Chair’s message

Sir Andrew Mackenzie, Chair of Shell plc, outlines the company’s updated energy transition plans, three years after the launch of the Powering Progress strategy. Shell remains committed to becoming a net-zero emissions energy business by 2050. To measure progress, the company has set a new ambition to reduce customer emissions from the use of its oil products by 15-20% by 2030 compared with 2021 levels. In 2023, Shell reduced carbon emissions from its operations by 31% compared with 2016, and achieved its short-term target to reduce the net carbon intensity of sold energy products by 6.3%.

CEO introduction

Chief Executive Officer Wael Sawan emphasizes a “more value, less emissions” approach. By the end of 2023, Shell achieved more than 60% of its target to halve operational emissions by 2030. The company continues to lead in reducing methane emissions, keeping intensity well below 0.2%. Shell invested $5.6 billion in low-carbon solutions in 2023, representing 23% of its total capital spending. The strategy involves growing the world-leading liquefied natural gas (LNG) business with lower carbon intensity while reducing emissions from oil and gas production.

Strategy and progress: summary

Shell’s strategy is informed by key beliefs, including the necessity of a balanced transition away from fossil fuels to maintain secure energy supplies. The company aims to lead in the decarbonisation of transport, specifically through biofuels and electric vehicle (EV) charging. By 2023, total methane emissions were reduced by 70% compared with 2016 levels. Shell is investing between $10 billion and $15 billion in low-carbon energy solutions between 2023 and the end of 2025.

The energy system: our beliefs

Fossil fuels currently meet approximately 80% of global primary energy demand. Shell believes that investment in oil and gas remains necessary because demand is expected to drop at a slower rate than the 4-5% natural decline rate of existing fields. LNG is projected to play a critical role in replacing coal in heavy industry and power generation. The company expects the number of electric vehicles on the road to reach up to 275 million by 2030, which will significantly influence future oil demand.

Shell’s strategy to 2030

The strategy to 2030 focuses on three core pillars: Leading Integrated Gas, Advantaged Upstream, and Differentiated Downstream, Renewables and Energy Solutions. Integrated Gas plans to grow the LNG business by 20-30% by 2030 compared with 2022. Upstream aims to keep oil production stable at 1.4 million barrels per day through 2030 while cutting production emissions. The Downstream segment is transforming to offer more low-carbon solutions, such as sustainable aviation fuel (SAF) and hydrogen, while reducing sales of traditional oil products.

More value, less emissions: our actions

Operational actions include the use of artificial intelligence to reduce emissions at LNG plants and the construction of Holland Hydrogen 1, which will be one of Europe’s largest renewable hydrogen plants. Shell is expanding its public EV charging network, aiming for 200,000 charge points by 2030. The company is also a leader in biofuels, with its Raízen joint venture in Brazil being a top producer of sugar-cane ethanol. Carbon capture and storage (CCS) is a priority, with the Quest facility in Canada having stored over 8.8 million tonnes of CO2 since 2015.

Targets, ambitions and performance

Shell has set rigorous targets: halving Scope 1 and 2 emissions by 2030, eliminating routine flaring by 2025, and maintaining methane intensity below 0.2%. The company has updated its net carbon intensity target to a 15-20% reduction by 2030 compared with 2016, following a strategic shift to prioritise value over volume in its power business. Acknowledging transition uncertainties, Shell has retired its 2035 target of a 45% reduction in net carbon intensity.

Shell net zero by 2050

Shell remains committed to becoming a net-zero emissions business across all its operations and energy products by 2050. This involves changing the product mix to include more low-carbon molecules and renewable power, alongside scaling up carbon removal and abatement businesses such as direct air capture.

Just transition and governance

Shell aims to contribute to a just transition by addressing social impacts, such as closing the energy access gap. The company has pledged $200 million to help millions in underserved communities gain access to electricity. Governance is integrated through a carbon management framework, and remuneration is linked to energy transition performance, with a 15% weighting in the annual bonus scorecard for 2023.

Climate litigation

Shell is appealing a 2021 decision by the District Court of The Hague that ordered the company to reduce its worldwide aggregate carbon emissions by 45% by 2030. Shell believes the ruling is counterproductive as it focuses on supply rather than demand. The appeal is scheduled to be heard in April 2024.

Climate standards and benchmarks

Shell engages with various ESG rating agencies and climate initiatives. In 2023, the company received a score of “AA” from MSCI and was one of only eight oil and gas companies rated as “aligning” with net zero by ISS ESG. Shell continues to support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).