Royal Dutch Shell has made one of the most significant carbon footprint commitments of any major fossil fuels-centric energy company to date, with a pledge to achieve net zero emissions by 2050. The FTSE 100 oil and gas major announced plans to cut or compensate all greenhouse gas emissions within 30 years, through an overhaul of its business that will see it transition to selling energy that is majority low or zero carbon.
The Anglo-Dutch group will not stop producing oil and gas but plans to achieve carbon neutrality through a combination of a shift towards renewable sources and only selling fossil fuels to buyers who neutralise any emissions caused by burning them. The result, said the pledge, would be Shell evolving into a “net-zero emissions energy business by 2050”, with its customers’ support.
Shell follows in the footsteps of London-listed rival BP, which made a similar commitment to achieve net carbon neutrality by 2050 back in February. Against the backdrop of plunging oil prices over the past two months, the result of a combination of a 30% drop in demand due to the Covid-19 pandemic and the recent price war between Saudi Arabia and Russia, a move towards less dependence on oil and gas revenues may also make strategic business sense.
Ben van Beurden, the company’s chief executive, commented that “even at a time of immediate challenge, we must also maintain the focus on the long term”. He added that in recent years a clear societal shift in expectations around climate change meant that the group was obliged to raise the bar on its ambitions for emissions targets.
Shell is Europe’s largest oil and gas company, followed by BP. It’s also the London Stock Exchange’s largest company by market capitalisation and last year generated profits of $15.3 billion.
Shell’s commitment, which is to reduce the net carbon footprint of all of the products it sells by 65%, is even bolder than BP’s earlier move to target the elimination of emissions resulting from oil and gas production and to halve the carbon intensity of sold products by 2050.
The most significant aspect of the pledge is arguably that Shell has promised to only sell fossil fuel products to “those segments of society that mitigate their emissions”. That is understood to mean customers such as airlines that offset their emissions or gas power plants that make use of sophisticated carbon capture technology.
The Church of England Pensions Board, which is a declared ‘ethical investor’ commented through co-chair Adam Matthews, that the commitment “reset the global benchmark”.