Our journey to net zero

Shell recognises that greenhouse gas emissions from our operations as well as the use of hydrocarbon-based energy contribute to climate change. The Paris Agreement aims to strengthen the global response to the threat of climate change by "holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above preindustrial levels". 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°C above pre-industrial levels.

Our target is to become a net-zero emissions energy business by 2050. To help us get there, we have set short-, medium- and long-term targets to reduce the carbon intensity of the energy products we sell, measured using our net carbon intensity metric. We believe these targets are aligned with a 1.5°C pathway derived from scenarios developed for the IPCC’s Sixth Assessment (AR6) Report.

Becoming a net-zero emissions energy business means 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; and
• 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. By the end of 2023, we had achieved more than 60% of our target (see Delivering our climate targets).

We have also established remuneration policies which are designed to support our short-term climate targets (see Remuneration).

In March 2024, we published our Energy Transition Strategy 2024, in which we take stock of our progress since launching our Powering Progress strategy in 2021 and look forward as we transform Shell into a net-zero emissions energy business by 2050.

We are also working with governments on their climate policies to help establish regulatory frameworks that will enable society to reach the goals of the Paris Agreement. In March 2024, we updated our global climate and energy transition policy positions. By advocating these positions as we transform our business, we believe we are supporting both the energy transition and the Paris Agreement.

We signed up to the Oil and Gas Decarbonization Charter announced at COP28 in 2023, within which organisations have pledged to achieve near-zero methane emissions by 2030 and zero routine flaring by no later than 2030. We also intend to contribute to the World Bank’s Global Flaring and Methane Reduction Fund, which was launched at COP28.

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 2023 Annual Report and Energy Transition Strategy 2024.

Supporting our customers

Emissions resulting from customer use of our energy products make up the largest percentage of Shell’s carbon emissions. We believe we can make the greatest contribution to the energy transition by helping to enable our customers to switch to low-carbon energy products and services. This is reflected in our strategy to develop a portfolio that seeks to:

• develop low- and zero-carbon alternatives to traditional fuels, including biofuels, hydrogen and other low- and zero-carbon gases;
• provide more electricity to customers, while also driving a shift to renewable electricity;
• work with customers across different sectors to help them decarbonise their use of energy, for example by substituting the use of coal with liquefied natural gas; and
• address any remaining emissions from conventional fuels with solutions such as carbon capture and storage and carbon credits.

Assessing climate-related risks and opportunities

Shell has identified climate change and the associated energy transition as a material risk based on societal concerns and developments related to climate change and managing greenhouse gas emissions. The risks could potentially result in changes to the demand for our products, supply chains and markets, and in further changes to the regulatory environment in which we operate.

Overall, we mitigate climate-related risks through our Powering Progress strategy to deliver more value with less emissions. With our focus on performance, discipline and simplification, we believe that we are in a better position to achieve both our financial and climate-related targets and ambitions. This approach includes:

• reducing the greenhouse gas emissions from our operations (Scope 1 and 2) by improving our energy efficiency, deploying renewable electricity, managing flaring and reducing methane emissions from our assets and projects;
• growing our world-leading liquefied natural gas (LNG) business while decarbonising our LNG portfolio in two main ways: by growing our portfolio with a lower carbon intensity, and by focusing on reducing methane emissions;
• managing our Upstream portfolio by cutting emissions from oil and gas production, while keeping oil production stable. Oil production is increasingly from our deep-water business which, through innovation, produces higher-margin and lower-carbon barrels; and
• transforming our businesses in Downstream and Renewables and Energy Solutions to offer low-carbon solutions while reducing sales of oil products.

In addition, we are working to effectively adapt our assets and activities to enhance our resilience to the physical risks related to climate change where needed.

The transition to a low-carbon economy also brings significant opportunities. As the global energy mix changes, our current infrastructure, know-how and global footprint put us in an ideal position to service the changing energy demands of the market. As we work to deliver more value with less emissions, we are focusing on natural gas, particularly LNG; continuing the transformation of select integrated refineries into energy and chemicals parks; biofuels; and developing low-carbon products and solutions for our customers.

Read more about Shell’s material climate-related risks and opportunities in our 2023 Annual Report.