Shell recently announced adjustments to its climate targets, including the weakening of a 2030 carbon reduction goal and the abandonment of a challenging 2035 objective. The company cited the anticipated strong demand for gas and uncertainties in the energy transition as reasons for these changes, while reaffirming its commitment to achieving net-zero emissions by 2050.
This move by Shell mirrors a similar decision made by competitor BP last year, reflecting a broader trend among oil majors in response to slowed government climate policies and delayed targets due to rising energy costs and supply issues. With mounting pressure from investors to prioritize profitable ventures, oil companies are reassessing their strategies amidst fluctuating market conditions.
CEO Wael Sawan’s revamped strategy for Shell emphasizes focusing on higher-margin projects, maintaining oil output stability, and expanding natural gas production to enhance returns. The company now aims for a 15-20% reduction in the net carbon intensity of its energy products by 2030, shifting from its previous target of a 20% cut. This approach allows Shell to potentially increase fossil fuel output while offsetting emissions through renewable energy or biofuels.
Recognizing the pivotal role of gas and LNG in the energy transition, Shell foresees these sources as key replacements for more polluting carbon in power generation. Despite this focus on gas, the company anticipates lower-than-expected power sales, including renewable energy.
Shell’s decision to forgo a 2035 carbon intensity reduction target reflects the current uncertainties in the energy transition trajectory, according to Sawan. The company now concentrates on clearer waypoints, particularly aiming at milestones by 2030.
Additionally, Shell introduced a new ambition to reduce emissions from oil products sold to customers by 15-20% by 2030 compared to 2021 levels. Scope 3 emissions, which account for a significant portion of the company’s greenhouse gas pollution, remain a key focus area.
Maintaining its commitment to halve emissions from its own operations by 2030 (Scope 1 and 2 emissions), Shell highlighted significant progress towards this goal, having already achieved over 60% of the target.