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 performance and progress in respect of our climate-related targets, including those reflected in the remuneration of senior management and employees.
Shell's target is to become a net-zero emissions energy business by 2050. We have set intensity targets and absolute targets and ambitions over the short, medium and long term to track our performance over time (as summarised below).
The targets are forward-looking targets based on management's current expectations and certain material assumptions and, accordingly, involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied herein.
We believe our total net absolute emissions peaked in 2018 at 1.73 gigatonnes of carbon dioxide equivalent (GtCO2e).
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 the 2016 baseline, on a net basis. We aim to maintain methane emissions intensity for operated oil and gas assets below 0.2% and achieve near-zero methane emissions by 2030. We aim to eliminate routine flaring from our upstream-operated assets by 2025 [A].
[A] Subject to completion of the sale of SPDC.
We have set targets to reduce the net carbon intensity (NCI) of the energy products we sell by 9-12% by 2024, 9-13% by 2025, 15-20% by 2030, and 100% by 2050.
The intended use of the NCI metric is to track progress in reducing the overall carbon intensity of the energy products sold by Shell. NCI measures emissions associated with each unit of energy we sell, compared to a 2016 baseline. It reflects changes in sales of oil and gas products, and changes in sales of low- and zero-carbon products -- such as biofuels, hydrogen and renewable electricity.
Unlike Scope 1 and 2 emissions, reducing the NCI of the products we sell requires action by both Shell and our customers, with the support of governments and policymakers to create the right conditions for change.
Our focus on where we can add the most value has led to a strategic shift in our power business. We plan to build our integrated power business, including renewable power, in places such as Australia, Europe, India and the USA. We have withdrawn from the supply of energy directly to homes in Europe because we do not believe that is where our strengths lie.
In line with our shift to prioritising value over volume in power, we are concentrating on select markets and segments. One example is our focus on commercial customers more than retail customers. Given this focus on value, we expect growth in total power sales to 2030 will be lower than previously planned. This has led to an update to our NCI target. We are now targeting a 15-20% reduction by 2030 in the NCI of the energy products we sell, compared with 2016, against our previous target of a 20% reduction. Acknowledging uncertainty in the pace of change in the energy transition, we have also chosen to retire our 2035 target of a 45% reduction in NCI.
We have 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) [B]. This level of ambition is in line with the European Union's climate goals in the transport sector, among the most progressive in the world.
Achieving this ambition will mean reducing sales of oil products, such as petrol and diesel, as we support customers as they move to electric mobility and lower-carbon fuels, including natural gas, LNG and biofuels.
[A] Customer emissions from the use of our oil products (Scope 3, Category 11) were 517 million tonnes carbon dioxide equivalent (CO2e) in 2023 and 569 million tonnes CO2e in 2021.
We monitor our progress against these targets and ambitions using the key metrics described.
Climate-related targets and ambitions summary
[B] Operational control boundary. Our 2030 and 2050 targets are on a net basis (i.e. inclusive of any future use of carbon credits).
[C] Covers all oil and gas assets for which Shell is the operator. Measured separately for assets with marketed gas (gas, LNG and GTL available for sale) and assets without marketed gas (oil and gas assets where gas is reinjected). 2023 actual performance relates to assets with marketed gas.
[D] Our targets for 2050 are based on mitigation activities undertaken by both Shell and our customers.
[E] Subject to completion of the sale of SPDC.
[F] In our energy transition update in March 2024, we have set an ambition to reduce customer emissions from the use of our oil products (Scope 3, Category 11) by 15-20% by 2030, compared with 2021. Customer emissions from the use of our oil products (Scope 3, Category 11) were 517 million tonnes carbon dioxide equivalent (CO2e) in 2023 and 569 million tonnes CO2e in 2021.
Key metrics we use to track progress against our energy transition strategy are the NCI of our portfolio and our absolute emissions. Additional metrics associated with the resilience of Shell's strategy to climate-related risks and opportunities are included in "Energy transition strategy". This includes information on capital allocation between our business segments and the sensitivity of our assets to carbon pricing, discount rate and commodity price assumptions.
