Investments and returns

Shell’s financial strength and access to capital give us the ability to provide significant shareholder returns and to profitably transform our portfolio to meet our target of achieving net-zero emissions. They also allow us to withstand volatility in oil and gas markets and to continue to provide the energy the world needs.

We are stepping up our investments in low- and zero-carbon energy where we see good opportunities for growth and strong returns. From the first quarter of 2022, we will report separately on the performance of our Renewables and Energy Solutions business, which includes our integrated power, hydrogen, carbon capture and storage, and nature-based solutions businesses. We will also report separately on the performance of our Marketing business, which includes charging for electric vehicles and biofuels. We expect to provide more details on the performance of these activities as they grow.

We set out our planned total expenditure (cash capital expenditure and operating expenses) [A], and expected returns, across our businesses. Our strategy is to:

• Increase our investments in Marketing and Renewables and Energy Solutions, with expected returns of 15-25% and more than 10% respectively. [B]
  These businesses include our service stations, sales of gasoline and diesel, fuels for business customers, power, hydrogen, biofuels, charging for electric vehicles, nature-based solutions, and carbon capture and storage. They focus on working with our customers to accelerate the transition to net zero and are the foundations for the future businesses in Shell.
• Maintain our investments in our Integrated Gas and Chemicals and Products businesses, with expected returns of 14-18% and 10-15% respectively. [C]
  These businesses make and sell the products needed to enable the energy transition. They produce sustainable cash flows and give us the asset infrastructure to support our investments in our low-carbon businesses. 
• Limit our investments in our Upstream oil and gas business, with expected returns of 20-25%.
  Our Upstream business helps to provide the vital supply of oil and natural gas that the world needs today, and generates the cash and returns needed to fund our shareholder distributions and the transformation of our portfolio.

Our targeted returns consider risks and uncertainties associated with our investments, and the scale of spending that is required to develop opportunities. For example, our expected returns in our Upstream business reflect the costs of exploration, feasibility studies and construction, as well as risks linked to commodity prices. 

In 2021, our cash capital expenditure was $20 billion and our operating expenses were $36 billion. The table below shows how we expect several key metrics, including total expenditure, to evolve over time.

[A] Please refer to the Annual Report and Accounts 2021 for the definitions of cash capital expenditure and operating expenses.
[B] The IRR target for Renewables and Energy Solutions covers Integrated Power only – note added on April 22, 2022 for additional clarification.
[C] Corrected on 21 April 2022 because of typographical error.