In line with the Paris Agreement, Shell wants to transform itself into a net-zero emissions business by 2050
Shell has unveiled plans to transform itself into a net-zero emissions business by 2050. The challenging path to net-zero emissions involves gradually paring its oil production over the next decade, and investing in LNG, hydrogen, renewables and carbon capture and storage (CCS).
Under its ‘Powering Progress Strategy’, Shell has committed to not only accounting for the emissions from its operations, but also the emissions from its energy products. Additionally, it will incorporate emissions from the oil and gas that others produce, when Shell then sells those products to customers. This means that Shell will look to its partners to cut their emissions, too.
Shell revealed its total carbon emissions peaked at 1.7 gigatonnes in 2018, and oil production peaked in 2019.
Using its net carbon emissions from 2016 as its baseline, Shell set short-term goals for reducing net carbon intensity by 6 to 8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050.
Tying into this strategy will be CCS technology. Shell is part of three such projects: Quest, operating in Canada; the sanctioned Northern Lights project in Norway; and the planned Porthos project in The Netherlands. These three projects have a total CCS capacity of 4.5 million tonnes (mt). Shell wants to have an additional 25 mt of CCS capacity by 2035.
“Green hydrogen will play an important role in the energy system”
The Anglo-Dutch energy producer will rebalance its near-term spending, with annual investments in its lubricants and electrical vehicle charging business of US$3Bn, US$2Bn to US$3Bn in renewables and energy solutions, US$4Bn in integrated gas, US$4Bn to US$5Bn in chemicals and products and US$8Bn in its upstream business.
Selective investments in LNG
LNG will remain a key component of Shell’s business, with selective investment in competitive LNG assets expected to deliver an additional 7 mt of LNG by 2025. Shell owns a 40% interest in LNG Canada in Kitimat, British Columbia, Canada, which will initially have two trains producing a total of 13 mt annually (mta) of LNG. It could eventually expand to four trains with a total capacity of 26 mta.
Additional plans call for Shell to deliver carbon-neutral LNG to customers.
Expectations are that oil and gas will continue to provide material cash flow into the 2030s, with a gradual reduction in oil production of around 1 to 2% each year through divestments and natural decline, said Shell.
Plans call for an increase in capacity of its biofuels business, doubling its electricity sales to 560 terawatt hours per year by 2030, and building hydrogen hubs to serve industry and heavy-duty transport.
Shell is moving forward with the development of a hydrogen hub. It recently inked a letter of intent (LOI) with Mitsubishi Heavy Industries, Vattenfall and Wärme Hamburg to develop a project in Hamburg to produce green hydrogen from wind and solar power.
In addition to constructing a scalable electrolyser with an initial output of 100 MW, in the longer term the partners plan to develop a ‘Green Energy Hub’ and explore the extent to which existing infrastructure at Hamburg-Moorburg power plant could be used to generate energy from renewables.
Subject to FID, once the site has been cleared, production of green hydrogen could start in 2025.
Shell Germany chief executive Fabian Ziegler said: “Green hydrogen will play an important role in the energy system.” He highlighted the company’s interest in developments along the green hydrogen value chain, from electricity produced by offshore windfarms to supplying green hydrogen for transport and other industrial uses.
The project partners intend to apply for funding under the EU’s ‘Important Projects of Common European Interest’ programme. The application is expected to take place in Q1 2021 with the submission of an initial project outline.