Oil giant Shell announces that it will become net zero by 2050

The Anglo-Dutch oil giant Royal Dutch Shell has today announced that it intends to reach net zero by 2050 or sooner by selling more green energy to reduce its carbon emissions.

Shell CEO Ben van Beurden said:

With the COVID-19 pandemic having a serious impact on people’s health and our economies, these are extraordinary times. Yet even at this time of immediate challenge, we must also maintain the focus on the long term.

Society’s expectations have shifted quickly in the debate around climate change. 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. Society, and our customers, expect nothing less.

Shell said it plans to offset CO2 emissions from its own oil and gas production by 2050. Those emissions do not include the bigger category of greenhouse gases emitted from its products such as gasoline and jet fuel. The plan includes an interim target to cut those emissions by more than 33% by 2030, up from 20% previously.

The company stated:

Shell’s aim is that, in the future, its operating plans and budgets will change to reflect this movement toward its new net-zero emissions ambition.

But it didn’t specify how it aims to do that. In 2019, Shell spent around 8% of its $24 billion budget on low-carbon energies, according to Reuters.

Viewpoints on Shell’s plan

The Guardian compares Shell’s plan to BP’s plan:

Whereas BP’s ambitious targets include an absolute reduction in emissions, Shell has chosen to focus on the overall carbon intensity of the energy it sells, which could be lowered by selling more clean energy alternatives without reducing the amount of fossil fuels produced.

Greenpeace UK isn’t impressed. Richard George, head of Greenpeace UK’s climate campaign, said:

A credible net-zero plan from Shell would start with a commitment to stop drilling for new oil and gas.

Instead, investors are being fobbed off with vague aspirations that don’t tackle Shell’s monstrous carbon footprint and pass the buck to Shell’s customers to offset their emissions.

Adam Matthews, a director on the Church of England Pensions Board, took a slightly softer tone:

Ultimately, it will be by developing and supporting net-zero pathways in these sectors that we will achieve the goals of the Paris Agreement.

And Andrew Logan, senior director of oil and gas at sustainability nonprofit Ceres, said:

Considering that Shell had just last year questioned the feasibility of achieving the 1.5 degree goal envisioned by the Paris Agreement, the company’s new aim to align its business with a 1.5 degree trajectory by 2050 or sooner is a sign of just how quickly the bar is being raised by Climate Action 100+ investor signatories in this high-emitting sector.

This increased ambition, coupled with recent commitments from other oil companies including BP, Equinor, Repsol, and Eni, will place intense pressure on Shell’s US competitors including ExxonMobil and Chevron to follow suit. With stock prices in the sector near record lows, investors are quickly running out of patience with any company that continues to pursue business as usual.