our investments in producing low-carbon
energy such as biofuels will increase our Scope 1 and 2 emissions,
while reducing the net carbon intensity of the products we sell.
Subsequent reductions in our emissions are reflected in the
mechanisms outlined below and reflect an expected path to meeting
our target in 2030.
Working
to reduce our absolute Scope 1 and 2 emissions
Scope 1 and 2
emissions in million tonnes per annum [A], [B]
|
Scope
1
|
Scope
2
|
|
Target
|
2016
|
72
|
11
|
|
|
2020
|
63
|
8
|
|
|
2021
|
60
|
8
|
|
|
2022
|
51
|
7
|
|
|
2023
|
50
|
7
|
|
|
Portfolio
changes
|
|
|
-1.4
|
|
Efficiency
improvements
|
|
|
-3.33
|
|
Energy
and chemicals park transformation
|
|
|
-0.58
|
|
Use of
renewable power
|
|
|
-1.73
|
|
Carbon
capture and storage
|
|
|
-6.3
|
|
Carbon
credits [C]
|
|
|
-1.6
|
|
2030
|
|
|
|
41
|
-
The 2016
baseline was not recalculated in 2023. The 2016 baseline may be
recalculated in future years if an acquisition or a divestment has
an impact of more than 10% on the total Scope 1 and 2
emissions.
- Operational
control boundary.
- Including
nature-based solutions.
Our
direct GHG emissions (Scope 1, operational control boundary)
decreased from 51 million tonnes of carbon dioxide equivalent
(CO2e)
in 2022 to 50 million tonnes CO2e
in 2023, driven by several factors including: divestments in 2022
(e.g. Deer Park and Mobile refinery, Tunisia Miskar concession,
offshore Baram Delta Operations (BDO) PSC and Block SK307 PSC in
the Philippines) and handover of operations in OML 11 in Nigeria in
2022; unplanned downtime (e.g. Deer Park Chemicals); reduced
flaring from assets including Shell Nigeria Exploration and
Production Company (SNEPCo); reduction activities and purchase of
renewable electricity. These decreases were partly offset by Shell
Polymers Monaca having more units online in 2023 and higher
emissions from our Pearl gas-to-liquids plant and our Prelude
floating liquefied natural gas facility with increased
production.
Our
Annual Report and Accounts 2023 provides more details of how we
reduced our Scope 1 and 2 emissions.
Methane
emissions
Methane
emissions include those from unintentional leaks, venting and
incomplete combustion, for example in flares and turbines. Our
target to maintain methane emissions intensity below 0.2% continued
to be met in 2023. Shell's overall methane emissions intensity was
at 0.05% for facilities with marketed gas and 0.001% for facilities
without marketed gas. We believe our methane emissions are
quantified according to industry best practice. This target covers
all Shell-operated oil and gas assets in our Upstream and
Integrated Gas businesses.
By the
end of 2023, we reduced our total methane emissions by 70% since
2016. In 2023, Shell's total methane emissions were 41 thousand
tonnes compared with 40 thousand tonnes in 2022. The increase was
due to venting (for example, the maintenance of our Prelude asset
and operational issues in assets operated by Sarawak Shell Berhad)
and an increase in reported emissions from integrated gas
assets in Canada resulting from the adoption of enhanced source
level measurements in line with OGMP reporting
requirements.
Methane
emissions intensity [A], [D]
|
|
2023
|
2022
|
2021
|
2016
|
Methane
emissions intensity - assets with marketed gas [B]
|
%
|
0.05 %
|
0.05 %
|
0.06 %
|
0.10 %
|
Methane emissions intensity - assets without marketed gas
[C]
|
%
|
0.001 %
|
0.01 %
|
0.01 %
|
0.03 %
|
Methane
emissions [D]
|
thousand
tonnes
|
41
|
40
|
55
|
138
|
-
Our target is to
maintain methane emissions intensity below 0.2% and achieve near
zero methane emissions by 2030
- Methane emissions intensity
from all oil and gas assets for which Shell is the operator that
market their gas (incl. LNG and GTL assets), defined as the total
volume of methane emissions in normal cubic metre (Nm3) per total
volume of gas available for sale in Nm3.
- Methane emissions intensity
from all oil and gas assets for which Shell is the operator that do
not market their gas (e.g. where gas is reinjected) defined as the
total mass of methane emissions in tonnes per total mass of oil and
condensate available for sale in tonnes.
- Total methane emissions for
all assets under Shell operational control including Integrated Gas
and Upstream and Downstream and Renewables Energy Solutions assets,
quantified according to industry best practice.
Routine
flaring
We are
working to reduce flaring, which is inefficient and contributes to
climate change. Routine flaring of gas occurs during normal oil
production when it is not possible to use the gas or reinject it
into the well. In 2021, we brought forward our target to eliminate
routine flaring from our upstream operations to 2025 [A] from 2030.
This accelerates our commitment of 2015 to end routine flaring as a
signatory to the World Bank's Zero Routine Flaring by 2030
initiative.
Total
routine flaring from our upstream oil and gas assets remained
relatively stable in 2023 compared with 2022 at 0.1 million tonnes,
having reduced from 1.1 million tonnes in 2016.
Around
50% of total routine and non-routine flaring in our Integrated Gas
and Upstream facilities in 2023 occurred in assets operated by the
SPDC and Shell Nigeria Exploration and Production Company (SNEPCo).
