Royal Dutch Shell plc outlined its ambition to reduce the net carbon footprint of its energy products as well as setting out plans to grow returns and free cash flow in an update to investors on the company's strategy on Tuesday.
The company announced a net carbon footprint ambition covering not just emissions from its own operations but also those produced when using Shell products.
"Shell aims to cut the net carbon footprint of its energy products—expressed in grams of CO2 per megajoule consumed—by around half by 2050. As an interim step, by 2035, we aim to reduce it by around 20 per cent," said chief executive officer Ben van Beurden. "We will do this in step with society's drive to align with the Paris goals, and we will do it by reducing the net carbon footprint of the full range of Shell emissions, from our operations and from the consumption of our products."
The development of new energies as a future growth platform will accelerate and the company will increase the capital allocated to this business to $1 to $2 billion per year until 2020. Shell will continue to target opportunities in new fuels and power, two businesses adjacent to its downstream and gas businesses that play to Shell's existing strengths in brand and value-chain integration, the company said.
Integrated gas, conventional oil and gas, and oil products are currently cash engines; deep water and chemicals are growth priorities; shales and new energies are emerging opportunities. Illustrating the dynamic nature of the company's portfolio, the intention is for deep water to have become a cash engine by 2020, and shales to have become a growth priority by 2020.
Reducing net carbon footprint
Shell said it “positioned itself for the future” by unveiling its ambition to cut the net carbon footprint of its energy products by around half by 2050.
The company will measure its progress by disclosing the net carbon footprint not just from its operations and energy use, as it does now, but also from the use of its energy products, expressed in grams of CO2 per megajoule consumed and taking account of any emissions offset. This measure will be tracked over time, with reviews every five years to ensure Shell is progressing in line with societal progress toward the carbon footprint reduction required to meet the Paris goals.
"Tackling climate change is a cross-generational, global and multi-faceted effort," van Beurden said. "This is a challenge for the whole planet, for all of society, for customers, for governments and indeed for businesses. It will mean meeting increasing energy demand with an ever-lower carbon footprint. And it is critical that our ambition covers the full energy lifecycle from production to consumption. We are committed to play our part.”