Delivering our climate targets
Investing in the energy transition
We help provide energy security while investing in the energy transition.
In 2023, we invested $7.9 billion in low-carbon energy and non-energy products, around a third of our total cash capital expenditure [A] of $24.4 billion. Of this, we invested $5.6 billion in low-carbon energy solutions including biofuels, hydrogen, charging for electric vehicles, wind and solar power, an increase of 30% compared with the previous year. This was mainly due to the acquisition of Nature Energy and the roll-out of electric vehicle charging. The remaining $2.3 billion was invested in non-energy products such as chemicals, lubricants and convenience retail. Our investment in non-energy products decreased by 41% compared with 2022 due to the completion of Shell Polymers Monaca in 2022 and greater inorganic expansion in our lubricants and convenience retailing businesses in 2022.
[A] Non-GAAP financial measure. See Reconciliation of non-GAAP financial measures where non-GAAP reconciliation is provided.
Our strategy supports a balanced energy transition by responsibly delivering the oil and gas people need today, while helping to build the clean energy system of the future. We are prioritising slower-to-decarbonise sectors, namely transport and industry, where we believe we have the competitive strengths to provide our customers with the products they need through the transition. See our 2023 Annual Report to learn more about our investments in energy in 2023.
Investing in the energy transition
Total cash capital expenditure * of $24.4 billion in 2023
$2.3 billion
$5.6 billion
$4.0 billion
$12.5 billion
- [A]Products for which usage does not cause Scope 3, Category 11 emissions: Lubricants, Chemicals, Convenience Retailing, Agriculture & Forestry, Construction & Road.
- [B]E-Mobility and Electric Vehicle Charging Services, Low-Carbon Fuels, Renewable Power Generation, Environmental Solutions, Hydrogen, CCS. We define low-carbon energy products as those that have an average carbon intensity that is lower than conventional hydrocarbon products, assessed on a life-cycle basis.
- [C]LNG Production & Trading, Gas & Power Trading, and Energy Marketing.
- [D]Upstream segment, GTL, Refining & Trading, Marketing fuel and hydrocarbon sales, Shell Ventures, Corporate segment.
- * Non-GAAP financial measure. See Reconciliation of non-GAAP financial measures where non-GAAP reconciliation is provided.
Absolute emissions reduction performance
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.
In 2023, our total combined Scope 1 and 2 absolute greenhouse gas emissions (from assets and activities under our operational control) were 57 million tonnes on a CO2 equivalent basis, a 2% reduction compared with 2022 and a 31% reduction compared with 2016, the base year for our target.
Our Scope 3 emissions associated with our energy product sales were 1,147 million tonnes of CO2 equivalent, compared with 1,174 million tonnes of CO2 equivalent in 2022.
In March 2024, we set an ambition to reduce customer emissions related to 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, which are among the most progressive in the world. Read more about our climate targets in our Energy Transition Strategy 2024.
[B] 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.
Scope 1 and 2 emissions under operational control
Million tonnes CO2e
[B] Greenhouse gas emissions for 2023 were calculated using global warming potential (GWP) factors from the IPCC Fifth Assessment Report. Data from previous years were calculated using GWP factors from the IPCC Fourth Assessment Report. For comparison, our Scope 1 emissions would still have been 50 million tonnes in 2023 if we were to use GWPs from the IPCC Fourth Assessment Report.
[C] Greenhouse gas emissions in this table do not include carbon credits.
[D] We estimated the uncertainty of our 2023 Scope 2 greenhouse gas emissions from the market-based method to be around 8%.
We undertake external verification of our greenhouse gas emissions annually. Our Scope 1 and 2 greenhouse gas emissions from assets and activities under our operational control and the emissions associated with the use of our energy products (Scope 3) included in our net carbon intensity have been verified to a level of limited assurance by LRQA. Limited assurance means nothing has come to the verifier’s attention that would indicate the greenhouse gas data and information, as presented in the Greenhouse Gas Statement/Assertion, were not materially correct.
Read our most recent assurance statements at www.shell.com/ghg.
Net carbon intensity
Our target is to reduce the net carbon intensity of the energy products we sell by the following amounts: 9–12% by 2024, 9–13% by 2025, 15–20% by 2030 and 100% by 2050. We use net carbon intensity to track our progress in reducing the overall carbon intensity of the energy products sold by Shell. Net carbon intensity 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 net carbon intensity 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.
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 net carbon intensity target.
As a result, we are now targeting a 15–20% reduction in the net carbon intensity of the energy products we sell by 2030, compared with 2016, against 20% previously. Read more about our climate targets in our Energy Transition Strategy 2024.
Shell’s net carbon intensity is the average intensity, weighted by sales volume, of the energy products sold by Shell. It is tracked, measured and reported using the Net Carbon Footprint methodology. We express our net carbon intensity as the grams of CO2 equivalent per megajoule (gCO2e/MJ) produced for each unit of energy delivered to, and used by, a consumer.
In 2023, Shell’s net carbon intensity was 74 grams of carbon dioxide equivalent per megajoule of energy (gCO2e/MJ), a 2.6% decrease from the previous year and a 6.3% reduction compared with 2016, the base year. The decrease in our net carbon intensity in 2023 was mainly achieved through a reduction in the average intensity of power sold and the use of carbon credits. The power intensity reduction was driven mainly by progress in grid decarbonisation in key markets such as the USA and Europe and partly by increased sales of renewable power including the retirement of renewable energy certificates.
Net carbon intensity [A] [B]
Grams of CO2 equivalent per megajoule (gCO2e/MJ)
[B] Acquisitions and divestments are included in the actual performance tracking with the target and baseline year unchanged. Acquisitions and divestments could have a material impact on meeting the targets.
The carbon credits we retired in 2023 amounted to 20 million tonnes of emission offsets, compared with 4.1 million tonnes that were included in our 2022 net carbon intensity. Of the carbon credit retirements included in Shell's net carbon intensity metric for 2023, 85% were certified by Verra, 9% by the American Carbon registry, 6% by Gold Standard, and less than 1% via Australian Carbon Credit Units.
We undertake external verification of our net carbon intensity annually, and we have received third-party limited assurance on our net carbon intensity for the period 2016 to 2023 by LRQA. Limited assurance means nothing has come to the verifier’s attention that would indicate the net carbon intensity data and information, as presented in the Net Carbon Intensity Assertion, were not materially correct.
Read more about our Net Carbon Footprint methodology in our 2023 Annual Report and at www.shell.com/ncf.
