Shell has abandoned a key climate target for 2035 and weakened another goal for 2030, according to its latest “energy transition strategy”.
The oil major has “updated” its target to cut the total “net carbon intensity” of all the energy products it sells to customers – the emissions per unit of energy – by 20% between 2016 and 2030. The reduction is now set at between 15-20%.
Within Shell’s strategy, chief executive, Wael Sawan, writes that this change reflects “a strategic shift” to focus less on selling electricity, including renewable power.
Instead, the company says investment in oil and gas “will be needed” due to sustained demand for fossil fuels. It emphasises the importance of liquified natural gas (LNG) as “critical” for the energy transition and says it will grow its LNG business by 30% by 2030.
This amounts to a bet against the world meeting its climate goals, with the International Energy Agency (IEA) and others concluding no new oil-and-gas investment is needed on a pathway to 1.5C – and warning against the risk of “overinvestment”.
Elsewhere in the report, Shell notes that it has “chosen to retire [its] 2035 target of a 45% reduction in net carbon intensity” due to “uncertainty in the pace of change in the energy transition”.
Both goals were intended as stepping stones on the company’s journey towards net-zero emissions by 2050, a goal set by the previous chief executive, Ben van Beurden, in 2020.
The weakening of climate goals from Shell, the world’s second-largest investor-owned oil-and-gas company, comes after BP scaled back its ambitions last year.
Weaker targets
The new report marks the first three-year review of Shell’s “energy transition plan”, after it was adopted in 2021.
Rather than setting a target for cutting its entire “scope 3” emissions – those generated by the use of Shell’s fossil fuels and other energy products by consumers – the company set itself “net carbon intensity” targets on its path to net-zero.
This allows Shell to bring down its carbon intensity and hit its targets through means other than cutting its oil-and-gas production, such as selling more low-carbon products, including renewable electricity.
Shell initially said the carbon intensity of the energy it sells would fall 20% by 2030, from a baseline of 2016, and then 45% by 2035.
This amounted to a cut from 79g of carbon dioxide equivalent per megajoule of energy (gCO2e/MJ) to 63gCO2e/MJ by 2030 and 43gCO2e/MJ by 2035.
As the chart below shows, these targets have now been weakened. The 2030 target has been changed to a range of 15-20% and the 2035 target has been “retired”, according to a footnote in the review.
Shell attributes these changes to a shift in its business priorities.
The firm says that when it comes to selling electricity, including renewable power, it will focus on “value over volume”. For example, it will target “commercial customers more than retail customers”.
The company points to its withdrawal from supplying energy to European homes, having closed its utilities arms in the UK, the Netherlands and Germany in 2023.
Nevertheless, the company also says the “biggest driver for reducing our net carbon intensity is increasing the sales of and demand for low-carbon energy”, rather than cuts in fossil-fuels production. The report states that:
“Investment in oil and gas will be needed because demand for oil and gas is expected to drop at a slower rate than the natural decline rate of the world’s oil and gas fields, which is 4-5% a year.”
This amounts to a bet against the world meeting its carbon targets. If the world were to get on track to limiting warming to 1.5C, there would be no need for investments in new oil and gas production, according to the IEA.
In its 2023 World Energy Outlook, the IEA said that warnings from oil and gas producers that the world was “underinvesting” in new supplies were no longer valid. It said:
“[T]he fears expressed by some large resource-holders and certain oil and gas companies that the world is underinvesting in oil and gas supply are no longer based on the latest technology and market trends.”
The agency added that risks were “weighted more towards overinvestment”.
LNG over oil
Shell has also introduced a new target for cutting emissions from customer use of its oil products, such as petrol and diesel used in cars, within its energy transition strategy review.
This goal amounts to a 40% reduction in absolute emissions by 2030, compared to 2016 – a level the European company says is compatible with the EU’s climate targets for transport. Shell says it will “gradually reduc[e] exposure to oil products used for transport”, by shifting its sales away from this area.
Alongside this, Shell announced a renewed focus on LNG in the strategy, which it says will play a “critical role” in the energy transition, even as people embrace electric cars and therefore reduce their reliance on oil.
The company expects global demand for LNG to continue growing “at least through the 2030s”, and says it will grow its LNG business by 20-30% by 2030.
This marks a continuation of Shell’s focus on LNG from its 2021 strategy, when it said it would “extend leadership” in this area.
Shell’s internal outlook for the growth of global LNG demand is markedly more optimistic than the IEA’s, which suggests that there is already enough capacity built or under construction to meet demand for the next two decades.
According to the Institute for Energy Economics and Financial Analysis (IEEFA), Shell’s LNG outlook “underestimates barriers” to demand growth. IEEFA says:
“[Shell] is pinning its hopes on rapid demand growth in emerging markets and China’s industrial sector, which may never materialise.”
Despite its plans to expand its LNG business, Shell’s report overall emphasises a “balanced and orderly transition away from fossil fuels”.
Wider trends
Shell states that it has so far met its climate targets and points to its success reducing emissions from its own operations, such as those from oil rigs and offices.
It argues in the small print at the bottom of the report that, despite its targets for consumer carbon intensity, “Shell only controls its own emissions”.
(Shell has long maintained this line, that it is merely meeting the demand of customers to buy fossil fuels. Exxon chief executive Darren Woods recently made a similar argument.)
