SHELL BOWS TO SHAREHOLDER PRESSURE, DOUBLES SPENDING ON GREEN ENERGY

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28 november 2017

Shell doubles up on green spending and vows to halve carbon footprint

Anglo-Dutch giant to spend $2bn on wind power, biofuels and electric cars as it bows to shareholder pressure by setting new company climate change target

Adam Vaughan, The Guardian, november 28, 2017, Tuesday 28 November 2017

Shell has doubled its spending on clean power and bowed to shareholder pressure by promising to halve the carbon footprint of the energy it sells by 2050, as the oil giant said it was stepping up its ambitions on green energy.

The Anglo Dutch firm is increasing capital expenditure for its new energies division, to $1bn-$2bn (£750m to £1.5bn) a year for 2018-2020, up from a previous plan of up to $1bn a year by 2020.

But the spending on wind power, biofuels and electric car infrastructure will still account for a small fraction of the giant’s planned $25-30bn annual investment. Shell has $5bn-$6bn a year pegged for deepwater drilling and $2-3bn a year allocated for shale oil and gas.

The company’s new climate change target aims to cut the net carbon footprint of its products in half by 2050, and around one-fifth by 2035.

“It is making sure that the products within society have an overall lower carbon footprint. That is the longterm way of making sure our business remains a relevant business in the face of the energy transition,” said Ben van Beurden, Shell’s chief executive.

The carbon target is similar to one put forward by shareholder activists at the company’s AGM earlier this year, which the board opposed and defeated.

Shell said the goal addressed the spirit of the shareholders’ proposal but the company’s chosen methodology meant it did not have “negative side-effects” of the resolution. “We could see a kernel of truth and relevance in there,” said Van Beurden.

The Dutch activist shareholder group behind the proposal, Follow This, welcomed the new target.

“We applaud Shell’s ambitious decision to take leadership in achieving the goals of the Paris climate agreement to limit global warming to well below 2C,” said the group’s founder, Mark van Baal.

Shell said it would grow its new energies division through its existing businesses and by acquiring companies, as it has done recently by buying electric car charging firms Ionity and New Motion.

Van Beurden defended the level of spending on green energy. “Is the investment we are going to put in new energies enough? Let’s see, we have to start somewhere,” he said.

Wind and biofuels would have a key role, he said. “We will systematically improve, we will grow this business up to be a very significant part of the future of the company, otherwise you can’t even get to a 20% reduction of a carbon footprint.

“But we have to do it in a disciplined way. If we destroy value in this process, no one is going to be served.”

However, the company said hydrocarbons would still be at the heart of its business and the global energy landscape over the next two decades.

“Oil and gas will remain an important part of the energy system [up to 2030], no credible forecast says otherwise,” said Van Beurden.


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