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Yesterday Shell watered down its green goals and said the world will have to continue investing in oil and gas for decades to come.
The FTSE 100 energy giant reduced its 2030 carbon reduction target and abandoned another target for 2035.
It is the latest evidence that Shell, whose boss Wael Sawan took over last year, is reconsidering how the company can achieve its net-zero ambitions amid uncertainty over the transition to green energy.
But it came under fire from environmental campaigners amid complaints the £163bn company was no longer doing enough in the battle against climate change.
Shell’s argument is that investment in green energy, such as wind farms, is not happening fast enough to meet growing global demand, while fossil fuel energy sources are being lost.
One stark move: Shell lowered its 2030 carbon reduction target and abandoned another target for 2035 as it reconsiders how it can achieve its net-zero emissions ambitions.
It said it continues to aim for net zero emissions, supporting a “balanced and orderly transition… towards low-carbon energy solutions”.
Sawan said his strategy “makes it more likely, not less, that we will achieve our climate goals.”
It comes after the chief executive announced last year that Shell would stop reducing its oil production and increase its natural gas production.
Rival BP is moving in a similar direction and has decided to backtrack on its own emissions reduction targets.
The moves come amid investor pressure on the two companies to increase profitability.
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 the company sells, allowing the impact of fossil fuel production to be offset by other parts of the business, such as renewable energy.
Shell will aim to reduce its carbon intensity by 15 to 20 percent by 2030 compared to 2016 levels, having previously targeted 20 percent. The goal of reducing it by 45 percent by 2035 was abandoned.
Sawan said the 2035 target was “dangerous” because “there is too much uncertainty right now in the energy transition.”
Shell plans to increase 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 diluting the target is that Shell expects the growth of its energy sales, including those from renewable sources, to slow.
Its broader analysis has concluded that not enough money is being invested in renewable energy.
At around £1.3 trillion a year, it falls short of the £2.3 trillion to £3.1 trillion needed to reach net zero by 2050, he said, adding: “Significant investment will be needed to continue supplying oil and gas, while low carbon alternatives are developed and commercialized.
“This continued investment is necessary because demand for oil and gas is expected to fall at a slower rate than the natural decline of the world’s oil and gas fields, which is 4 to 5 percent annually.”
The plans come as Shell faces legal challenges over its climate strategy.
It is appealing against a Dutch court ruling that ordered it to reduce its emissions more quickly.
Mark van Baal, founder of the activist shareholder group Follow This, said that “with this setback, Shell is betting on the failure of the Paris climate agreement that requires halving emissions this decade.”
But Neil Wilson, chief analyst at Markets, said Shell’s move “seems sensible” and the main problem was emissions from China and India.
“It’s time to get rid of all this net zero waste,” Wilson said.
Oil boss van Beurden paid £95m
Former Shell boss Ben van Beurden received another £8.9m last year, taking his total earnings at the oil giant to £95m.
A long-term bonus payment and redundancy payment helped him raise more than his replacement Wael Sawan’s £7.9m (pictured, left).
Van Beurden (right) earned £86m at Shell before moving to Sawan last year.
Top job: Former Shell boss Ben van Beurden received £8.9m last year, while his replacement Wael Sawan earned £7.9m.
He stayed on as an adviser for six months, receiving a £5.1m long-term bonus and £1.4m loss of office bonus.
Sawan received £7.9m during his first year in charge as the company reported profits of £22bn by 2023 and increased dividends.
The profit was 30 percent lower than in 2022, but the second highest in Shell’s 116 years.
The figures came as it was revealed that Unilever boss Hein Schumacher was paid £3.3m during his first seven months. And at Pearson, Andy Bird received £11.3m last year.