Royal Dutch Shell on April 16 deepened its ambition to battle climate change, setting the oil and gas sector’s broadest plan to reduce greenhouse gas emissions to net-zero by 2050.
The new climate goals come as Shell and its peers face the sector’s biggest crises in decades after oil prices collapsed and global demand for energy cratered due to coronavirus, leading companies to sharply cut their spending plans.
The emission ambitions put the Anglo-Dutch company—at least on paper—ahead of the most progressive of its rivals, including BP and Italy’s Eni.
“Society’s expectations have shifted quickly in the debate around climate change,” CEO Ben van Beurden said in a statement.
“Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner.”
Shell said it plans to fully offset carbon emissions from its own oil and gas production by 2050, in what is known as Scope 1 and Scope 2 emissions.
Those emissions do not include the much larger category of greenhouse gases emitted from fuels and products it sells to customers such as jet fuel and gasoline, known as Scope 3.
The company, however, said it will “pivot towards serving businesses and sectors that by 2050 are also net-zero emissions,” which it said means its absolute emissions, including Scope 3, should be fully offset.
Investors welcomed the announcement but differed on whether it is in line with the 2015 Paris climate agreement to limit global warming to “well-below” 2 degrees Celsius by the end of the century.
“Shell plans to become a net-zero emissions energy business (covering scope 1, 2 and 3 emissions) or sooner by 2050,” Carola van Lamoen, head of Robeco’s Active Ownership team, said.
“This package of enhanced steps, set against the current other commitments in the oil and gas sector, significantly jumps Shell to the leading global position,” van Lamoen told Reuters.
Mark van Baal, founder of activist group Follow This, said the new goals were not enough.
“Shell’s Board is still failing in its responsibility to show leadership at a time of devastating climate change,” he said.
Shell also recommended investors vote against a climate resolution filed by Follow This ahead of its annual general meeting in May calling for more aggressive climate steps.
Energy companies' carbon emission reduction targets vary largely in scope and definition.
Shell’s ambition applies to all of the products it produces, refines and buys from other companies in absolute terms.
BP, for example, aims to bring net emissions from its equity barrels from oil well to petrol station to zero by 2050, including a 50% reduction of the carbon intensity of all products it sells.
Shell also expanded its broader aim to cut the total carbon emission footprint from energy products it sells—an intensity-based measure—by around 65% by 2050, and by around 30% by 2035.
Previously it aimed to reduce its net carbon footprint by 50% by 2050 and by 20% by 2035.
The company has rejected setting long-term targets, opting instead for ambitions which it says allows it flexibility to move “in step” with society’s shift away from fossil fuels in order to battle global warming.
Shell did not outline how it plans to change its spending plans in order to meet the new climate goals. Last year it spent roughly 8% of its $24 billion budget on low-carbon energies.
It also set binding targets to reduce its net carbon footprint in the three years to 2022 by 3% to 4% from a 2016 baseline.
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