Shell waters down its climate change targets

Energy giant faces backlash as it doubles down on fossil fuels

SHELL yesterday watered down its green targets and said the world will have to keep investing in oil and gas for decades to come.

The Ftse 100 energy giant scaled back its carbon reduction goal for 2030 and has ditched a further target for 2035.

It is the latest evidence that shell, whose boss Wael sawan took over last year, is rethinking how the company can achieve its net zero ambitions amid uncertainty about the transition to green energy.

But it was criticised by environmental campaigners amid complaints that the £163bn company was already not doing enough in the battle against climate change.

Shell’s argument is that investment in green energy such as wind farms is not happening quickly enough to meet growing global demand while fossil fuel energy sources are being lost.

It said it continues to target net zero emissions, supporting a ‘ balanced and orderly transition... to lowcarbon energy solutions’.

Sawan said that its strategy ‘makes it more, not less, likely that we will achieve our climate targets’.

It comes after the chief executive announced last year that shell would stop shrinking its oil production and would be ramping up its natural gas manufacturing.

Rival BP is moving in a similar direction, and has decided to row back on its own emission reduction targets.

The moves come amid investor pressure on the two companies to boost returns.

Shell’s position was announced as part of an annual update on its energy transition strategy, focused on a measure of ‘carbon intensity’.

That measures carbon emissions as a proportion of all the energy that the company sells, allowing the impact of fossil fuel output to be offset by other parts of the business – such as renewable energy.

Shell will aim to cut its carbon intensity by 15pc to 20pc by 2030 compared with 2016 levels, having previously aimed for 20pc. a target to reduce it by 45pc by 2035 was scrapped.

Sawan said the 2035 goal was ‘perilous’ because ‘ there is too much uncertainty at the moment in the energy transition’.

Shell plans to ramp up gas production in the belief that it will play a critical role in the energy transition, being preferable to coal for use in heavy industry and power generation

Another key factor in the target being watered down is that shell expects growth in its sales of power, including from renewable sources, to slow.

Its broader analysis has concluded that not enough money is being invested in renewable energy.

At around £1.3trillion a year, it falls short of the £2.3trillion to £3.1trillion needed to reach net zero by 2050, it said, adding: ‘significant investment will be required to keep supplying oil and gas while low-carbon alternatives are developed and made commercially available.

‘This continued investment is needed because demand for oil and gas is expected to drop at a slower rate than the natural decline of the world’s oil and gas fields, which is at 4pc to 5pc a year.’

The plans come as shell is facing legal challenges over its climate strategy.

It is appealing against a dutch court ruling that ordered it to cut its emissions faster.

Mark van Baal, founder of the activist shareholder group Follow this, said that ‘ with this backtrack, shell bets on the failure of the Paris climate agreement which requires almost halving emissions this decade’.

But neil Wilson, the chief market analyst at Markets, said that shell’s move ‘ seems sensible’ and that it was emissions from china and india that were the main problem.

‘time to ditch all of this net zero crap,’ said Wilson.