Our journey to achieving net zero

Shell supports the more ambitious goal of the Paris Agreement, which is to limit the rise in global average temperature this century to 1.5 degrees Celsius above pre-industrial levels.

Our target is to become a net-zero emissions energy business by 2050. We also have short-, medium- and long-term targets to reduce our carbon intensity, measured using our net carbon intensity metric. We believe these targets are aligned with a 1.5°C pathway derived from the scenarios used in the IPCC Special Report on Global Warming of 1.5°C, most of which show the global energy system reaching net zero between 2040 and 2060.

Becoming a net-zero emissions energy business means that we are reducing emissions from our operations and from the fuels and other energy products, such as electricity, that we sell to our customers. It also means capturing and storing any remaining emissions using technology, protecting natural carbon sinks and providing high-quality carbon credits to our customers to compensate for hard-to-abate emissions.

We follow the Greenhouse Gas Protocol’s Corporate Accounting and Reporting Standard, which defines three scopes of greenhouse gas emissions:

• Scope 1: direct greenhouse gas emissions from sources under Shell’s operational control.
• Scope 2: indirect greenhouse gas emissions from the generation of purchased energy consumed by Shell assets under operational control.
• Scope 3: other indirect greenhouse gas emissions, including emissions associated with the use of energy products sold by Shell.

Scope 3 emissions from the energy products we sell account for most of the total emissions we report.

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 2016 levels on a net basis (including carbon credits).

We have also established remuneration policies which are designed to support us in achieving our short-term climate targets.

Read more about our climate targets at www.shell.com/energy-and-innovation/the-energy-future/what-is-shells-net-carbon-footprint-ambition/faq.html and in our 2022 Annual Report and 2022 Energy Transition Progress Report.

Assessing climate-related risks

Shell has identified climate change and the associated energy transition as a material risk. The risk could potentially result in changes to the demand for our products, our operational costs, supply chains, markets, the regulatory environment, our licence to operate and litigation.

As Shell has operations both onshore and offshore, the potential physical impacts of climate change are important for us to manage. We take climate variability into consideration in the design and operation of our assets and infrastructure to minimise the risk of adverse incidents to our employees and contractors, the communities where we operate, our equipment and infrastructure.

Projects under development that are expected to have a material greenhouse gas impact must meet our internal carbon performance standards or industry benchmarks. Our performance standards are used for measuring a project’s average lifetime greenhouse gas intensity or energy efficiency per asset type. Applying these criteria ensures that our projects can compete and prosper in the energy transition. An exception process is in place to manage specific incidental cases.

Read more about Shell’s material climate-related risks and opportunities in our 2022 Annual Report.