On Track for Net-Zero Emissions by 2050

The famous yellow and red of Shell, adorned across energy infrastructure around the world, is perhaps the most recognisable brand in the history of the energy industry. Hailed as an innovator and reliable supplier of liquid fuels for decades, the company was known for world-leading oil, petroleum, and associated chemical products. Where you saw the yellow and red scallop, you knew a premium range was close. 

But changes in the world have forced Shell into a fresh manoeuvre. As a globally relevant business, the requirement for addressing climate change, global warming, pollution, and human impact on the planet has ramped up significantly.

Pressure from shareholders, governments, and customers has seen a strategy shift within Shell. Prioritising renewable energy for the future, and transitioning away from traditional oil and gas, the company is refocusing while ensuring continued value creation. Now, the yellow and red pecten conjures the image of a brand that is integrated, diversified, and active in change.

In September 2022, Ben van Beurden stepped down as Shell CEO, and Wael Sawan former-Director Integrated Gas, Renewables and Energy Solutions took over. Perhaps a symbol from the business around its future intentions, bringing in an executive from a renewables background.

“We want to be a net-zero emissions energy business by 2050,” highlights Sawan.

Employing multiple strategies, the group is looking to reduce its emissions which have been mapped using the Greenhouse Gas Protocol – a globally recognised accounting standard for measuring emissions. Scope 1, 2 and 3 emissions are problematic, and drivers of climate change, and Shell produces a lot. But the company is reducing its emissions across all areas, with Sawan driving ambitious targets for the coming years.

In 2020, before Sawan took over at the top, the company was busy in the UK market, completing a power purchase agreement (PPA) to supply households with energy from the Dogger Bank wind farm. This power generation monster is located off the coast of Yorkshire and is the world’s largest, with a capacity of 2400MW. Shell’s offtake agreement saw it deploying 480MW.

“Offshore wind will play a key role in the UK’s transition to a low-carbon future,” said Rupen Tanna, Director at Shell Energy Europe. “Power is a growth priority for Shell. This long-term agreement will enable us to supply more clean power to our customers, while supporting the development of one of the most ambitious renewable power projects in the world.”

Shell was forced to exit the retail energy markets in the UK, Germany, and the Netherlands due to poor returns. But the company’s focus and strategy around renewable energy did not change. “We continue to look at opportunities to invest in offshore wind generation, including innovative wind technologies such as floating wind,” the company states.

RENEWABLE GAS

Adding further diversity to the portfolio, Shell has made acquisitions that have bolstered its exposure to multiple alternative energies. In August 2022, the company announced completion of its acquisition of Sprng Energy, a solar and wind supplier to distribution companies in India. With significant GW under management, and more in the pipeline, the company was a perfect fit for Shell as it tripled its renewable capacity.

“This deal positions Shell as one of the first movers in building a truly integrated energy transition business in India,” said Sawan at the time. “I believe it will enable Shell to become a leader across the power value chain in a rapidly growing market where electrification on a massive scale and strong demand for renewables are driving the energy transition. Sprng Energy generates cash, has an excellent team, strong and proven development track record and a healthy growth pipeline. Sprng Energy’s strengths can combine with Shell India’s thriving customer-facing gas and downstream businesses to create even more opportunities for growth.”

Shell had more than 11,000 employees in India in March 2023 and it expects to boom with more equipment and revenue coming from India in the next five years.

In February 2023, the acquisition of Nature Energy was finalised. This Danish producer of renewable natural gas from waste appealed to Shell because of its remarkable infrastructure and assets, and its value creation potential.

“Shell’s competitiveness in low carbon fuels derives from capabilities across the value chain, combining a world-class Trading and Supply organisation with access to differentiated technology and production assets,” said Huibert Vigeveno, Shell’s Downstream Director. “Acquiring Nature Energy will add a European production platform and growth pipeline to Shell’s existing RNG projects in the United States. We will use this acquisition to build an integrated RNG value chain at global scale, at a time when energy transition policies and customer preferences are signalling strong growth in demand in the years ahead.”

INNOVATION

At the same time, the company is taking a managed approach to the transition, not neglecting its customers demand for energy that powers life and keeps people out of poverty. Oil and gas will remain part of the global system for decades and Shell will remain an industry leader. In the UK, the company restarted its Pierce field, previously a major source of oil, upgraded to produce gas. The Haewene Brim FPSO was overhauled to produce 30,000 boe per day. Previously, gas had been reinjected into the reservoir, but a new subsea gas export pipeline, connecting into the SEGAL system, brings gas ashore near Aberdeen.

“The completion of this major project is testament to Shell’s long-standing commitment to the UK North Sea,” said Upstream Director, Zoe Yujnovich. “We took this investment decision in 2019, and it is now increasing locally produced gas right at the time when this additional supply is critically important for the UK’s energy security. It’s a source of huge satisfaction when projects like Pierce come to fruition.”

Wael Sawan will speak at ADIPEC – the world’s leading energy exhibition and conference – in Abu Dhabi in October and will make it clear that the challenge of climate change is one we must face together and one which requires innovation, but it is a challenge that can be overcome. “What is certain, is that we have to act together. Significant collaboration between government, industry, customers, and society as a whole is vital in transforming both supply and demand, sector by sector,” he says.

Confident and ambitious, Shell is on target to achieve net-zero emissions by 2050. Global policy positions are structured throughout the company and its subsidiaries, and the company continues to push others, including government, to advance all transitional activity as fast as possible.

“I’m looking forward to channelling the pioneering spirit and passion of our incredible people to rise to the immense challenges, and grasp the opportunities presented by the energy transition. We will be disciplined and value focused, as we work with our customers and partners to deliver the reliable, affordable and cleaner energy the world needs,” says Sawan, convinced that all in yellow and red, working together, can make changes and progress that shape the world of tomorrow for the better.