On January 16, 2024, Shell reached an agreement to sell SPDC to a
consortium of five companies, subject to approvals by the
Federal Government of Nigeria and other conditions.
- Subject
to completion of the sale of SPDC.
Reducing
net carbon intensity
We have
set targets to reduce the net carbon intensity (NCI) of the
energy products we sell by 9-12% by 2024, 9-13% by 2025, 15-20% by
2030, and 100% by 2050.
The
intended use of the NCI metric is to track progress in reducing the
overall carbon intensity of the energy products sold by Shell. Net
carbon intensity measures emissions associated with each unit of
energy we sell, compared with a 2016 baseline. It reflects
changes in sales of oil and gas products, and changes in sales of
low and zero-carbon products- such as biofuels, hydrogen and
renewable electricity.
Unlike
Scope 1 and 2 emissions, reducing the net carbon intensity of the
products we sell requires action by both Shell and our customers,
with the support of governments and policymakers to create the
right conditions for change.
Our focus
on where we can add the most value has led to a strategic
shift in our power business. We plan to build our integrated
power business, including renewable power, in places such as
Australia, Europe, India and the USA. We have withdrawn from the
supply of energy directly to homes in Europe because we do not
believe that is where our strengths lie.
In line
with our shift to prioritising value over volume in power, we are
concentrating on select markets and segments. One example is our
focus on commercial customers more than retail customers. Given
this focus on value, we expect growth in total power sales to 2030
will be lower than previously planned. This has led to an update to
our net carbon intensity target. We are now targeting a 15-20%
reduction by 2030 in the net carbon intensity of the energy
products we sell, compared with 2016, against our previous
target of a 20% reduction.
Acknowledging
uncertainty in the pace of change in the energy transition, we have
also chosen to retire our 2035 target of a 45% reduction in
net carbon intensity.
The
biggest driver for reducing our net carbon intensity is increasing
the sales of and demand for low-carbon energy. The chart on
the next page illustrates how changes in the volume of products and
services we sell could result in net carbon intensity reductions
through to 2030.
The
change in our sales of these products and services will
also reflect the development and adoption of new technologies
and infrastructure, and the adoption of public policies
designed to encourage the energy transition.
In 2023,
Shell's NCI was 74 grams of carbon dioxide equivalent per megajoule
of energy (gCO2e/MJ),
a 2.6% decrease from the previous year and a 6.3% reduction
compared with 2016, the base year. The decrease in Shell's NCI in
2023 was mainly achieved through a reduction in the average
intensity of power sold and the use of carbon credits. The power
intensity reduction was driven mainly by progress in grid
decarbonisation in key markets such as the USA and Europe, and
partly by increased sales of renewable power, including the
retirement of Renewable Energy Certificates.
Working
to reduce our net carbon intensity (NCI)
NCI in
gCO2e/MJ
[A]
|
Actual
|
|
Target
|
|
2016
|
79
|
|
|
|
2021
|
77
|
|
|
|
2022
|
76
|
|
|
|
2023
|
74
|
|
|
|
Hydrocarbon
sales [B]
|
|
-1.1
|
|
|
Power
sales [C]
|
|
-7.4
|
|
Grow
power sales
|
Low-carbon
fuels sales [D]
|
|
-0.8
|
|
Grow
biofuels, develop hydrogen
|
Carbon
capture and storage [E]
|
|
0.4
|
|
Develop
Carbon capture and storage
|
Carbon
credits [F]
|
|
-0.6
|
|
High-quality
carbon credits
|
2030
|
|
|
-15-20%
|
|
- Grams of
carbon dioxide equivalent per megajoule.
- Hydrocarbon
sales reflect the effect of lower sales of oil products, and higher
sales of natural gas. Emissions associated with gas are lower than
those of oil products.
- Power
sales show the expected growth of our integrated power business and
increasing sales of renewable power.
- Sales of
low-carbon fuels reflect higher sales of biofuels and hydrogen,
which are low- and zero-carbon products.
- CCS
reduces carbon emissions by capturing them at source.
- Carbon
credits such as nature-based solutions can be used to offset
remaining carbon emissions, particularly in hard-to-abate sectors
such as aviation and industries including cement
and steel.
We
undertake external verification of our GHG emissions annually. Our
Scope 1 and 2 GHG emissions from assets and activities under our
operational control and emissions associated with the use of our
energy products (Scope 3) included in our NCI have been verified to
a level of limited assurance.
Ambition
to reduce customer emissions from the use of our oil
products
We have
set a new ambition to reduce customer emissions from the use of our
oil products by 15-20% by 2030 compared with 2021 (Scope 3,
Category 11). That is more than 40% compared with 2016 reported
emissions. [A] This level of ambition is in line with the European
Union's climate goals in the transport sector, among the most
progressive in the world.
Achieving
this ambition will mean reducing sales of oil products, such as
petrol and diesel, as we support customers as they move to
electric mobility and lower-carbon fuels, including natural gas,
LNG and biofuels.
[A]
Customer emissions from the use of our oil products (Scope 3,
Category 11) were 517 million tonnes carbon dioxide equivalent
(CO2e)
in 2023, 569 million tonnes CO2e
in 2021 and 819 million tonnes CO2e
in 2016. Of the 40% reduction by 2030, around 8 percentage points
are related to volumes associated with additional contracts being
classified as held for trading purposes, impacting reported volumes
from 2020 onwards..
