The 24th edition of the Shell Sustainability Report outlines Shell’s strategy to become a net-zero emissions energy business by 2050. The report describes Shell’s social, safety, and environmental performance in 2020. “In 2020, the COVID-19 pandemic changed the world and people’s lives in ways we could never have imagined,” said Shell CEO Ben van Beurden. “It was a tough year for everyone. It was a tough year for Shell, but also a year when we set a clear path for our future. We refreshed our business strategy and, when we announced it in February 2021, we called it Powering Progress. Powering Progress sets out our goals for powering lives and livelihoods, and respecting nature by protecting the environment. It lays out how we believe Shell can and must play a role as the world accelerates toward a future of zero- and lower-carbon energy.”
The Sustainability Report sets out Shell’s progress in the transition to a lower-carbon world and its contribution to society, which includes helping to achieve universal access to cleaner, affordable energy. The report also includes details of the Net Carbon Footprint of energy products Shell sold each year from 2016 to 2020.
Shell also published its Industry Associations Climate Review. The report assesses 36 key industry associations’ climate-related policy and advocacy against Shell’s climate-related policy positions. It also provides a summary of how much Shell paid to these associations in 2020.
In addition, Shell published its 2020 Payments to Governments Report covering countries where it has exploration and production activities. This report details payments in 24 countries and is prepared in accordance with the UK’s The Reports on Payments to Governments Regulations 2014 (as amended in December 2015).
Shell’s Approach
Shell’s target is to become a net-zero emissions energy business by 2050. It aims to follow the goals of the United Nations’ Paris Agreement on climate change. With this target, Shell recognizes that society must stop adding to the total amount of greenhouse gases (GHGs) in the atmosphere. This supports the most ambitious goal to tackle climate change laid out in the Paris Agreement: to limit the rise in average global temperature to 2.7°F (1.5°C) above pre-industrial levels.
Becoming a net-zero emissions energy business means that Shell is reducing emissions from its operations, and from the fuels and other energy products it sells to its customers. It also means capturing and storing any remaining emissions using technology or balancing them with offsets. Shell is in the process of transforming its business to meet its target of providing more low-carbon energy such as charging for electric vehicles (EVs), hydrogen, and electricity generated by solar and wind power. It is also working with customers as they make changes in sectors that are difficult to decarbonize, such as aviation, shipping, and road freight.
Shell believes its emissions peaked in 2018. The company said it will reduce emissions from its own operations, including the production of oil and gas, by increasing energy efficiency and capturing or offsetting any remaining emissions. Emissions from operations comprise less than 10% of its total emissions.
Most of Shell’s emissions come from the use of the energy it sells. Therefore, Shell’s target includes emissions not only from the energy it produces and processes but also from all the energy products that others produce, such as oil, gas, biofuels, and electricity, and that Shell in turn sells to its customers.
Notable Developments
In January 2021, Shell signed an agreement to buy 100% of Berlin-based EV charging network company, Ubitricity. Ubitricity is the United Kingdom’s largest public EV charging network with over 2700 charge points as of February 2021.
Shell is also teaming up with Equinor and Total to capture CO2 and store it along the Norwegian continental shelf through what’s commonly referred to as the Northern Lights project. Northern Lights is a collaborative effort between power generation and industrial infrastructure companies that will capture CO2 and deliver it to a terminal in Øygarden, Norway for intermediate storage. On December 15, 2020, the Norwegian government approved its decision to help fund the project.
Business Milestones
Shell listed the following predictions and business milestones in its 2020 sustainability report:
- Shell believes its annual oil production peaked in 2019 and expects its total oil production to decline by 1% to 2% per year until 2030.
- According to data by the International Energy Agency, natural gas emits 45% to 55% fewer GHG emissions than coal when used to generate electricity. Shell expects the percentage of total gas production in its portfolio to gradually rise to 55% or more by 2030.
- Shell said it will end routine flaring of gas from its assets by 2030.
- By 2025, Shell expects to have kept the methane emissions intensity of operated assets below 0.2%.
- Shell is linking compensation to ESG, and 16,500 of its employees have a financial incentive to reduce the carbon intensity of Shell’s energy products by 6% to 8% by 2023, in comparison with 2016.
- According to Shell, it is the first energy company to offer shareholders an advisory vote on its energy transition strategy at its Annual General Meeting. Shell says it will offer its shareholders this vote every three years starting in 2021.
