Climate-related metrics and targets
Metrics used by Shell to assess climate-related risks and opportunities in line with its strategy and risk management process
This section describes our energy product and carbon emissions performance and metrics linked to our material climate transition risks and opportunities.
We must decarbonise our portfolio and operations in order to mitigate climate risks and seize opportunities in the energy transition. Key metrics we use to track progress against our energy transition strategy are the net carbon intensity of our portfolio and our absolute emissions.
The other material climate-related risk relates to Shell’s physical risk exposure. Currently, this response is managed at an asset level. We are continuing to establish a structured process for managing the physical risk of climate change across the Group. The process may include consideration of additional metrics and targets to monitor physical risk exposure.
Our overall climate target is to become a net-zero emissions energy business by 2050, in step with society. It includes net-zero emissions from our operations (Scope 1 and 2 emissions), as well as net-zero emissions from the end-use of all the energy products we sell (scope 3 emissions). We have set short, medium and long-term targets to track our performance against our overall climate target over time.
We believe our total absolute emissions peaked in 2018 at 1.73 gigatonnes of carbon dioxide equivalent (GtCO2e) and our overall climate target means we will have to bring that down to absolute net-zero emissions by 2050, in step with society.
In October 2021, in support of our 2050 net-zero emissions target, we set a target to reduce Scope 1 and 2 absolute emissions from assets and activities under our operational control (including divestments) by 50% by 2030 compared with 2016 levels on a net basis. We monitor our progress against these targets using the key metrics described below.
Climate-related targets summary
[B] Operational control boundary.
[C] Overall methane emissions intensity for facilities with marketing gas.
[D] Indirect GHG emissions (Scope 3) based on the energy product sales included in Net Carbon Intensity (NCI) using equity boundary.
[E] We aim to achieve these targets in step with society.
Net carbon intensity
Shell’s net carbon intensity is the average intensity, weighted by sales volume, of the energy products sold by Shell. It is tracked, measured and reported using the Net Carbon Footprint (NCF) methodology.
We have received third-party limited assurance on our carbon intensity, measured and reported using the Net Carbon Footprint methodology, for the period 2016 to 2021.
Scope of Net Carbon Intensity
Emissions from energy products included within the Net Carbon Footprint methodology
Performance – net carbon intensity (NCI)
In 2021, Shell’s NCI was 77 grams of carbon dioxide equivalent per megajoule of energy (gCO2e/MJ), a 2.7% increase from the previous year and a 2.5% reduction compared with 2016, the reference year. The increase in Shell’s NCI in 2021 was largely due to the introduction of an improved approach for the estimation of the emissions intensity of power sold by Shell. The new approach is based on categorising power sales as certified renewable, own generation or power purchase agreement, or power purchased from the grid. Intensities are then assigned to each power sales category, allowing a better estimate of the overall intensity of power sold by Shell.
NCI reference year: 2016 |
2021 |
2020 |
2019 |
2016 |
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|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
NCI [E] |
gCO2e/MJ |
77 |
75 |
78 |
79 |
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Estimated total energy delivered by Shell [A] |
trillion (10^12) MJ |
17.89 |
18.40 |
21.05 |
20.93 |
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Estimated total GHG emissions included in NCI (net) [B] |
million tonnes CO2e |
1,375 |
1,384 |
1,646 |
1,645 |
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Carbon credits |
million tonnes CO2e |
5.1 |
3.9 |
2.2 |
0.0 |
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Estimated total GHG emissions (gross) [C][D] |
million tonnes CO2e |
1,381 |
1,388 |
1,648 |
1,645 |
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As we implement our Powering Progress strategy, we are increasing the share of lower-carbon products in our energy product sales, which should result in a reduction in our NCI.
Our ability to change the emissions intensity of each energy product varies depending on the product type:
- For hydrocarbon fuels, emissions from end-use by customers are by far the biggest contributors to the carbon intensity of the product. As a result, the emissions intensity of hydrocarbon fuels is expected to stay relatively unchanged over time. This is why we are focused on helping our customers decarbonise.
- This contrasts with the emissions intensity of power, which can be highly variable depending on how it has been generated. To a lesser extent, there is also a contrast between hydrocarbon fuels and biofuels, which can vary significantly in intensity depending on the feedstock and production process used.
- The proportion of our renewable power sales and the generation mix in countries where we sell power to the market both affect Shell’s overall power mix and its resulting emissions intensity.
The biggest driver for reducing our NCI is increasing the share of lower-carbon products in our energy product sales.
