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Summary
- Royal Dutch Shell pledged to achieve net zero emissions by 2050 driven by growth in its customer-facing businesses.
- The oil giant reported its oil output had peaked in 2019 and would drop by 1 to 2 per cent a year.
- The company plans to continue expanding its gas capacity by 7 million tonnes annually despite its green energy shift.
Oil and gas giant Royal Dutch Shell (LON: RDSA) has pledged accelerate its strategy to achieve net zero emissions by 2050 pivoting from its fossil fuel-based business model on 11 February. The move was driven by growth in its customer-facing businesses. The company plans to have a more disciplined cash allocation approach to drive down its carbon emissions.
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Carbon management strategy
The energy company reported that its oil output peaked in 2019 and will continue to drop by 1 to 2 per cent annually in its latest strategy update. However, the company plans to expand its gas capacity by 7 million tonnes annually or a capacity expansion of 20 per cent cumulatively over the next few years.
The company's liquefied natural gas (LNG) export capacity is 33.3 million tonnes every year. Thus, its near-term expansion plan would increase its LNG capacity by more than 20 per cent during a time-sensitive period for addressing the climate emergency.
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The company outlined several actions to achieve net-zero emissions in its strategy update. For instance, it plans to increase its carbon, capture and storage (CCS) capacity by an additional 25 million tonnes a year by 2035 and use nature-based solutions (NBS) to offset up to 120 million tonnes a year by 2030. Additionally, it plans to develop and align with various energy transition initiatives and submit an Energy Transition Plan starting from this year.
Want to know more? Do Read: Top Executives at Royal Dutch Shell (LON:RDSA) Quit Over Green Transition Concern
Portfolio rebalancing
The British-Dutch company has added its total carbon emissions peaked in 2018 at 1.7 gigatonnes per annum.
The company outlined its plans to rebalance its investments into different verticals. It aims to invest between US $5 and US $6 billion in its growth pillar, which includes approximately US $3 billion in marketing and between US $2 and US $3 billion in its renewables and energy solutions business.
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Secondly, it plans an investment of about US $8-$9 billion in its transition pillar, subdivided by an investment of up to US $4 billion in integrated gas and between US $4 and $5 billion in chemicals and products. And lastly, around US $8 billion in its upstream business vertical.
The energy giant will continue relying on its retail business, the world's largest, and plans to increase the number of sites to 55,000 by 2025 from 46,000 currently. Furthermore, it also plans to increase the number of electric vehicles charging points to 500,000 from its present 60,000 by 2025.
Share performance
The company's stock price (LON:RDSA) stood at GBX 1,330.40, down by 1.60 per cent at the day’s closing on 11 February.