The report also stresses that its plans for net-zero are dependent on society as a whole and “if society is not net-zero in 2050… there would be significant risk that Shell may not meet this target”. This is familiar language from the oil major, which frequently explains that it is consumers, not Shell itself, that influence fossil-fuel use.
Shell’s review follows the global energy crisis that has unfolded over recent years, driven by spiralling gas prices. In response to the changing energy landscape this has brought about, there has been a shift in tone from the oil majors regarding climate commitments.
It also follows a period in which companies such as Shell have made record profits due to rising fossil-fuel prices.
After taking over from Van Beurden, Shell chief executive Sawan stated that “cutting oil and gas production is not healthy”, emphasising the “fragility of the energy system”. In his introduction to the new strategy, Sawan writes:
“Our ability to raise and invest capital depends on delivering strong returns to shareholders, shaping the role that Shell can play on the journey to net-zero. We believe this focus makes it more, not less, likely that we will achieve our climate targets and ambitions.”
BP, Europe’s second largest oil major, weakened its climate targets last year. The change in its goals, which unlike Shell’s are based on full scope 3 emissions, can be seen in the chart below.
Shell’s “strategic shift” in its operational focus comes amid a wider effort to cut operating costs.
This has seen the company announce plans to reduce staff numbers, in particular in low-carbon sectors of the company such as hydrogen.
The company’s profits have fallen now fossil-fuel costs have returned to more normal levels, but have remained high. In February, the company announced an annual profit for 2023 of more than £22bn ($28bn), one of its most profitable years on record.
The post Shell abandons 2035 emissions target and weakens 2030 goal appeared first on Carbon Brief.
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Three countries have been named by the Paris Agreement’s compliance committee for failing to submit a nationally determined contribution (NDC) and repeatedly snubbing offers of help with their climate plans.
After months of internal debate over whether to identify serial non-responders, the Paris Agreement’s Implementation and Compliance Committee (PAICC) named the three countries which have failed to engage with it over their NDCs on Friday.
It named Democratic Republic of Congo, Senegal and North Korea in a footnote of its annual report, adding that it decided to name them “with a view to facilitating engagement”, adding that representatives of the three nations had been invited to its meeting in early 2027 “with the purpose of identifying any challenges and constraints”.
“The Committee noted the importance of Parties engaging with the Committee in a timely manner, while noting that some delays may be due to the national capabilities and circumstances of the Parties”, the report said.
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Paris Agreement committee snubbed over missing NDC climate plans
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In July, PAICC said 12 countries had ignored its repeated attempts to discuss why they had not published an NDC as required every five years under the 2015 Paris accord.
Members of the committee had been divided over whether to name them, but at a September meeting decided to do so in their annual report to the annual climate COP summit.
By the time the report was published on Friday, only Congo, Senegal and North Korea “had not communicated an NDC or submitted a [Biennial Transparency Report] and had not yet responded to any of the Committee’s notifications, despite several reminders issued by the Committee in this regard”.
Rainforest and renewable energy ambitions
The silence from Congo and Senegal is notable because the former is home to much of the Congo Basin rainforest while the latter has sought billions of dollars in climate finance to support its renewable energy ambitions.
After Brazil, Congo has more rainforest than any country in the world. This forest, and the country’s peatlands, absorb huge amounts of greenhouse gas but are fast being lost to expanding farmland, charcoal production, logging and mining.
Senegal signed a Just Energy Transition Partnership with Canada and wealthy European nations in 2023, to help it meet its renewable energy targets under the-then government of Macky Sall. It was chair of the Least Developed Countries group between January 2022 and December 2023.
Tejas Rao, who is researching the PAICC as part of a doctoral thesis at Cambridge University, said the governments of the three countries should engage with the committee.
“Engagement costs these governments very little and the committee has shown it will listen,” he said.
“Silence leaves the committee with no basis to help, and it leaves the [governments] exposed to the narrative that they are simply disengaged,” he told Climate Home News.
Paris Agreement requirement
The 2015 Paris Agreement requires all parties to publish an NDC every five years outlining their emissions reduction targets, with each plan meant to be more ambitious than the country’s last NDC.
The latest set – the third round of plans, with new targets for 2035 – was due in February 2025. While most countries missed this deadline, all but around 30 – mostly small emitters but including Egypt, Vietnam and Argentina – have now submitted them.
Over the year, the PAICC – which is made up of government climate officials from developed and developing countries – has been communicating with governments that have not submitted NDCs and trying to overcome barriers to them doing so.
Some nations have cited exceptional circumstances as the reason for not submitting an NDC, a process that requires a significant amount of work in tracking emissions and consulting on how to curb them across the economy. For example, a letter from a Sudanese official to the PAICC, seen by Climate Home News, said that the country’s civil war had led to the suspension of its NDC preparation.
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The US and Iran are not signed up to the Paris Agreement and so do not have active NDCs, nor does Taiwan, which is not a UN member state.
Rao said that because the PAICC is “facilitative and non-punitive”, naming the countries “is meant to open a door, not close one – the invited consultation is the point”.
“In recent months, governments that explained their constraints, whether capacity, finance or domestic process, have been met with follow-up and support rather than sanction, and the number of silent governments has fallen sharply,” Rao said.
The post Paris Agreement committee names three countries snubbing it over NDCs appeared first on Climate Home News.
Paris Agreement committee names three countries snubbing it over NDCs