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Shell Sets Bolder Emissions Goal Even as Virus Hits Oil

 

 

 

 

 

 

 

 

 

 

 

Royal Dutch Shell Plc plans to eliminate all net emissions from its own operations and the bulk of greenhouse gases from fuel it sells to customers by 2050.

The energy giant is following in the footsteps of its peers BP Plc and Repsol SA, which have already set similar targets. Shell’s move indicates that, despite the turmoil caused in the industry by the coronavirus, major oil and gas companies aren’t abandoning the transition to cleaner energy.

“Society’s expectations have shifted quickly in the debate around climate change. Shell now needs to go further with our own ambitions,” Chief Executive Officer Ben van Beurden said in a statement on Thursday. “Even at this time of immediate challenge, we must also maintain the focus on the long term.”

Shell aims to have net-zero emissions from its own operations, a category known as scope one and two, by 2050. It also intends to reduce the net carbon footprint of the energy products it sells to customers, so-called scope three emissions, by around 30% by 2035 and 65% by 2050. To achieve this, the company will sell products with lower carbon intensity, such as renewable power, biofuels and hydrogen.

While Big Oil has always been a target for environmental and activist groups, the sector is increasingly being pressured to tackle its emissions by its own investors. On Wednesday, a group of 11 asset managers asked France’s Total SA to discuss adopting tougher climate goals in its meetings.

“Investors will now look to other energy companies to match, and build on, the welcome ambition Shell is showing,” Stephanie Pfeifer, a member of Climate Action 100+ Steering Committee and CEO of Institutional Investor Groups on Climate Change.

The move comes even as the International Energy Agency said on Wednesday that the current pandemic and the resultant oil price crash was threatening to derail the major companies’ energy transition plans. The industry has been calling for government support for key technologies, such as hydrogen and carbon capture and storage.

“To do this during the midst of the Covid crisis to me signals both their continued focus on the other systemic challenge we face of climate as well as a welcome indication of their confidence beyond the current crisis,” Adam Matthews, Director of Ethics and Engagement of the Church of England Pensions Board, said in an email.

Road to Net-Zero

While the ambition is big, the path to net zero won’t be smooth. Shell’s greenhouse gas emissions edged lower last year only because because it sold assets, the company said in its sustainability report earlier this month. The company’s flaring emissions were up in 2019, but it made strides reducing its leaks from methane, which is more potent than carbon dioxide.

As European oil majors have increasingly chased more ambitious emissions targets, pledges from their American peers remain modest. ExxonMobil Corp. and Chevron Corp. targets are mostly limited to reducing flaring and methane emissions reduction. Exxon does not report scope 3 emissions, saying that these are a function of demand and out of its control.

Shell’s announcement is a big win for the climate, says Dutch activist investor group Follow This. However, the group, which filed a shareholder resolution asking Shell to align its ambitions with the goals of the Paris accord, does not believe the company goes far enough. The Anglo-Dutch major has advised its shareholders to vote against the Follow This resolution, saying that it is “unnecessary” and “counterproductive”.

SOURCE

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