Shell cites net-zero as reason for moving base from the Netherlands to the UK
Royal Dutch Shell is planning to simplify its share structure and move its tax residence and head office to the UK, in a move it claims will help it to "accelerate" its net-zero plans.
The oil and gas major announced the proposals on Monday (15 November) and they will be put to a shareholder vote next month. If the vote goes as planned, the firm will shift from a dual to a single-line share structure and align its tax residence with the UK.
Royal Dutch Shell, which plans to rebrand as just ‘Shell’ if the move goes ahead, has stated that its proposals would “strengthen its ability to rise to the challenges posed by the energy transition” and enable it to “accelerate the delivery” of its net-zero strategy.
First announced in April 2020, Shell’s 2050 net-zero strategy has been the subject of much scrutiny.
Unlike many other energy majors, Shell has time-bound, numerical targets to reduce Scope 3 (indirect) emissions from the end-use of energy products by customers. Shell is targeting a 65% reduction in emissions across those products by 2050, with an interim target of 30% set for 2035.
The strategy is also headlined by an assertion that Shell’s total annual emissions will never be higher than they were in 2018 and that its total oil production will never be higher than 2019 levels. All in all, it is hoping to reduce the production of what it calls “traditional fuels” by 55% by 2030. Oil production will decline by around 1-2% each year.
Nonetheless, Shell has been told by bodies including the Hague District Court that the plans are not – as it claims – aligned with a 1.5C temperature pathway. The firm is notably planning to appeal the court’s ruling. A shareholder resolution was proposed this spring for stronger climate targets, but it was ultimately blocked.
Aside from the decarbonisation-related motivators for the proposed move, the chair of the Shell board, Sir Andrew Mackenzie, has stated that it will make it “simpler for investors to understand value” and boost competitiveness.
The UK was notably ranked the world’s fifth most attractive investment market for renewable energy by EY in October. EY also stated that the UK’s attractiveness is likely to improve in the next six months, following policy changes such as the Hydrogen Strategy and the formalization of a commitment to end electricity generation from unabated fossil fuels by 2035. The Netherlands, meanwhile, took ninth place in the EY ranking, as it failed to meet its EU targets for domestic production.
As is to be expected, the UK Government is framing the proposals as a boost for the British economy and a sign that Shell views its net-zero plans as credible.
Business Secretary Kwasi Kwarteng took to Twitter to call the “welcome news” a “clear vote of confidence in the British economy as we work to strengthen competitiveness, attract investment and create jobs”.
The Dutch Government, however, is quoted in Reuters as calling the decision an “unwelcome surprise”. The Netherlands’ 2019 Climate Act states that national emissions should be reduced by 49% by 2030 and 95% by 2050, against a 1990 baseline. There is also an interim target to deliver a 25% reduction between 1990 and 2025.
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