Scope 3, Category 11
emission by product
|
Diesel
[A]
|
204.63378
|
Gasoline
|
186.18788
|
LNG
[B]
|
185.42407
|
Natural
gas
|
175.32567
|
Kerosene
|
73.598994
|
Fuel
oil
|
44.459623
|
LPG
[C]
|
7.5833652
|
[A] Including
blending GLT
[B] Liquefied
natural gas
[C] Liquefied
petroleum
Paris
alignment
The Paris
Agreement aims to strengthen the global response to the threat of
climate change by "holding the increase in the global average
temperature to well below 2°C above pre-industrial levels and
pursuing efforts to limit the temperature increase to 1.5°C above
pre-industrial levels".
Shell
supports the more ambitious goal of the Paris Agreement, which is
to limit the rise in global average temperature this century to
1.5°C above pre-industrial levels.
There is
no established standard for aligning an energy supplier's
decarbonisation targets and ambitions with the 1.5°C temperature
goal of the Paris Agreement. For this reason, we have defined our
net carbon intensity target using 1.5°C scenarios developed for the
Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment
Report (AR6).
We start
with the complete set of 1.5°C scenarios [A] and then exclude
scenarios which are too reliant on carbon removals or use of
bioenergy before removing outliers. We then calculate an
emissions intensity for each scenario which is comparable to our
own net carbon intensity. Finally, we produce a 1.5°C pathway based
on the reductions in emissions intensity over time. We have chosen
to use a range instead of any individual scenario to better reflect
the uncertainty of the energy transition.
-
These are
the AR6 scenarios which have a greater than 50% likelihood of
limiting warming to 1.5°C with no or limited overshoot (C1) or of
returning warming to 1.5°C after a high overshoot (C2). Overshoot
describes how much the global temperature in a scenario
exceeds 1.5°C before returning.
We
believe that using this pathway to set our targets demonstrates
that they are aligned with the more ambitious 1.5°C goal of the
Paris Agreement. This is illustrated in the chart below.
Shell's
Paris-aligned targets
|
|
Shell
historical
|
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
2023
|
|
|
|
100%
|
100%
|
100%
|
99%
|
95%
|
97%
|
96%
|
94%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2021
|
2030
|
2035
|
2040
|
2045
|
2050
|
|
|
|
IEA
APS
|
|
97%
|
87%
|
73%
|
61%
|
49%
|
40%
|
|
|
|
IEA
NZE
|
|
97%
|
77%
|
50%
|
27%
|
11%
|
0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shell
targets
|
|
|
|
|
|
|
|
|
|
|
Year
|
2024
|
2024
|
|
2025
|
2025
|
|
2030
|
2030
|
|
2050
|
Range
|
91%
|
88%
|
|
91%
|
87%
|
|
85%
|
80%
|
|
0%
|
Read more
about our approach at
shell.com/sustainability/our-climate-target/our-climate-target-faqs
Shell
net zero by 2050
We
are committed to our target to become a net-zero emissions
energy business by 2050.
To
achieve net zero, we will reduce emissions from our own operations,
change the mix of the energy products we sell and grow new carbon
removal and abatement businesses. At the same time, we will work to
help advance the critical factors required for the world to achieve
net zero.
Critical
factors on the path to net zero
The scale
of the energy transition requires fundamental change in both supply
and demand. It will take supportive government policies, advances
in technology and investments by companies across all parts of the
economy to achieve this.
We
advocate policies, legislation and regulations in areas where we
can best support the decarbonisation of our customers, reduce our
own emissions and help accelerate the energy
transition.
To help
stimulate demand, we are investing in scaling up low-carbon
solutions so that they become an affordable choice for our
customers. Through partnerships with start-ups and leading academic
institutions, we are also helping to develop the technologies of
the future that will be critical to achieving net zero such as
direct air capture, renewable hydrogen and heat and power
storage solutions.
Multi-energy
business
There
remains significant uncertainty around the shape
of the future energy system. As a result, we are
developing a multi-energy portfolio that has the flexibility
to respond to uncertainty, and that will allow us to remain a
successful business and achieve net-zero emissions.
By 2050,
we expect that low-carbon products and solutions will have grown to
become a material part of our portfolio. These solutions will be in
the form of sustainable biofuels as well as liquid synthetic
products, such as synthetic kerosene for aviation, that will
be created through new technologies.
At the
same time, we will have focused our oil and gas businesses on
projects with higher margins and lower carbon emissions, while
pairing these projects with carbon capture and storage to
further reduce emissions.
In
addition to our energy sales, a core part of our future business
will be helping customers to decarbonise in the sectors where we
have competitive advantages, including by capturing carbon and
storing it, or by using the carbon to produce low-carbon products
such as hydrogen.
While the
journey to net zero will include significant challenges, it also
presents many opportunities. Through the actions we are taking
today, we are positioning Shell to deliver more value with less
emissions as we transform into a net-zero emissions energy
business.
