Shell to accelerate net zero efforts with its Powering Progress strategy

shell net zero efforts

The Dutch oil major, Shell, announced this Thursday a new strategy that would accelerate its net zero efforts, particularly in its customer-facing business. The company also confirmed that its oil production peaked in 2019, and its emissions in 2019.

Starting on this day, Shell established a new strategy for growth called: Powering Progress, specifically dedicated to generating shareholder value, achieving net zero emissions, powering lives and businesses, and respecting nature. Consequently, such strategy will have three pillars: Growth, Transition and Upstream.

Firstly, the company will concentrate on financial resilience and financial growth through disciplined capital allocation. Some of the points of the strategy are: reducing net debt to $65 billion; increasing dividend per share around 4% a year.

Also, the company expects, in the near term, to “maintain underlying operating expenses of no higher than $35 billion; and pursue divestments averaging $4 billion a year.” Shell also underlines that: “Over time the balance of capital spending will shift towards the businesses in the Growth pillar; attracting around half of the additional capital spend.”

Secondly, the Powering Progress strategy will focus on achieving new net zero goals by 2050. The new approach intends to cover the emissions from Shell’s operations and the emissions generated by the products the company sells, that includes the emissions others produce.

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Shell to collaborate with Science Based Targets Initiative to achieve net zero

Therefore, the company has set a new range of targets to reduce their carbon intensity. This include access to additional 25 million tons a year of carbon capture capacity by 2035. Currently, Shell’s capacity in CCS spans around 4,5 million tons of capacity, with projects Quest in Canada, Northern Lights in Norway and Porthos in Netherlands.

In addition, shell with collaborate with the Science Based Targets Initiative; Transition Pathway Initiative to develop a strict standard of decarbonization and net zero goals. Such plan will be updated three years.

Finally, in regards to the upstream shell announces that it will “continue to deliver vital energy supplies; which will also help to generate the cash and returns needed to fund shareholder distributions while accelerating investment in the growth businesses to capture new market opportunities.”

In conclusion, Shell’s new approach will rebalance its portfolio with annual investments of $3 billion in marketing; also $2-3 billion for renewables; $4 billion for integrated gas, and other $4 billion for chemicals and products. And finally, $8 billion for the upstream plan.

“Whether our customers are motorists, households or businesses, we will use our global scale and trusted brand to grow in markets where demand for cleaner products and services is strongest; also delivering more predictable cash flows and generating higher returns,” concluded Ben van Beurden, CEO.

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