Chair's message
“For Shell, 2023 was a pivotal year in our drive to achieve more value with less emissions.”
My geologist's mind has always been intrigued by what lies beneath our feet, including the natural energy resources that have propelled the world's economic progress for so long. But with the urgent need to tackle climate change, I am just as fascinated by the technologies that will help the world deliver cleaner power and fuel the future, as well as significantly cut carbon emissions.
Along with great challenges, the energy transition offers tremendous opportunities to those eager to play their part. For well over a century, Shell has pioneered ways of providing energy to people. We are a leader in deep-water oil production, liquefied natural gas (LNG) and biofuels, and we aim to become one of the largest providers of charging for electric vehicles.
We aim to lead in the energy transition where we have competitive strengths and see strong customer demand and clear support from governments. Our strategy is to create value for our shareholders, customers and wider society as we reduce our emissions and fulfil our purpose to provide more and cleaner energy solutions.
For Shell, 2023 was a pivotal year in our drive to achieve more value with less emissions. It was the first year under our new Chief Executive Officer, Wael Sawan, who stressed the importance of enhancing our returns to shareholders, while staying firm on our target to become a net-zero emissions energy business by 2050. We did exactly that by maintaining a very healthy balance sheet, increasing our dividends and continuing to buy back shares, all while investing capital to reduce our Scope 1 and 2 emissions, and Scope 3 emissions related to the use of the oil products we sell.
People everywhere need a secure, sustainable and affordable energy supply. Shell can help to enable a balanced energy transition by keeping the world moving with oil and gas, while delivering the low-carbon alternatives our customers need to decarbonise. To this end, we have made it clear that we plan to expand our LNG business and develop new low-carbon products and technologies, such as carbon capture and storage (CCS).
I saw this when I visited Qatar's North Field expansion project in January 2024. This project will support the delivery of much-needed supplies of natural gas around the world and I appreciated the opportunity to learn more about how we are developing a CCS project there. I also visited Oman and saw how we are moving forward with a hydrogen project, enabled by CCS.
More value, less emissions
Shell's 2023 earnings were strong and we reduced our total combined Scope 1 and 2 absolute greenhouse gas emissions from our operations by 31% [A] compared with 2016 levels. This positions us well as we continue to implement our strategy, guided by the free cash flow*, investment and cost reduction targets set in 2023. We will continue to create value for shareholders and lower emissions.
Our energy transition update, published on March 14, 2024, aims to keep us on track to meet our climate targets and ambitions. As we continue to supply oil and gas, we must continually work to lower carbon emissions from our own operations and offer our customers more low- and zero-carbon fuels to meet their needs in a world on its way to net zero.
In November, I saw first-hand how committed our teams are to transforming the refinery in Rheinland, Germany, into an energy and chemicals park. We are building a renewable hydrogen electrolyser to help decarbonise our own operations and we will convert a hydrocracker into a base oils production unit. The teams have also almost finished building a plant to produce bioLNG for heavy-duty road transport. The use of bioLNG in this slower-to-decarbonise sector could be a game changer for accelerating the energy transition.
The energy transition must be just and fair, and we are committed to respecting nature and powering lives in our activities. The Board visited LNG Canada in June, where we are building a major project designed to deliver a secure supply of energy. Our people there have worked closely with indigenous communities to help protect the environment.
Innovating for net zero
Tackling climate change will need new technologies. It will also demand collective action from governments, businesses and consumers, even in the face of heightened instability caused by the Russia-Ukraine war and renewed major conflict in the Middle East.
Innovation is vital to the energy transition and is close to my heart. In September, I met with students in China who had taken part in the Shell Eco-marathon by embracing the challenge to design and make energy-efficient vehicles. Their passion and perseverance should inspire us all to keep pushing the boundaries of what is technically possible.
Shell is determined to help tackle climate change. We must do this with continued innovation and we will lead where we have the expertise and experience. For instance, our Raízen biofuels joint venture in Brazil and our renewable natural gas acquisition Nature Energy in Denmark, completed in February 2023, help us to be well placed to play an increasing role in supplying lower-carbon transport fuels.
Under Wael's leadership in 2023, we began streamlining our business, set clear targets, tightened up on spending and reduced emissions. The energy transition is an evolution that we are proud to be part of. We are carefully choosing where we can make the biggest, most positive impact as we move forward to becoming a net-zero emissions energy business by 2050, purposefully and profitably.
Shell has the drive, the ingenuity and the competitive edge to make things happen: to create value for investors, customers and society, and contribute to a low-carbon world.
Sir Andrew Mackenzie
Chair
[A] Reduced from 83 million tonnes carbon dioxide equivalent (CO2e) in 2016 to 57 million tonnes CO2e in 2023
* Non-GAAP measure (see Non-GAAP measures reconciliations).
Powering Progress
