While Anglo-Dutch energy company Shell has set net-zero carbon emission targets by 2050, it will continue to grow its natural gas business by more than 20% in the coming years. Its new climate strategy includes a slight fall in oil production by selling oilfields or through the natural decline of their reserves, and an increase in gas production and gas exports.
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What is Happening?
- These plans have raised concerns that Shell may increase its emissions in the coming decade, which is considered a crucial time to mitigate the climate crisis and stave off its worst effects.
- Shell has promised to reduce its net carbon intensity by between 6 and 8% by 2023, compared with 2016, which would increase to 20% by 2030 and 45% in 2035. It plans to reach a 100% emissions reduction by 2050.
- However, these targets based on “carbon intensity” are not the same as the absolute emissions created, and means that Shell could lower its carbon intensity by selling more clean energy alternatives without having to reduce the amount of fossil fuels produced.
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- The company said that its oil production reached its peak in 2019, and would continue to fall by 1-2% (over what time period is unclear). However, Shell will expand its capacity to export 33.3 million tons of liquefied natural gas a year, and another 7 millions tons a year by 2025.
- Shell plans to offset its emissions through carbon capture projects and nature-based solutions such as planting trees and restoring natural habitats. The three projects it is involved with will be able to capture 4.5 million tons of carbon a year, with hopes to capture another 25 million tons of carbon a year by 2035.
- The company has also pledged to grow its green energy business, through, among other things, by growing its network of electric vehicle charging points from 60 000 to 500 000 by 2025 and investing more in hydrogen.
- However, the plan has been called vague and unambiguous by green groups, with Greenpeace describing Shell’s decision to avoid tough oil production cuts as “grotesque.” Mel Evans, a senior Greenpeace campaigner, says, “Without commitments to reduce absolute emissions by making actual oil production cuts, this new strategy can’t succeed nor can it be taken seriously.”
- According to equity market analysts, Shell’s investment and fossil fuel production plans were broadly in line with its existing strategies. Further, analysts at Jefferies said the plan did not introduce significant changes in Shell’s energy transition strategy and that the company’s emissions targets remained “partially unclear, based on the limited low-carbon growth targets provided.”
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