Share of
global primary energy mix (%)
|
2010
|
2011
|
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
2020
|
2021
|
2022
|
Hydrocarbon
|
0.82
|
0.83
|
0.83
|
0.82
|
0.82
|
0.82
|
0.82
|
0.81
|
0.81
|
0.81
|
0.8
|
0.81
|
0.8
|
Electricity
|
0.09
|
0.08
|
0.08
|
0.08
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.1
|
0.1
|
0.1
|
0.1
|
Low
Carbon Molecules
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.09
|
0.1
|
0.1
|
0.1
|
Arch
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
Arch
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
Arch
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
Sky
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
Sky
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
Sky
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IPCC C2
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
IPCC C2
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IPCC C2
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IPCC C1
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
IPCC C1
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IPCC C1
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IEA NZE
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.79
|
IEA NZE
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IEA NZE
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IEA APS
(H)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.79
|
IEA APS
(E)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
IEA APS
(L)
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
2025
|
2026
|
2027
|
2028
|
2029
|
2030
|
2031
|
2032
|
2033
|
2034
|
2035
|
2036
|
2037
|
Hydrocarbon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
Carbon Molecules
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch
(H)
|
0.79
|
0.79
|
0.78
|
0.78
|
0.77
|
0.77
|
0.76
|
0.75
|
0.75
|
0.74
|
0.73
|
0.72
|
0.71
|
Arch
(E)
|
0.11
|
0.11
|
0.12
|
0.12
|
0.13
|
0.13
|
0.14
|
0.15
|
0.15
|
0.16
|
0.17
|
0.18
|
0.19
|
Arch
(L)
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
Sky
(H)
|
0.78
|
0.77
|
0.76
|
0.74
|
0.73
|
0.71
|
0.7
|
0.68
|
0.66
|
0.64
|
0.62
|
0.6
|
0.58
|
Sky
(E)
|
0.12
|
0.13
|
0.14
|
0.15
|
0.17
|
0.18
|
0.2
|
0.22
|
0.23
|
0.25
|
0.27
|
0.29
|
0.31
|
Sky
(L)
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.12
|
IPCC C2
(H)
|
0.79
|
|
|
|
|
0.74
|
|
|
|
|
0.65
|
|
|
IPCC C2
(E)
|
0.1
|
|
|
|
|
0.14
|
|
|
|
|
0.21
|
|
|
IPCC C2
(L)
|
0.11
|
|
|
|
|
0.12
|
|
|
|
|
0.14
|
|
|
IPCC C1
(H)
|
0.76
|
|
|
|
|
0.64
|
|
|
|
|
0.54
|
|
|
IPCC C1
(E)
|
0.12
|
|
|
|
|
0.2
|
|
|
|
|
0.29
|
|
|
IPCC C1
(L)
|
0.13
|
|
|
|
|
0.16
|
|
|
|
|
0.18
|
|
|
IEA NZE
(H)
|
|
|
|
|
|
0.63
|
|
|
|
|
|
|
|
IEA NZE
(E)
|
|
|
|
|
|
0.24
|
|
|
|
|
|
|
|
IEA NZE
(L)
|
|
|
|
|
|
0.13
|
|
|
|
|
|
|
|
IEA APS
(H)
|
|
|
|
|
|
0.7
|
|
|
|
|
|
|
|
IEA APS
(E)
|
|
|
|
|
|
0.18
|
|
|
|
|
|
|
|
IEA APS
(L)
|
|
|
|
|
|
0.12
|
|
|
|
|
|
|
|
|
2038
|
2039
|
2040
|
2041
|
2042
|
2043
|
2044
|
2045
|
2046
|
2047
|
2048
|
2049
|
2050
|
Hydrocarbon
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Low
Carbon Molecules
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Arch
(H)
|
0.7
|
0.7
|
0.68
|
0.67
|
0.66
|
0.65
|
0.64
|
0.63
|
0.62
|
0.61
|
0.6
|
0.59
|
0.58
|
Arch
(E)
|
0.19
|
0.2
|
0.21
|
0.22
|
0.23
|
0.24
|
0.25
|
0.26
|
0.27
|
0.28
|
0.29
|
0.3
|
0.31
|
Arch
(L)
|
0.1
|
0.1
|
0.1
|
0.1
|
0.1
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
0.11
|
Sky
(H)
|
0.56
|
0.54
|
0.52
|
0.49
|
0.47
|
0.45
|
0.43
|
0.41
|
0.39
|
0.37
|
0.35
|
0.33
|
0.31
|
Sky
(E)
|
0.33
|
0.34
|
0.37
|
0.39
|
0.41
|
0.43
|
0.45
|
0.47
|
0.49
|
0.51
|
0.53
|
0.55
|
0.57
|
Sky
(L)
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
0.12
|
IPCC C2
(H)
|
|
|
0.57
|
|
|
|
|
0.46
|
|
|
|
|
0.4
|
IPCC C2
(E)
|
|
|
0.27
|
|
|
|
|
0.35
|
|
|
|
|
0.39
|
IPCC C2
(L)
|
|
|
0.16
|
|
|
|
|
0.19
|
|
|
|
|
0.21
|
IPCC C1
(H)
|
|
|
0.45
|
|
|
|
|
0.37
|
|
|
|
|
0.32
|
IPCC C1
(E)
|
|
|
0.35
|
|
|
|
|
0.41
|
|
|
|
|
0.45
|
IPCC C1
(L)
|
|
|
0.2
|
|
|
|
|
0.22
|
|
|
|
|
0.23
|
IEA NZE
(H)
|
|
|
0.44
|
|
|
|
|
0.3
|
|
|
|
|
0.16
|
IEA NZE
(E)
|
|
|
0.39
|
|
|
|
|
0.52
|
|
|
|
|
0.65
|
IEA NZE
(L)
|
|
|
0.16
|
|
|
|
|
0.18
|
|
|
|
|
0.18
|
IEA APS
(H)
|
|
|
0.6
|
|
|
|
|
0.5
|
|
|
|
|
0.37
|
IEA APS
(E)
|
|
|
0.26
|
|
|
|
|
0.34
|
|
|
|
|
0.46
|
IEA APS
(L)
|
|
|
0.14
|
|
|
|
|
0.15
|
|
|
|
|
0.17
|
Just
transition and governance
A
just transition
A
successful energy transition depends on more than financial
investment and technological advances. It also needs to be
a just transition, which means a fairer distribution of the
costs and benefits of the world's transition to a net-zero
emissions energy system.
