Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Shell has weakened some of its climate targets to accommodate its plans to keep growing its giant gas business, even as it pushes to cut emissions to net zero by 2050.
In the first three-year review of its energy transition plan, launched in 2021, the energy major said the net carbon intensity of its products would fall more slowly than previously planned.
Rather than a commitment to cut the absolute emissions generated by burning fossil fuels, carbon intensity is an accounting treatment that allows Shell to offset the carbon produced by its oil and gas business against its growing sales of lower-carbon products.
Shell had previously said the net carbon intensity of its energy products would fall 20 per cent from 2016 levels by 2030, and then 45 per cent by 2035 and to net zero by 2050.
The company said on Thursday it was now targeting a 15 to 20 per cent drop by 2030 and would abandon the interim 2035 target.
At the same time Shell introduced an ambition to cut the absolute emissions from its oil products by 15 to 20 per cent from 2021 levels by 2030. Shell said that would represent a 40 per cent fall compared with 2016.
The change in targets reflects chief executive Wael Sawan’s plans for Shell to become a leaner, more disciplined business by keeping oil production flat, growing sales of liquefied natural gas and being more selective about the types of low-carbon energy products it sells.
“We believe this focus makes it more, not less, likely that we will achieve our climate targets,” he said.
The company’s 2021 commitment to reduce absolute emissions from its operations by 50 per cent by 2030 remains unchanged, it said, adding that those operational emissions had already fallen by 31 per cent.
Despite the commitment to cut oil-related customer emissions, the changes to Shell’s carbon intensity targets are likely to provoke criticism, particularly from groups that already thought the company was not doing enough to reduce its environmental impact. Shell now has no interim targets to lower emissions between 2030 and 2050.
“This backtracking removes any doubt about Shell’s intentions: the company wants to stay in fossil fuels as long as possible,” said Mark van Baal, founder of activist group Follow This, which has filed regular shareholder motions at Shell calling on the company to cut emissions faster.
Even before the changes, a Dutch court had ruled that Shell’s original targets were not ambitious enough, instructing the company to cut all of its emissions by 45 per cent, on an absolute basis, by 2030. Shell has appealed against the ruling and that appeal will be heard next month.
Shell said it planned to “gradually” reduce sales of oil products such as petrol, diesel and jet fuel, but would continue growing its sales of LNG, which it described as a “critical fuel in the energy transition”.
Shell is already the largest supplier of the gas, after state-owned Qatar Energy, and has said it wants to increase the volume it sells by 20 to 30 per cent by 2030.
