Environmentally-minded investor groups have commended Anglo-Dutch oil and gas major Shell for committing to cut emissions to net-zero by 2050 or even sooner.
Royal Dutch Shell on Thursday (16 April) announced what investors said was the oil industry’s most extensive strategy yet to reduce greenhouse gas emissions.
“We aim to be a net-zero emissions energy business by 2050 or sooner,” said Ben van Beurden, Shell’s chief executive.
This is in line with the European Union’s objective of becoming the world’s first climate-neutral continent in the world by 2050.
Van Beurden told investors the coronavirus crisis would not distract him from steering the company’s shift to low-carbon energy as Shell braces for “a complete overhaul” over the next 30 years.
The move includes:
- A commitment to reach net-zero emissions from the manufacture of all of Shell’s products (so-called Scope 1 and 2 emissions) by 2050;
- Reducing the net carbon footprint of the energy products Shell sells to its customers by around 65% by 2050 and by around 30% by 2035.
- The remainder would be offset with emission reduction credits obtained from reforestation projects and other green activities.
The announcement doesn’t cover the much larger category of greenhouse gases emitted from burning the fuels Shell sells to its customers, known as Scope 3.
However, Shell said it will “pivot towards serving businesses and sectors that by 2050 are also net-zero emissions”. This means absolute emissions, including Scope 3, should be fully offset.
By 2050 we aim to be a net-zero emissions energy business across scope 1, 2 and 3, in line with society. We aim to do this in 3 interrelated ways.
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— Shell (@Shell) April 16, 2020
Green investor groups lauded Shell’s move, describing it as the most far-reaching commitment yet by any oil and gas company.
“Investors will now look to other energy companies to match, and build on, the welcome ambition Shell is showing,” said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change (IIGCC), which has over €30 trillion assets under management.
“It’s imperative we see companies across the entire oil and gas sector put strategies in place to achieve net zero emission if we are to tackle climate change. This applies to the fuels and products companies sell, as well as emissions from operations,” Pfeifer added.
Shell’s move follows a similar announcement by British oil giant BP, which set an objective in February to “reduce and neutralise the carbon in the oil and gas” that the company extracts.
European oil and gas majors are seen as global leaders in the energy transition, with investments in low-carbon technologies reaching up to 7% of their total expenditure, according to CDP, a financial watchdog.
Shell’s announcement came on the back of pressure by the Climate Action 100+, a group of investors led by the Church of England Pension Board, which has more than $40 trillion in assets.
The group said they will continue to engage with Shell “to ensure it fully aligns its business with the goals of the Paris Agreement and achieves net-zero emissions across its entire value chain.”
[Edited by Benjamin Fox]