Shell Plc weakened its targets for carbon-emissions cuts in the coming decade, while maintaining the ambition of becoming a net zero company by 2050.
The change is the latest sign of a broader adjustment in plans for the energy transition among the UK-based oil majors, which have been under pressure from activist investors to focus on their core petroleum businesses. BP Plc last year said it would pump more oil and gas and have higher emissions this decade than previously planned.
Shell now aims to reduce its net carbon intensity by 15% to 20% by 2030, compared with a previous target of 20%, according to its latest energy transition strategy update published on Thursday. The company also dropped its goal of a 45% reduction by 2035 citing “uncertainty in the pace of change in the energy transition.” Those targets are measured against a baseline of emissions in 2016.
The change reflects Shell’s move away from supplying renewable power to homes, following the sale of its UK and German retail business last year. Underscoring this shift back to its core fuel business, the company introduced a new target to reduce customer emissions from the use of its oil products by 15% to 20% by 2030, compared with 2021 levels.
“Our focus on value has led to a strategic shift in our power business towards select markets and segments,” Chief Executive Officer Wael Sawan said in a statement. “We expect lower growth in sales of power overall. We have updated our net carbon intensity target to reflect that change.”
Shell’s spending on low-carbon energy may also slow in the coming years. The company plans to invest $10 billion to $15 billion between 2023 and 2025, $5.6 billion of which was already spent in 2023.
Emissions Ambitions
Shell first unveiled its plan to become a net zero company in 2020, under then-CEO Ben van Beurden, just a few months after BP laid out similar ambitions. At the time, energy prices were in a deep slump because of Covid-19 lockdowns, prompting some speculation that oil demand had already peaked.
Those predictions proved to be unfounded, and a swift rebound in consumption combined with Russia’s invasion of Ukraine sent oil and gas prices soaring, resulting in record profits for fossil fuel producers. Since then, many shareholders in companies including BP and Shell have demanded ever-higher returns and urged a greater emphasis on more profitable oil and gas.
Under Sawan, who took over from Van Beurden last year, Shell has promised a “ruthless” focus on boosting investor returns. The company is also seeking to narrow the valuation gap with US peers Exxon Mobil Corp. and Chevron Corp., which have maintained a greater emphasis on oil and gas.
Meanwhile, environmental groups have decried what they see as the watering-down of the industry’s climate pledges.
“With this backtrack, Shell bets on the failure of the Paris Climate Agreement which requires almost halving emissions this decade,” Mark van Baal, founder of activist shareholder group Follow This, said in an emailed statement. “Only Shell’s shareholders can change the board’s mind by voting for our climate resolution at the shareholders’ meeting in May.”
Van Baal, along with 27 investors including Amundi SA, has filed a resolution at Shell’s annual general meeting pushing the company to align itself with the Paris Climate Agreement.
