Shell plc (Shell) has published its first energy transition update since the launch of its Powering Progress strategy in 2021. At the company’s Capital Markets Day in June 2023, they outlined how their strategy delivers more value with less emissions, emphasizing the “more value” part. In this energy transition update, they are focusing on how the same strategy delivers less emissions.

Their target to achieve net-zero emissions by 2050 across all their operations and energy products is transforming their business. Shell believes this target supports the more ambitious goal of the Paris Agreement to limit global warming to 1.5°C above pre-industrial levels. Shell’s strategy supports a balanced and orderly transition away from fossil fuels to low-carbon energy solutions to maintain secure and affordable energy supplies.

“Energy has made an incredible contribution to human development, allowing many people around the world to live more prosperous lives. Today, the world must meet growing demand for energy while tackling the urgent challenge of climate change. I am encouraged by the rapid progress in the energy transition in recent years in many countries and technologies, which reinforces my deep conviction in the direction of our strategy,” said Wael Sawan, Shell’s Chief Executive Officer.

“Shell has a very important role to play in providing the energy the world needs today, and in helping to build the low-carbon energy system of the future. Our focus on performance, discipline and simplification is driving clear choices about where we can have the greatest impact through the energy transition and create the most value for our investors and customers. We believe this focus makes it more, not less, likely that we will achieve our climate targets. By providing the different kinds of energy the world needs, we believe we are the investment case and the partner of choice through the energy transition,” said Sawan.

Shell’s energy transition plans cover all their businesses. Liquefied natural gas (LNG) is a critical fuel in the energy transition, and they are growing our world-leading LNG business with lower carbon intensity. They are cutting emissions from oil and gas production while keeping oil production stable, and growing sales of low-carbon energy solutions while gradually reducing sales of oil products such as petrol, diesel and jet fuel. As one of the world’s largest energy traders, we can connect the supply of low-carbon energy to demand, as we have done for many years with oil and gas.

Shell has made good progress toward its climate targets:

• By the end of 2023, Shell had achieved more than 60% of their target to halve emissions from our operations by 2030, compared with 2016. This goes beyond the targets set by signatories to the Oil and Gas Decarbonization Charter agreed at COP28.
• Shell continues to be an industry leader in reducing methane emissions. They were one of the first companies to set a target to achieve near-zero methane emissions by 2030. In 2023, Shell achieved 0.05% methane emissions intensity – significantly below our target of 0.2%. And in 2023 we also contributed to the World Bank’s Global Flaring and Methane Reduction Fund – further supporting industry-wide action to drive down methane emissions and flaring.
• In 2023, Shell achieved their target to reduce the net carbon intensity of the energy products we sell, with a 6.3% reduction compared with 2016.

As Shell transforms into a net-zero emissions energy business, they aim to take the lead in the energy transition where we have competitive strengths, see strong customer demand, and identify clear regulatory support from governments. To help drive the decarbonization of the transport sector, Shell has set a new ambition to reduce customer emissions from the use of our oil products by 15%−20% by 2030 compared with 2021 (Scope 3, Category 11).

Our focus on where they can add the most value has led to a strategic shift in their integrated power business. The company plans to build their power business, including renewable power, in places including Australia, Europe, India and the U.S., and have withdrawn from the supply of energy directly to homes in Europe.

In line with this shift to prioritizing value over volume in power, they will focus on select markets and segments. This includes selling more power to commercial customers, and less to retail customers. Given this focus on value, Shell expects lower total growth of power sales to 2030, which has led to an update to their net carbon intensity target. Shell is now targeting a 15%−20% reduction by 2030 in the net carbon intensity of the energy products they sell, compared with 2016, against our previous target of 20%.

The company is investing $10−$15 B between 2023 and the end of 2025 in low-carbon energy solutions, making us a significant investor in the energy transition. And in 2023, we invested $5.6 B on low-carbon solutions, more than 23% of our total capital spending.

These investments include electric vehicle charging, biofuels, renewable power, H₂ and carbon capture and storage. Shell’s investments in new technologies are helping to reduce emissions for Shell and their customers. They aim to help scale new technologies to make them an affordable choice for customers and are focusing on key areas which they believe are critical to the energy transition: policies that support national net-zero ambitions including carbon pricing, supplying the secure energy the world needs, driving changes in demand and growing low-carbon solutions.