Shell
aims to contribute to a just and inclusive transition by making a
positive economic and social impact on communities, workers and
customers.
Closing
the energy access gap
Today,
around 675 million people do not have access to electricity
and 2.3 billion lack access to clean cooking facilities, according
to the UN Department of Economic and Social
Affairs.
Shell has
pledged $200 million as part of a broader initiative to help
people get access to energy in the near and medium term. The
initiative aims to help millions of people in underserved
communities in sub-Saharan Africa, India and South-east Asia
get access to electricity and improved cooking
conditions.
Skills
for the future
As more
jobs are created in renewable energy, it is important to provide
workers with the opportunity to learn new skills.
This requires robust dialogue and collaboration between
governments, businesses and the workforce.
We are
aiming to help 15,000 people in the UK get jobs with a focus
on the energy transition by 2035. Shell, together with its
partners, is supporting the creation of two energy transition
skills hubs in Scotland and one in Wales. The facilities, which are
expected to open in 2024 and 2025, aim to provide people with
skills for the future, such as in wind turbine maintenance and heat
pump installation.
In 2023,
around 6,900 Shell employees – up from around 4,000 in 2022 –
completed courses linked to the energy transition, including
hydrogen production, carbon capture and storage, and
greenhouse gas and energy management.
We use
our existing structures to expand social dialogue with employees,
employee representative bodies, relevant local government agencies
and communities to address the social aspects of the energy
transition and to advance human rights and labour
rights.
Equal
opportunities
Equality
of opportunity for groups that have been traditionally
under-represented in energy is an important element of a just
transition. Shell has set an ambition to become one of the
most diverse and inclusive organisations in the world. This is
embedded in our company strategy and applies to all parts
of our business. We currently prioritise four areas: gender,
race and ethnicity, LGBT+ and disability inclusion and
enablement.
Communities
At our
Pottendijk wind and solar power park in the Netherlands, which
opened in 2023, we are sharing the proceeds from the renewable
energy we generate. Over the next 16 years we expect to
pay around $2 million into a community fund, which the
municipality of Emmen will use as the community
sees best.
In
Nigeria, Shell-funded investment company All On has agreed to
invest $11 million in 25 mini-grid projects across
the country. The company plans to supply affordable solar
energy to communities that need it the most.
Human
rights, governments and industry
Respecting
human rights is an essential element of a just transition. Shell is
committed to respecting human rights, as set out in the United
Nations Universal Declaration of Human Rights and the International
Labour Organization's Declaration on Fundamental Principles and
Rights at Work.
Read more
about our approach at shell.com/justtransition
Climate
governance
Our
governance framework is designed to effectively deliver on the
energy transition ambitions and targets of our Powering Progress
strategy, which seeks to deliver more value with less emissions.
The Board reviews our energy transition strategy periodically and
oversees its implementation and delivery.
In 2023,
the Board considered climate-related matters throughout the year,
including the assessment of climate-related risks and the
effectiveness of corresponding risk management activities. The
Board also challenged and endorsed business plans, including
consideration of major capital expenditures, acquisitions and
divestments.
Our
remuneration policies are designed to challenge and support the
Executive Committee (EC) to reduce net carbon emissions, while
generating shareholder value. Energy transition targets were part
of the 2023 annual bonus scorecard (15% weighting), applicable to
the majority of Shell's employees, as well as the 2023
Long-term Incentive Plan (LTIP) awards for senior executives
(25% weighting) and the 2023 Performance Share Plan (PSP) awards
for other employees (12.5% weighting), both vesting in
2026.
Carbon
management framework (CMF)
We employ
several processes across our organisation to ensure that management
teams can effectively monitor and manage climate-related matters,
including the delivery of Group carbon targets. These processes are
supported by a combination of carbon management standards in
projects, business growth forums where portfolio decisions are
made, and capability development programmes.
To drive
delivery of carbon targets in the 2023 operating plan cycle, our
net carbon intensity targets were translated into net absolute
emissions budgets for each business. This enabled trade-offs within
those budgets between emitting carbon and generating
shareholder value. We also use carbon metrics (profitability
per unit of carbon emitted) in decision-making when comparing
different growth opportunities against each other.
