Shell publishes Energy Transition Strategy
2024
- 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
EnquiriesUK / 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 customersWe
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 futureWe 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 emissionsAt 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 supportIn 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 targetsSince 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 emissionsAt 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 productionWe 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 decarboniseWe
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 zeroIn 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 SawanChief 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).
2019Published our first Industry Associations
Climate Review, which reviewed alignment between Shell’s
climate-related policy positions and 19 key industry
associations.
2018Signed a joint statement with Climate
Action 100+ investor group announcing steps taken by Shell
demonstrated alignment with the goals of the Paris Agreement.
2017Announced 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)
TargetHalving Scope 1 and 2 emissions by 2030
[A] under operational control (2016 reference year)
TargetEliminating routine flaring from Upstream
operations by 2025 [B]
TargetMaintain methane emissions intensity
below 0.2% and achieve near-zero methane emissions by 2030
Emissions from the products we sell (Scope 3)
TargetUpdated
Net carbon intensity (NCI) Introducing a range of 15-20% for our
target to reduce NCI by 2030 (2016 reference year)
AmbitionNew
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 demandSince 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 this10-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 2023Carbon
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 industryHeavy 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.
Innon-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 industryLight 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 useNon-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 transportToday,
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 transportCommercial 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.
AviationDemand 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.
ShippingShipping 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 transitionLNG 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 emissionsMethane 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 decadeOur 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 operationsAs 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
morelow-carbon solutions while reducing
salesof 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 solutionsfor
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 pathwaysWe 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
decadeElectric 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
intensityAs we grow our world-leading liquefied natural
gas (LNG) business by 20-30% by 2030, we will continue to
reduce the carbon intensityof 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.
BiofuelsWe 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 chargingShell 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 positionsOur 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.
HydrogenWe 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 Quest, initially by 750,000 tonnes a year.
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.
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 1Power: 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 creditsCarbon 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 innovationBuilt 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
needsPolicies that support energy security, such as clear
and predictable regulatory frameworks that enable the production of
hydrocarbons with lower emissions
C Driving changes in demandPolicies 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 solutionsPolicies 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)
TargetHalving Scope 1 and 2 emissions by 2030
[A] under operational control (2016 reference year)
TargetEliminating routine flaring from Upstream
operations by 2025 [B]
TargetMaintain methane emissions intensity
below 0.2% and achieve near-zero methane emissions by 2030
Emissions from the products we sell (Scope 3)
TargetUpdated
Net carbon intensity (NCI) Introducing a range of 15-20% for our
target to reduce NCI by 2030 (2016 reference year)
AmbitionNew
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 intolow-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
emissionsScope 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 emissionsMethane 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 flaringWe 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 intensityWe 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 zeroThe
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 businessThere 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 gapToday, 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 futureAs 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 opportunitiesEquality 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.
CommunitiesAt 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
industryRespecting 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+ |
ISSThe 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 InitiativesTransition Pathway
InitiativeThe 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
DisclosuresSince 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 statementsThis 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 intensityAlso, 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 targetShell'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 measuresThis 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 informationAs 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: 21380068P1DRHMJ8KU70Published: March
14, 2024Classification: Additional Regulated Information required
to be disclosed under the laws of the United Kingdom
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