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Shell on 20 April released its first report on its progress towards
the aim to "become a net-zero emissions energy business by
2050."
The report said that by the end of 2021 the company had reduced
the net carbon intensity of the energy products it sells by 2-3%,
and it is aiming for a 100% reduction by 2050.
Shell set a net-zero goal in 2020, and the report charts
progress in pursuing it through a strategy agreed to by
shareholders last May.
The court noted that Shell didn't have a 2030 emissions target
and found its emissions policies were "intangible, undefined and
non-binding plans for the long-term," according to US law firm Cleary
Gottlieb.
Shell has since filed an appeal, but appears to have taken the
message on board, offering a new absolute operational emissions
reduction target of 50% by 2030 below 2016 levels in October. This
target would not only halve emissions from its operations (Scope 1)
but also for the energy bought to run them (Scope 2). The company
said it had already reached an 18% reduction in its progress
report.
Shell also announced it would move its
headquarters from the Netherlands to the UK in November 2022 for
reasons of share structure simplification.
But it said the relocation would not affect its compliance with
the Dutch court decision. Its projects and technology division,
global upstream, and integrated gas businesses and renewable
energies hub remain in the Netherlands.
The company also must contend with shareholder pressures. Ahead
of a planned Annual General Meeting this week, directors resisted a resolution by
shareholder activist group Follow This that Shell set targets to
reach net-zero on Scope 3 by 2050. No oil company has such targets,
Follow This said.
Shell's directors called such targets
"unrealistic interim targets that are harmful to the company's
energy transition strategy and against good governance."
Shell's strategy for reaching its existing targets focuses on
heavily investing in new product areas.
For example, it operates 44,000 retail service stations in 75
countries, some of which, for example in the US, it may shift to EV and
hydrogen.
But in its progress report, Shell suggested it would find it
difficult to reach certain targets it was being asked to reach
unless governments "put in place the policies that bring about
fundamental changes in the way society consumes energy, for example
by mandating the sale of cars that run on low-carbon energy."
Hydrogen ramps up
In the progress report, Shell outlined investments in low-carbon
fuel production, solar power, wind power, and hydrogen in 2021 and
early this year.
Its hydrogen investment areas include not only production, but
also its storage and shipping, facilitating delivery to the road
freight, steel and cement sectors.
Industrial hydrogen supply is a focus area for Shell's R&D
efforts. "Our scientists are developing new ways to store hydrogen
safely, including underground, for example, which will be critical
to ensure secure, large-scale supplies of hydrogen to our
industrial customers in the future," Shell said.
For hydrogen production, Shell has increased its capacity from 2
MW to 30 MW of electrolyzers, which it said represented 10% of
global capacity. The bulk of this capacity came from its joint
venture that built a 20-MW electrolyzer in Zhangjiakou, China, that
supplied wind-powered green
hydrogen for fuel cell vehicles during February's Winter
Olympics.
The company's EU-funded 10-MW electrolyzer in Rheinland, Germany
started up in July 2021 and
will supply mobility and industrial customers. It is sited near
Shell's planned sustainable aviation fuel (SAF) facility. Shell
will seek investment enabling the Rheinland electrolyzer to expand
100 MW amid plans to decide to invest in at least 300 MW of
capacity globally by the end of 2022.
It has also increased hydrogen vehicle refueling sites in
Europe, North America, and China, reaching 50 hydrogen refueling
stations in Europe and North America by the end of last year. It
also has a stake in the H2 mobility joint venture that operates 90
hydrogen refueling stations in Germany.
Shell in the report pledged to reduce customers' emissions by
offering them carbon offsets and carbon capture and storage (CCS)
services that will mitigate the emissions created through the use
of its other products.
Shell also wants to develop CCS to meet the new target to reduce
its own operational emissions.
"Shell's ambition is to work with governments, customers, and
partners to unlock the potential for CCS to reduce emissions where
there are no currently scalable low-carbon alternatives," it said,
adding it is banking on a dramatic growth in markets for carbon
credits.
Beyond those facilities, the company said it has at least 10 CCS
projects under development, with a plan to increase capacity
25-fold by 2035. This includes the Northern Lights project in
Norway.
Six projects that use Shell's CANSOLV CO2 system in the UK and
the USA not only to capture post-combustion emissions from the
refining, chemicals, and power sectors, but also to help produce
pure CO2 to be sold on and re-used.
Low carbon fuel and electricity
In 2021, Shell also made progress in other low- and zero-carbon
products areas such as renewable electricity, biofuels, and
chemicals, according to the report.
While it failed in its goal to expand from 26 to 50 bio-LNG
refueling sites in Europe as promised, the company said it was
installing such stations.
In further European expansion, Shell said it plans to build a
facility to produce sustainable aviation fuel and renewable diesel
from waste near Rotterdam Port in the Netherlands.
Shell says it expects a third of its total capital spending to
go towards low-carbon projects in 2022, rising to a half in
2023.
Shell did achieve a 2021 target to invest $2-$3 billion in
renewable products and energy.
It has 4.7 GW of renewable generation capacity in operation,
under construction, and/or committed for sale. Its rival BP said it
had 4.4 GW developed at the end of
2021.
Posted 22 April 2022 by Cristina Brooks, Senior Journalist, Climate and Sustainability
This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.