Royal Dutch Shell commits to net-zero emissions by 2050
One of the world's largest emitters, Royal Dutch Shell, is set to announce plans to become a net-zero emissions business by 2050 at the latest at its Responsible Investment Annual Briefing today (16 April).
Shell has confirmed its intention to align its energy business with the net-zero trajectory of the Paris Agreement to limit global heating to a 1.5C increase. The energy giant’s net-zero plans will cover scope one, two and three emissions.
Specifically, Shell will aim to deliver net-zero emissions from the manufacture of all of its products (covering scope one and two) by 2050. However, the company has said that this ambition could be reached sooner.
Shell, which is the seventh-largest corporate emitter of carbon dioxide equivalent in the world, is also reducing the net carbon footprint of the energy products it sells to customers. Shell is targeting a 65% reduction in emissions across those products by 2050, with an interim target of 30% set for 2035.
“With the COVID-19 pandemic having a serious impact on people’s health and our economies, these are extraordinary times. Yet even at this time of immediate challenge, we must also maintain the focus on the long term,” Shell’s chief executive Ben van Beurden said.
“Society’s expectations have shifted quickly in the debate around climate change. Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner. Society, and our customers, expect nothing less.”
Shell has also announced its intention to “pivot” towards servicing sectors and businesses that are also net-zero emissions by 2050.
While Shell makes no mention of offsetting in the current ambition, the company has already committed to spending £10m over the next year to offset the emissions from customers’ fuel purchases at more than 1,000 service stations in the UK.
The net-zero target is an increase in the goals that Shell announced in 2017. Shell was previously aiming to reduce its net-carbon footprint of energy products by around half by 2050, and by around 20% by 2035.
Campaigners have been vocal about the fossil fuel industry and it’s perceived inability to function as part of a net-zero economy. Groups such as BP Or Not BP and Culture Unsustained have lobbied for organisations to end commercial deals with fossil fuel companies. Greenpeace has also been campaigning for arts and cultural institutions to cut ties with oil and gas firms.
The National Theatre, for example, ended its corporate membership deal with Shell, following climate protests calling on arts and culture bodies to cut ties with fossil fuel firms.
Shell has slowly been ramping up sustainability efforts, following engagement with NGOs and stakeholders.
In December, Shell confirmed that is was linking the interest and fees paid on its new $10bn (£7.5bn) revolving credit facility to progress against its carbon targets, but it remains unclear if this will be updated to support the net-zero target. The move was the first of its kind in the history of the oil and gas major and comes after Shell began linking the pay of its 150 most senior executives with progress against its carbon targets, following pressure from investors.
The announcement comes following a report from thinktank Carbon Tracker, which warned that 46% of global coal plants will be running at a loss in 2020, rising to 52% by 2030. Early reaction from investors and stakeholders has been positive.
Peter Ferket, chief investment officer of Robeco, Co-lead as part of the Climate Action 100+ dialogue with Shell, said: “These new ambitions build on the 2018 joint statement between Shell and Climate Action 100+. It proves that the strong and committed engagement of institutional investors with Shell can help accelerate the pace of change to deliver the goals of the Paris Agreement. It raises the bar and sets out an approach for others in the oil and gas sector to follow.”
“This announcement significantly increases Shell’s ambitions and commitments,” the Church of England Pensions Board’s board director of ethics and engagement and board member of the Institutional Investors Group on Climate Change Adam Matthews said.
“It is indicative of Shell’s confidence in not only navigating the immediate situation but rightly sets the focus on developing net-zero pathways in key sectors that shape the demand for energy. Ultimately, it will be by developing and supporting net-zero pathways in these sectors that we will achieve the goals of the Paris Agreement.”