Carbon neutrality has become a central issue for oil companies. Shell has set the year 2050 as the target. The objectives are not only ecological, they are also economic. Rightly so, since the current pandemic and the oil market turmoil have caused the Anglo-Dutch company to lose more than $21.7 billion in 2020.
As a result, Shell has a clear agenda for achieving greenhouse gas (GHG) emission reduction targets. At the same time, the company wants to develop its carbon storage and offsetting techniques, as well as invest in other markets such as renewable energy (RE).
Carbon neutrality: Shell’s core objective
Carbon neutrality for 2050
To achieve carbon neutrality, Shell has set a clear agenda. It wants to reduce its greenhouse gas (GHG) emissions by 6 to 8% by 2023. For the following years, 20% reduction is envisaged in 2030, 45% in 2035 and finally 100% in 2050.
Respect its Powering Progress policy
This is based on its entrepreneurial strategy called Powering Progress. The objectives set are to achieve carbon neutrality, but also to respect the environment while satisfying the economic expectations of customers. With $5 billion to $6 billion in marketing, this strategy will raise shareholder awareness of renewable energy.
In this way, it seeks to contribute to the goal set by theParis Climate Agreement. Let’s remember that it plans to limit global warming to 1.5°C compared to the pre-industrial level.
Developing carbon storage and offsetting
25 million tons stored per year by 2035
In short, to mitigate its carbon footprint, Shell is looking to deepen its expertise in carbon capture and storage (CCS). It wants to reach a storage and capture capacity of 25 million additional tons per year by 2035. It relies on existing structures such as Quest in Canada. Others are planned such as Porthos in the North Sea off the Dutch coast.
120 million tons offset by 2030
It is also committed to nature-based solutions (NBS), which consists of protecting or redeveloping an ecosystem. This includes investments in afforestation and reforestation projects. This would offset the emission of 120 million tons of CO2 per year by 2030.
Rebalancing its energy model with renewable energies
Shell is focusing on biofuels
Shell has high hopes for biofuels, . In this sense, through its joint venture Raizen formed with the Brazilian Cosan, it has been developing sugarcane-based bioethanol for several years. Shell would like to double its production. In all, 3.75 billion liters per year are planned, i.e. 3% of world capacity.
But also on electric cars
Shell also plans to increase its electric supply for the automotive sector from 60,000 to 500,000 charging points by 2025. In addition, the company recently signed an agreement to acquire 100% of Ubitricity, the world leader in charging stations.
Is carbon neutrality for 2050 achievable?
8 billion investment in oil
Nevertheless, hydrocarbons remain an important part of the company’s future. And even if its oil production is expected to decrease by 1 to 2% per year, the company has already planned $8 billion for exploration and production.
An announcement criticized by NGOs
In the end, the share of investments for hydrocarbons still represents more than 80% of investments. Those in RE represent only 10%.
This has led to much criticism from environmental NGOs. In this sense, Greenpeace has already taken legal action to push Shell to reduce its carbon footprint. The most recent procedure was in December 2020.
In short, Shell wants to move its model towards renewable and low-carbon energy. Nevertheless, its heavy investments in oil should offset a whole series of efforts made. While Shell is keen to invest in biofuels, hydrogen, wind, solar and electric car stations, there is still a long way to go to achieve carbon neutrality by 2050.