Shell’s target is to become a net-zero emissions energy business by 2050, in step with society's progress in achieving the goal of the UN Paris Agreement on climate change.
With this target, we will contribute to a net-zero world, where society stops adding to the total amount of greenhouse gases (GHGs) in the atmosphere. This supports the most ambitious goal to tackle climate change laid out in the Paris Agreement: to limit the rise in average global temperature to 1.5 degrees Celsius above pre-industrial levels.
Becoming a net-zero emissions energy business means that we are reducing emissions from our operations, and from the fuels and other energy products we sell to our customers. It also means capturing and storing any remaining emissions using technology or balancing them with offsets.
We are transforming our business to meet our target, providing more low-carbon energy such as charging for electric vehicles, hydrogen and electricity generated by solar and wind power.
We are also working with our customers as they make changes too, including in sectors that are difficult to decarbonise, such as aviation, shipping, road freight and industry.
We believe our emissions peaked in 2018 and we will continue to work to bring them down.
We will reduce emissions from our own operations, including the production of oil and gas, by increasing energy efficiency and capturing or offsetting any remaining emissions. Emissions from our own operations make up less than 10% of our total emissions.
Most of our emissions come from the use of the energy we sell, so we aim to help our customers cut their emissions when they use that energy. Importantly, our target includes emissions not only from the energy we produce and process ourselves, but also from all the energy products that others produce, such as oil, gas, biofuels and electricity, and that we sell to our customers.
We play three roles
We are an energy provider. Becoming a net-zero emissions energy business means offering customers more low-carbon products, from renewable electricity to charging for electric vehicles and hydrogen. We aim to reduce the carbon intensity of the energy products we sell by 100% by 2050, in step with society. Carbon intensity is the total amount of GHG emissions associated with each unit of energy we sell, and which is used by our customers. This includes the emissions associated with the production, processing, transport and end use of our energy products. The calculation also subtracts emissions that are stored by using carbon capture and storage or are offset using natural carbon sinks, such as forests and wetlands. Read about how we measure this in Our carbon intensity.
We are an energy user. Our target is to achieve net-zero emissions from all our operations, as well as from the energy we need to power them. That means that any GHG emissions from making our products that cannot be avoided will be captured or offset using technology and nature.
We are a partner for change. Working with our customers, we are helping them to address the emissions created when they use products bought from us. We are also helping our customers to find ways to reduce their overall carbon footprints. Partnering with others includes supporting government policies to reduce carbon emissions, sector by sector.
We are taking steps to cut emissions from our existing oil and gas operations, and to avoid generating more in the future. Here are some of Shell's business milestones:
- We believe our annual oil production peaked in 2019, and we expect our total oil production to decline by 1-2% a year until 2030.
- Natural gas emits 45-55% fewer GHG emissions than coal when used to generate electricity, according to IEA data. We expect the percentage of total gas production in our portfolio to gradually rise to 55% or more by 2030.
- By 2030, we will end routine flaring of gas from the assets we operate.
- By 2025, we expect to have kept the methane emissions intensity of Shell-operated assets to below 0.2%.
- We have linked the pay of more than 16,500 staff to our target to reduce the carbon intensity of our energy products by 6-8% by 2023, in comparison with 2016.
- We are the first energy company to offer shareholders an advisory vote on its energy transition strategy at its Annual General Meeting. We will do this every three years, starting in 2021.
Pedro is a strategic adviser at CDP, a not-for-profit charity that runs a global disclosure system for investors, companies, cities, states and regions to manage their environmental impacts.
“We need help from everyone in achieving ambitious standards matched with the level of ambition we have as a society. Standards are essential for science-based targets, including a comprehensive look at emissions across the full value chain, both intensity and absolute targets, and including specific requirements for emissions from the consumption of energy products and also refining and production.
“We also need to assess the contribution of individual companies in achieving the Paris Agreement and net-zero goals by 2050 in a way that is dynamic and future-oriented. We need to account for the time lag between investments today, and emissions in five, 10 and 15 years. Because of this time lag challenge, we need extra scrutiny and I would say uber transparency.
“Continuing to evolve the reporting requirements for companies will be essential to building trust.”
Today’s energy use
Primary energy demand
The global economy gets most of its energy from coal, oil and gas, with around a fifth of all energy being used to generate electricity. Energy sources differ across industry, transport and domestic use, which all need to transition to low-carbon options.
Global energy demand by type
The power sector transforms primary energy, such as gas, coal or renewables, into the electricity used in other end-use sectors. Because electricity is emission-free at its point of use, decarbonisation of the power sector can enable decarbonisation elsewhere.
Energy use by sector
There are currently no easy replacements for hydrocarbons in energy-intensive industries, such as in petrochemicals or in iron and steel manufacturing where extremely high temperatures need carbon-intensive processes.
The buildings sector is responsible for around one-third of global final energy consumption and is also the source of a large proportion of electricity demand and therefore emissions in the power sector. The primary use of energy in buildings is for heating or cooling, lighting and cooking.
Oil currently powers more than 90% of transport, with aircraft, motor vehicles and ships in use for between 15 and 25 years.
Source: Shell analysis based on data from the IEA (2020) World Energy Balances at www.iea.org/subscribe-to-data-services/world-energy-balances-and-statistics, all rights reserved