In Focus: Net carbon footprint
We aim to reduce the greenhouse gas (GHG) intensity of our portfolio and continue to work on improving the energy efficiency of our existing operations. In addition, and as a better way to inform and drive our investment choices and adapt our business over time, in November 2017, we announced our ambition to reduce the net carbon footprint of our energy products in step with society’s drive to reduce GHG emissions.
We aim to cut our and our customers’ GHG emissions from energy products that Shell sells – expressed in grams of carbon dioxide equivalent per megajoule (gCO2e/MJ) consumed – by around half by 2050. As an interim step, by 2035, and predicated on societal progress, we aim for a reduction of around 20% compared with 2017 levels. Our approach to reducing the net carbon footprint covers emissions directly from Shell operations (including from the extraction, transportation and processing of raw materials, and transportation of products), those generated by third parties who supply energy to us for production, and our customers’ emissions from their consumption of our energy products. Also included are emissions from elements of this life cycle not owned by Shell, such as oil and gas processed by Shell but not produced by Shell, or from oil products and electricity marketed by Shell that have not been processed or generated at a Shell facility. Excluded are our emissions or our customers’ emissions from our chemicals and lubricants products, which are not used to produce energy.
Our long-term ambition for 2050 is a stretching aspiration that aims to ensure that Shell continues to develop a resilient and relevant portfolio over the coming decades. While this is a long-term aspiration that will need periodic recalibration in line with the pace of change in broader society and the wider energy system, it is intended to help ensure that we remain relevant and competitively positioned in the energy transition. This means supplying energy products and services that our customers need, now and in the future, and developing a resilient portfolio in line with our purpose of providing more and cleaner energy to society.
In the period to 2035, we believe that all forms of GHG reduction measures must be accelerated and increased in scale. Major improvements in energy efficiency and new sources of energy, such as renewables, combined with the use of cleaner fossil fuels, such as replacing coal with natural gas, are needed to meet the growing global population’s energy needs while reducing GHG emissions. In addition, the world will need significant growth in carbon capture and storage (CCS) and sustained reductions in demand. The management of GHG emissions will become increasingly important to our shareholders as concerns over climate change lead to tighter environmental regulations. Policies and regulations designed to limit the increase in global temperatures to well below 2°C could have a material adverse effect on Shell – through higher operating costs and reduced demand for some of our products. We actively monitor and assess these potential threats and are best able to manage them when local policies provide a stable and predictable regulatory foundation for our future investments. At this stage, industry is still facing significant uncertainty about how local regulatory policies and consumer behaviour will shape the evolution of the energy system and which technologies and business models will thrive.
[A] Net carbon footprint measured on an aggregate “well-to-wheel” or “well-to-wire” basis, from production through to consumption, in gCO2e/MJ of energy products consumed; chemicals and lubricants products are excluded. The carbon footprint of the energy system is modelled using Shell methodology aggregating life-cycle emissions of energy products on a fossil-equivalence basis. The methodology will be further reviewed and validated in collaboration with external experts.
[B] Potential society trajectory includes analysis from Shell scenarios estimate of Net Zero Emissions by 2070 and IEA Energy Technology Perspectives 2017; potential illustrative Shell trajectory