Feb 11, 2021 - Energy & Environment

Shell peers into a future with less oil

Illustration of sea binoculars made from a Shell logo
Illustration: Annelise Capossela/Axios

Royal Dutch Shell said Thursday that its oil production peaked in 2019 and is expected to decline by roughly 1%-2% annually as the company diversifies into lower-carbon energy products and business lines.

Why it matters: It signals how some of the world's most powerful oil-and-gas companies are positioning themselves for a world taking climate change more seriously and responding to calls from investors and activists to do more.

Driving the news: The news arrived in Shell's wider update Thursday morning on its pledge last year to become a "net-zero emissions" business by 2050 while, it hopes, staying attractive for shareholders.

The company intends to raise dividends by roughly 4% annually.

  • Shell said its carbon emissions likely peaked in 2018.
  • It also laid out steeper targets for reducing carbon intensity — that is, emissions per unit output.
  • Shell plans to cut intensity by 6%-8% by 2023, 20% by 2030, and 45% by 2035.

The big picture: Europe-based multinationals all have aggressive long-term emissions targets and are moving more deeply into areas like renewables, power services and carbon removal — even as fossil fuels remain their dominant businesses and investments.

  • On Thursday morning, Shell said it plans to expand its electric vehicle charging network from roughly 60,000 charge points today to 500,000 by 2025.
  • It aims to sell 560 terawatt-hours a year of power to homes and businesses by 2030, double today's levels.
  • Shell is also eyeing the expansion of its hydrogen and biofuels businesses, among other efforts. That includes developing "integrated hydrogen hubs to serve industry and heavy-duty transport."

CEO Ben van Beurden said their overall plans will "drive down carbon emissions and will deliver value for our shareholders, our customers and wider society."

What they're saying: Several activist groups were critical.

“We welcome this step with cautious optimism. However, Shell’s new targets still won’t lead to Paris-consistent emissions levels,” said the activist shareholder group Follow This.

The environmental group Friends of the Earth said Shell's efforts are insufficient.

  • "Only if CO2 emissions are to decrease drastically in absolute terms in the coming years we can prevent dangerous climate change," the group said.
  • And Bloomberg notes that both Friends of the Earth and Greenpeace believe the company is "leaning too heavily on reforestation and carbon capture and storage."

Yes, but: Via Reuters, Adam Matthews of the Church of England Pensions Board, which works with companies on climate, said: "Shell’s net zero target is industry-leading and comprehensive as it covers all their carbon emissions."

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