For the
2024 LTIP and PSP awards, "Shell's journey in the energy
transition" performance condition retains the same weightings as
for 2023. The extent to which awards will vest will be based on a
holistic assessment of progress towards reducing emissions from our
operations and supporting our customers to reduce their emissions.
This will be based on our journey to net-zero targets for our
own operations of:
-
Halving
Scope 1 and 2 emissions by 2030 under operational control on a net
basis (2016 baseline);
-
Eliminating
routine flaring from upstream operations by 2025 [A];
and
-
Maintaining
methane emissions intensity below 0.2% and achieving near-zero
methane emissions by 2030.
It will
also be based on progress in developments that support the energy
transition to 2030 and beyond, such as the development of our
power business (including renewables), lower-carbon LNG, biofuels,
electric vehicle charging, hydrogen and carbon capture and storage
(CCS).
-
Subject
to completion of the sale of SPDC.
We will
take into account progress towards achieving a 15-20% reduction in
NCI by 2030 (2016 baseline) and a 15-20% reduction in customer
emissions from the use of our oil products by 2030 (2021
baseline) [A]. We will also take into account Shell’s wider
performance in accelerating the energy transition, for example by
demonstrating leadership and advocacy in standard setting,
alongside any other factors that are considered
material.
In 2024,
we have adjusted the energy transition measure in our annual
scorecard in light of our energy transition strategy update. By
doing this, we continued to align to Shell’s strategic objective of
becoming a net-zero emissions energy business by 2050, supporting a
balanced energy transition by responsibly delivering the oil and
gas people need today, while helping to build the clean energy
system of the future. The metric "Shell's journey in the energy
transition" in the annual bonus scorecard represents:
-
LNG
volumes – equity liquefaction;
-
Reducing
operational emissions – operational actions to reduce emissions in
support of our target to achieve a 50% reduction in Scope 1 and 2
emission by 2030, on a net basis; and
-
Supporting
customer decarbonisation – electric vehicle charge point
roll-out.
- Customer
emissions from the use of our oil products (Scope 3, Category 11)
were 517 million tonnes CO2e
in 2023 and 569 million tonnes CO2e
in 2021.
For
further details see "Governance of climate-related risks and
opportunities" in our Annual Report and Accounts 2023.
Energy
transition and advisory votes
Shell
offered its first Energy Transition Strategy for submission to a
shareholder advisory vote at the 2021 Annual General Meeting. The
vote offered shareholders an opportunity to engage with and support
Shell's energy transition plans. Shell was one of the first
companies in the world to introduce such a vote.
In 2022
and 2023, Shell also offered an advisory vote on its progress in
putting its energy transition plans into action in the previous
year. Following engagements with institutional investors, we found
that expectations around issues such as the inclusion of an
absolute Scope 3 target influenced the voting decisions of many
investors, rather than the progress report itself.
As a
result, going forward, the energy transition progress report will
be part of the Annual Report and Accounts without an advisory vote,
while the Energy Transition Strategy (this publication) will be
updated and offered for an advisory vote at least every three
years.
Climate
litigation
Climate
litigation
Environmental
activists continue to bring litigation against governments and
companies for the effects of climate change on individuals and
communities around the world.
In the
Netherlands, Shell is appealing a decision from the District Court
of The Hague ordering us to reduce worldwide aggregate carbon
emissions across Scope 1, 2 and 3 by net 45% by 2030, compared with
2019 levels. The order states that reductions in Scope 2 and 3
emissions should be on a "significant best efforts
basis".
We are
appealing the decision because we do not believe this is the right
solution for the energy transition. By focusing on one company, and
only on the supply of energy rather than the demand for it, we
believe the ruling is ineffective and even counterproductive in
addressing climate change.
It is not
clear how Shell can be ordered to reduce the emissions it does not
control from customers, who are not under a similar legal
obligation to reduce their emissions. The court is also asking
Shell to reduce emissions significantly faster than the EU,
which has one of the most ambitious pathways in the
world.
Shell
believes that by working together, with effective government
policies, the world can help shift consumer demand to low-carbon
products and develop the infrastructure and technology needed for
the energy transition, while maintaining a secure and affordable
supply of energy. Shell's appeal will be heard by the Dutch Court
of Appeal in April 2024. As we wait for the outcome of the appeal,
Shell is taking active steps to comply with the ruling.
Climate
standards and benchmarks
Climate
initiatives and benchmarks play a role in supporting Shell's
efforts in the energy transition.
They
promote an ongoing dialogue between interested parties and
highlight areas of progress against externally established
criteria.
Doing
business in a clear, open way is a commitment we work hard to keep,
and we promote transparency where possible throughout our industry.
We continue to learn as we work to provide relevant information to
key stakeholders groups. In doing so we work with a number of
stakeholders including regulators, auditors, investors and
non-governmental organisations.
Our
strategy and progress in the energy transition, as well
as our efforts to increase transparency, are recognised
across environmental, social and governance (ESG) frameworks.
Over the years, our performance scores have improved
consistently, as evidenced by the assessment done by various
external parties, including the most recent analysis from the
Carbon Tracker Initiative [A] which highlights Shell’s good
practices and key improvements in the financial related
climate disclosures.
