Shell to invest US$15 bn by 2025 in low carbon energy solutions
Oil giant Shell plc has published its first energy transition update since the launch of its Powering Progress strategy in 2021. At its Capital Markets Day in June 2023, it outlined how our strategy delivers more value with less emissions, emphasising the “more value” part. In this energy transition update, it is focusing on how the same strategy delivers “less emissions”.
The target to achieve net-zero emissions by 2050 across all our operations and energy products is transforming the business. Shell believes 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 CEO.
Shell’s energy transition plans cover all its businesses. Liquefied natural gas (LNG) is a critical fuel in the energy transition, and it is growing its world-leading LNG business with lower carbon intensity, as well as 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, it can connect the supply of low-carbon energy to demand, as it has done for many years with oil and gas.
As for targets achieved, by the end of 2023, it had achieved more than 60% of its 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 Decarbonisation Charter agreed at COP28.
Shell says it continues to be an industry leader in reducing methane emissions and was one of the first companies to set a target to achieve near-zero methane emissions by 2030. In 2023, it achieved 0.05% methane emissions intensity – significantly below its target of 0.2%. And in 2023 it 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, it achieved its target to reduce the net carbon intensity of the energy products it sells, with a 6.3% reduction compared with 2016 – the third consecutive year it hit our target.
Furthermore, to help drive the decarbonisation of the transport sector, it 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).
It has also seen a strategic shift in its integrated power business, with plans to build its power business, including renewable power, in places including Australia, Europe, India and the US, and has 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, it expects lower total growth of power sales to 2030, which has led to an update to its net carbon intensity target. It is now targeting a 15-20% reduction by 2030 in the net carbon intensity of the energy products it sells, compared with 2016, against the previous target of 20%.
Shell adds it is investing US$10-15 billion between 2023 and the end of 2025 in low-carbon energy solutions. And in 2023, it invested US$5.6 billion on low-carbon solutions, more than 23% of its total capital spending.
These investments include electric vehicle charging, biofuels, renewable power, hydrogen and carbon capture and storage. Investments in new technologies are helping to reduce emissions for Shell and its customers. It is also focusing advocacy on key areas: 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.
