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Shell scales back 2030 emissions target

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Scraps 2035 target

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Introduces target to cut emissions from oil product sales

By Ron Bousso

LONDON, March 14 (Reuters) - Shell weakened its

2030 carbon reduction target and scrapped a 2035 objective,

citing expectations for lower power sales and strong demand for

gas in the energy transition even as it affirmed a plan to cut

emissions to net zero by 2050.

The changes to the targets are a central pillar in CEO Wael

Sawan's strategy revamp to focus on higher-margin projects,

steady oil output and growth in production of natural gas in

order to boost returns.

Rival BP made a similar move last year, rowing back on oil

production and emission reduction targets, in the face of

growing investor pressure on the companies to boost returns.

In an annual update on its energy transition strategy on

Thursday, Shell said it will target a 15-20% reduction in net

carbon intensity of its energy products by 2030 compared with

2016 intensity levels. It had previously aimed for a 20% cut.

Measuring emissions by intensity means a company can

technically increase its fossil fuel output and overall

emissions while using offsets or adding renewable energy or

biofuels to its product mix.

Shell said that it believed gas, and liquefied natural gas

in particular, will play a critical role in the energy

transition by replacing more polluting carbon in power plants.

At the same time, it expects its power sales, which include

renewable power, to be lower than previously forecast.

The company retired a previous target to reduce its carbon

intensity by 45% by 2035.

"In line with this shift to prioritising value over volume

in power, we will focus on select markets and segments. This

includes selling more power to commercial customers and less to

retail customers," Shell said.

"Given this focus on value, we expect lower total growth of

power sales to 2030, which has led to an update to our net

carbon intensity target."

Shell, however, also introduced a new "ambition" to cut

overall emissions from oil products such as gasoline and jet

fuel sold to customers by 15-20% by 2030 compared with 2021.

Shell also maintained its target to halve emissions from its

own operations, known as Scope 1 and 2 emissions, by 2030,

saying it had already achieved more than 60% of that target.

'BACKTRACK'

Mark van Baal, founder of activist shareholder group Follow This

which co-filed a climate resolution at Shell's upcoming annual

general meeting, said that "with this backtrack, Shell bets on

the failure of the Paris Climate Agreement which requires almost

halving emissions this decade".

Shell also faces legal challenges over its climate strategy and

is appealing against a landmark Dutch court ruling that ordered

it to cut its emissions faster.

As part of the strategy, Shell has started company-wide

staff reductions, including in its low-carbon solutions

division, in a drive to save up to $3 billion.

It has also sold its European power trading business, exited

offshore wind and low-carbon projects, put U.S. solar assets on

sale and placed its giant refining and petrochemical complex in

Singapore under review. It has also announced plans to shut down

a refinery in Germany and to exit Nigeria's troubled onshore oil

operations.

The company reported a net profit of $28 billion in 2023 on the

back of strong liquefied natural gas and oil sales, which were

still down 30% from the previous year's record earnings.