ESG
rating agencies [B]
|
2020
|
2021
|
2022
|
2023
|
MSCI
|
A
|
AA
|
AA
|
AA
|
Sustainalytics
|
36.8
H
|
35.1
H
|
34.7
H
|
33.7
H
|
ISS
|
C
|
C+
|
C+
|
C+
|
ISS
The ISS
ESG net zero alignment model evaluates whether companies have a
credible decarbonisation strategy, including interim greenhouse gas
emissions targets and substantiated commitments to achieving net
zero by 2050. Shell is one of eight companies in the oil and
gas sector that received a net zero overall alignment status of
"aligning" in 2023.
- Flying
Blind: In a Holding Pattern, Carbon Tracker Initiative, February
2024
- MSCI: A
score of AA and AAA indicates the company is leading its industry
in managing the most significant ESG risks and opportunities.
Sustainalytics: A lower score indicates a lower risk of
experiencing material financial impacts from ESG factors. ISS:
Companies are rated on a 12-point scale from A+ (best) to
D-(worst).
Climate
Initiatives
Transition
Pathway Initiative
The
Transition Pathway Initiative (TPI) is a global, asset-owner led
initiative which assesses companies' preparedness for the
transition to a low-carbon economy. TPI assess a companies'
performance and progress in the energy transition against
internationally agreed benchmark.
TPI's
assessment is divided into two parts: management quality and carbon
performance. Management quality describes a company’s carbon
management practices and governance, with a higher score indicating
better performance. Carbon performance compares a company’s
emissions pathway against different climate scenarios consistent
with the Paris Agreement. The carbon performance scores indicate
whether a company's targets and plans are aligned in the
short-term (2025), medium term (2035), and long-term
(2050).
In terms
of management quality, in 2023, we received the highest score
of four (strategic assessment) for the management of our
greenhouse gas emissions, and of risks and opportunities
related to the low-carbon transition. This exceeds the average
score of 3.2 across all assessed companies in the oil and gas
sector (90)
In
relation to carbon performance, although Shell's goal
of becoming a net-zero emissions energy business by 2050
remains unchanged, TPI no longer considers this target to be
aligned with its 1.5°C benchmark. This is the result of TPI's
approach to accounting for customer mitigation actions.
Climate
Action 100+
Climate
Action 100+ is an investor-led initiative that drives corporate
action on climate change, representing investors with assets
of around $68 trillion.
Its net
zero company benchmark assesses companies against three high-level
goals set by investors: emissions reduction, governance, and
climate-related disclosures. It tracks business alignment with a
net-zero emissions future and the Paris Agreement goal of limiting
global temperature rise to 1.5°C.
The disclosure
framework evaluates the adequacy of corporate disclosure in
relation to key actions companies can take to align with the goals
of the Paris Agreement, and is assessed by the Transition Pathway
Initiative. The latest results for Shell are shown below, based on
publicly disclosed information as of May 29, 2023.
Disclosure framework
|
2022
|
2023
|
Yes, meets all criteria
|
5
|
2
|
Partial, meets some criteria
|
3
|
7
|
No, does not meet any criteria
|
1
|
1
|
We are disappointed to see that our ratings have deteriorated in
some areas in the latest assessment, which is
largely due to annual updates to the methodology used. We have a
strong governance and commitment to transparency so that investors
can continue to assess our climate strategy and compare our
progress with that of other companies. We will continue our
engagement with CA100+ and TPI with the aim of ensuring
that our current targets and disclosures are reflected in
their benchmark and hope we can continue to improve the
outcome in their assessment.
Task
Force on Climate-related Financial Disclosures
Since
2017, Shell has supported the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). The TCFD is a global
initiative to get companies across all sectors to assess
climate-related risks and opportunities. It recommends disclosure
of qualitative and quantitative information aligned to its four
core elements: governance, strategy, risk management, and metrics
and targets.
Our
climate-related financial disclosures are consistent with all the
TCFD's Recommendations and Recommended Disclosures. Please refer to
our Annual Report and Accounts 2023 for more details. Shell's
disclosures related to recommendations by the TCFD are set out
in the "Our journey to achieving net zero" section of the
Annual Report.
Cautionary
note
The
companies in which Shell plc directly and indirectly owns
investments are separate legal entities. In this report "Shell",
"Shell Group" and "Group" are sometimes used for convenience where
references are made to Shell plc and its subsidiaries in general.
Likewise, the words "we", “us" and "our' are also used to refer to
Shell plc and its subsidiaries in general or to those who work for
them. These terms are also used where no useful purpose is served
by identifying the particular entity or entities. "Subsidiaries",
"Shell subsidiaries" and "Shell companies" as used in this report
refer to entities over which Shell plc either directly or
indirectly has control. The term “joint venture”, "joint
operations", "joint arrangements", and "associates" may also be
used to refer to a commercial arrangement in which Shell has a
direct or indirect ownership interest with one or more parties. The
term "Shell interest" is used for convenience to indicate the
direct and/or indirect ownership interest held by Shell in an
entity or unincorporated joint arrangement, after exclusion of all
third-party interest.
