Shell Adjusts Carbon Emission Goals Amid Evolving Energy Landscape
Shell revises its 2030 carbon reduction target and removes a 2035 goal due to shifting market dynamics, anticipating reduced power sales and increased gas demand during the energy transition. Despite this, Shell remains committed to achieving net-zero emissions by 2050.
Shell has adjusted its 2030 carbon reduction target and removed a 2035 goal. This decision was made due to anticipated decreases in power sales and increased demand for gas during the energy transition. However, the company has reaffirmed its commitment to achieving net zero emissions by 2050.
These changes to the targets are a key part of CEO Wael Sawan's plan to prioritize projects with higher margins, maintain oil production levels, and expand the production of natural gas to enhance returns.
Another example of a major fossil fuel company going back on its promises to address climate change has emerged. Fossil fuels play a significant role in causing the climate crisis, and experts say that significant cuts in emissions are needed urgently.
Last year, competitor BP also made a similar decision to reduce its oil production and emission reduction goals due to increasing pressure from investors to increase profits.
Shell announced in its annual update on Thursday that it plans to reduce the net carbon intensity of its energy products by 15-20% by 2030, compared to 2016 levels. This is a change from its previous target of a 20% reduction.
Measuring emissions by intensity allows a company to potentially increase its fossil fuel production and overall emissions, while utilizing offsets or incorporating renewable energy and biofuels into its product range.
Shell believes that gas, especially liquefied natural gas, will be essential in the energy transition as it replaces more polluting carbon in power plants. Additionally, the company anticipates that its power sales, including renewable power, will be lower than originally predicted.
A coal fired power plant near a large floating solar farm project under construction on June 16, 2017 in Huainan, Anhui province, China.
A coal fired power plant near a large floating solar farm project under construction on June 16, 2017 in Huainan, Anhui province, China.
Kevin Frayer/Getty Images
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The company has decided to drop its goal of reducing carbon intensity by 45% by 2035.
Shell explained that they are now focusing on providing more power to commercial customers and less to retail customers, as they prioritize value over volume in the power sector.
With a focus on value, we anticipate a decrease in total power sales growth by 2030, prompting us to revise our net carbon intensity goal.
In addition, Shell has set a new goal to reduce emissions from oil products like gasoline and jet fuel sold to customers by 15-20% by 2030, compared to levels in 2021.
Shell also maintained its target to halve emissions from its own operations, known as Scope 1 and 2 emissions, by 2030, saying it had already achieved more than 60% of that target.
‘Backtrack’
Mark van Baal, the founder of Follow This, a group of activist shareholders, expressed concern over Shell's decision to backtrack on their climate resolution at the upcoming annual general meeting. He believes that by doing so, Shell is essentially betting against the success of the Paris Climate Agreement, which calls for a nearly 50% reduction in emissions within this decade.
In addition to this, Shell is currently dealing with legal challenges regarding its climate strategy. The company is appealing a significant ruling by a Dutch court that mandated a faster reduction of its emissions.
Shell has begun implementing company-wide staff reductions as part of its strategy to save up to $3 billion. This includes cuts in its low-carbon solutions division.
In addition to the staff reductions, Shell has taken other steps to streamline its operations. This includes selling its European power trading business, exiting offshore wind and low-carbon projects, and putting its US solar assets up for sale. The company has also placed its refining and petrochemical complex in Singapore under review.
Furthermore, Shell has announced plans to shut down a refinery in Germany and to exit its troubled onshore oil operations in Nigeria. These actions are part of the company's efforts to optimize its portfolio and improve its financial performance.
The company reported a net profit of $28 billion in 2023 on the back of strong liquefied natural gas and oil sales, which were still down 30% from the previous year’s record earnings.
Editor's P/S:
The article highlights a concerning trend in the oil and gas industry, where companies are prioritizing profits over climate commitments. Shell's decision to adjust its carbon reduction targets and remove its 2035 goal is a clear indication that the industry is not taking the climate crisis seriously enough. This is especially disheartening given the urgency of the situation, with experts warning that significant emissions cuts are needed now to avoid the worst impacts of climate change.
The article also raises questions about the role of fossil fuel companies in the energy transition. Shell's belief that gas will be essential in replacing coal and other polluting fuels is questionable, as gas is itself a fossil fuel that contributes to greenhouse gas emissions. Additionally, the company's focus on value over volume in the power sector could lead to a decrease in renewable energy sales, which would undermine the transition to a clean energy future. It is clear that fossil fuel companies must do more to address the climate crisis and align their actions with the goals of the Paris Climate Agreement.