Forward-looking
statements
This
report contains forward-looking statements (within the meaning of
the U.S. Private Securities Litigation Reform Act of 1995)
concerning the financial condition, results of operations and
businesses of Shell. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management's current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Shell to
market risks and statements expressing management's expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and
phrases such as "aim", "ambition", "anticipate", "believe",
"could", "estimate", "expect", "goals", "intend", "may",
"milestones", "objectives", "outlook", "plan", "probably",
"project", "risks", "schedule", "seek", "should", "target", "will"
and similar terms and phrases. There are a number of factors that
could affect the future operations of Shell and could cause those
results to differ materially from those expressed in the
forward-looking statements included in this report, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell's products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, judicial, fiscal and regulatory
developments including regulatory measures addressing climate
change; (k) economic and financial market conditions in various
countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with
governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; (m)
risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak, regional conflicts, such as Russia's
invasion of Ukraine, and a significant cybersecurity breach; and
(n) changes in trading conditions. No assurance is provided that
future dividend payments will match or exceed previous dividend
payments. All forward-looking statements contained in this report
are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. Readers should
not place undue reliance on forward-looking statements. Additional
risk factors that may affect future results are contained in Shell
plc's Form 20-F for the year ended December 31, 2023 (available at
shell.com/investors/news-and-filings/sec-filings.html and sec.gov).
These risk factors also expressly qualify all forward-looking
statements contained in this report and should be considered by the
reader. Each forward-looking statement speaks only as of the date
of this report, March 14, 2024. Neither Shell plc nor any
of its subsidiaries undertake any obligation to publicly
update or revise any forward-looking statement as a result of new
information, future events or other information. In light of these
risks, results could differ materially from those stated, implied
or inferred from the forward-looking statements contained in this
report.
Shell's
net carbon intensity
Also, in
this report we may refer to Shell's "net carbon intensity", which
includes Shell's carbon emissions from the production of our energy
products, our suppliers' carbon emissions in supplying energy for
that production and our customers' carbon emissions associated with
their use of the energy products we sell. Shell only controls its
own emissions. The use of the term Shell's "net carbon intensity"
is for convenience only and not intended to suggest these emissions
are those of Shell plc or its subsidiaries.
Shell's
net-zero emissions target
Shell's
operating plan, outlook and budgets are forecasted for a ten-year
period and are updated every year. They reflect the current
economic environment and what we can reasonably expect to see over
the next ten years. Accordingly, they reflect our Scope 1, Scope 2
and Net Carbon Intensity (NCI) targets over the next ten years.
However, Shell's operating plans cannot reflect our 2050 net-zero
emissions target, as this target is currently outside our planning
period.In the future, as society moves towards net-zero emissions,
we expect Shell's operating plans to reflect this movement.
However, if society is not net zero in 2050, as of today, there
would be significant risk that Shell may not meet this
target.
Forward-looking
non-GAAP measures
This
report may contain certain forward-looking non-GAAP measures such
as cash capital expenditure and divestments. We are unable to
provide a reconciliation of these forward-looking Non-GAAP measures
to the most comparable GAAP financial measures because certain
information needed to reconcile those non-GAAP measures to the most
comparable GAAP financial measures is dependent on future events
some of which are outside the control of Shell, such as oil and gas
prices, interest rates and exchange rates. Moreover, estimating
such GAAP measures with the required precision necessary to provide
a meaningful reconciliation is extremely difficult and could not be
accomplished without unreasonable effort. Non-GAAP measures in
respect of future periods which cannot be reconciled to the most
comparable GAAP financial measure are calculated in a manner which
is consistent with the accounting policies applied in Shell plc's
consolidated financial statements.
The
contents of websites referred to in this report do not form part of
this report.
We may
have used certain terms, such as resources, in this report that the
United States Securities and Exchange Commission (SEC) strictly
prohibits us from including in our filings with the SEC. Investors
are urged to consider closely the disclosure in our Form 20-F, File
No 1-32575, available on the SEC website sec.gov.
Additional
information
As used
in this Report, "accountable" is intended to mean: required or
expected to justify actions or decisions. The accountable person
does not necessarily implement the action or decision
(implementation is usually carried out by the person who is
Responsible) but must organise the implementation and verify that
the action has been carried out as required. This includes
obtaining requisite assurance from Shell companies that the
framework is operating effectively. "Responsible" is intended to
mean: required or expected to implement actions or decisions. Each
Shell company and Shell-operated venture is responsible for its
operational performance and compliance with the Shell General
Business Principles, Code of Conduct, Statement on Risk Management
and Risk Manual, and Standards and Manuals. This includes
responsibility for the operationalisation and implementation of
Shell Group strategies and policies. CO2
compensation
does not imply that there is no environmental impact from the
production and use of the product as associated emissions remain in
the atmosphere. CO2
compensation
is not a substitute for switching to lower emission energy
solutions or reducing the use of fossil fuels. Shell businesses
focus first on emissions that can be avoided or reduced and only
then, compensate the remaining emissions. "carbon neutral" or
"CO2
compensated"
indicates that Shell will engage in a transaction where an amount
of CO2
equivalent
to the value of the remaining CO2e
emissions associated with the raw material extraction, transport,
production, distribution and usage /end-of-life (if Lubricants or
other non-energy product) of the product are compensated through
the purchase and retirement of carbon credits generated from
CO2
compensation
projects. Although these carbon credits have been generated in
accordance with international carbon standards, the compensation
may not be exact. CO2e(
CO2
equivalent)
refers to CO2,
CH4,
N2O.
LEI
Number: 21380068P1DRHMJ8KU70
Published:
March 20, 2024
Classification:
Additional Regulated Information required to be disclosed under the
laws of the United Kingdom
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