Shell reports good progress on journey to net-zero
emissions
Shell plc has published its Energy Transition Progress Report
2022, which can be viewed and downloaded
from www.shell.com/agm. The report shows Shell has again met
its climate targets as part of its energy transition strategy. The
report will be put to shareholders for an advisory vote at Shell’s
Annual General Meeting, currently scheduled for May 23, 2023.
“In this report, we show the progress we have made towards
becoming a net-zero emissions energy business by 2050, as we
continue to supply the vital energy the world needs during a time
of great volatility," said Wael Sawan, Shell's Chief Executive
Officer. "I am especially proud of the progress we have made in
reducing carbon emissions from our operations, with a 30% reduction
by the end of 2022 compared with 2016 on a net basis."
By the end of 2022, the net carbon intensity of the energy
products sold by Shell had also fallen by 3.8%, compared with 2016.
Our analysis, using data from the International Energy Agency,
shows the net carbon intensity of the global energy system fell by
around 2% over that time. (For more details see
www.shell.com/energytransitionfaq).
The report highlights important steps that Shell has taken to
advance its energy transition strategy. These include significant
investments in liquefied natural gas (LNG), which Shell expects to
remain an important part of the energy mix for many years to come,
partly because of its role in reducing emissions from power
generation and transport.
Other steps include Shell's $1.6 billion investment in Indian
renewable power developer Sprng Energy, and the final investment
decision on the Holland Hydrogen 1 project in the Netherlands,
which will be Europe’s largest renewable hydrogen plant. In 2022,
Shell also announced the acquisition of Denmark's Nature Energy,
which produces renewable natural gas, for around $2 billion. This
deal was completed at the beginning of 2023.
Shell also increased the number of electric vehicle charge
points it owned or operated worldwide by 62% to around 139,000 in
2022, up from 86,000 the previous year.
Sir Andrew Mackenzie, Shell Chair, said: “We believe the
progress we have made in line with our energy transition strategy
has been to the benefit of our customers, our shareholders and
wider society.”
This progress comes at a time when the energy system still faces
challenges as high energy prices continue to contribute to a
cost-of-living crisis for many people. These challenges have
highlighted the need for a balanced energy transition: one in which
the world achieves net-zero emissions, while still providing a
secure and affordable supply of energy.
Shell’s energy transition strategy was put to an advisory
shareholder vote at its 2021 Annual General Meeting, where it
secured 89% of the vote. At the 2022 AGM, almost 80% of
shareholders who voted supported our progress in implementing this
strategy.
This year, Shell is again asking shareholders to vote on its
annual progress.
Read the report at
www.shell.com/energy-transition-progress-report
Notes to editors
The publication of annual progress reports, along with the
advisory votes, have resulted in a more informed dialogue between
Shell and its institutional investors. The vote is purely advisory
and is not binding on our shareholders. The legal responsibility
for Shell’s strategy lies with the Board and Executive
Committee.
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Shell plc
Energy Transition Progress Report 2022
Contents
|
Introduction |
|
Financial framework |
| Chair’s
message |
|
Investments and
returns |
| Chief Executive
Officer’s introduction |
|
Investing in net
zero |
| The path to
net-zero emissions |
|
|
| Our progress
towards net zero |
|
Policies and Governance |
| Carbon
performance at a glance |
|
Climate policy
engagement |
|
|
|
Climate
governance |
|
Our performance |
|
A just
transition |
| Absolute
emissions |
|
Climate standards
and benchmarks |
| Net carbon
intensity |
|
|
|
|
|
Litigation and activism |
|
Decarbonising our portfolio |
|
Climate
litigation and activism |
| Transforming the
energy system |
|
|
| Electricity |
|
|
| Hydrogen |
|
|
| Biofuels |
|
|
| Conventional
fuels |
|
|
| In focus: Carbon
capture and storage |
|
|
| In focus: Carbon
credits |
|
|
| Energy Transition
in action |
|
|
| |
|
|
|
|
| |
Introduction and summary Welcome to Shell's Energy Transition
Progress Report. This report aims to update shareholders and wider
society on how Shell has progressed in 2022 against the energy
transition strategy we announced in 2021. |
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|
|
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|
|
Chair’s
message |
|
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|
|
Chief Executive
Officer’s introduction |
|
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|
|
Steps on the path
to net-zero emissions |
|
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|
|
Our progress
towards net zero |
|
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|
|
Carbon
performance at a glance |
|
Chair’s message
| |
| Sir Andrew
Mackenzie, Chair |
Our second Energy Transition Progress Report comes as the
Russian war in Ukraine continues to have a devastating effect on
the lives of many. The conflict has also highlighted the need for a
global supply of secure and affordable energy. Amid this period of
heightened uncertainty, we have worked hard to keep energy flowing
to households and businesses around the world.
In 2022, I witnessed first-hand how our staff diverted energy
supplies to where they were most needed. In total, we delivered 194
cargoes of liquefied natural gas to Europe – almost five times our
usual average. This work helped to avert the threat of blackouts
and to build up energy supplies ahead of next winter.
Against this backdrop, we made good progress in putting our
energy transition strategy into action. As we delivered the oil and
gas the world needs today, we reduced carbon emissions from our
operations by 30% by the end of 2022, compared with 2016 on a net
basis. This is more than halfway towards our target of a 50%
reduction by 2030. Global energy-related carbon emissions increased
by around 4% over the same period. [A]
We continued to work towards becoming a net-zero emissions
energy business by 2050 by making significant investments in solar
and wind power, biofuels and hydrogen. For example, we made our
biggest acquisition in the energy transition yet with the purchase
of Denmark’s Nature Energy for around $2 billion. This acquisition
makes us Europe’s largest producer of renewable natural gas, which
is made from agricultural, industrial and household waste.
Renewable natural gas can be used by customers in sectors such
as commercial road transport and shipping. This is part of the work
we are undertaking, sector by sector, to identify the low- and
zero-carbon products that our customers need to reduce their
emissions.
We continued to build infrastructure to help our customers
switch to low- and zero-carbon energy. In 2022, for example, we
increased the number of electric vehicle chargers we owned or
operated by 62% to around 139,000, compared with the previous
year.
The development of new technologies is vital to decarbonising
our own operations, as well as reducing the emissions for our
customers. In 2022, we launched the Energy Transition Campus
Amsterdam in the Netherlands, which creates an opportunity for
Shell and other companies to research new technologies for the
energy transition.
Engaging with shareholders
The continued support of our shareholders is critical to Shell’s
success as a company. In 2021, shareholders supported our energy
transition strategy with 89% of the votes. In contrast, a
resolution by shareholder group Follow This calling for a different
energy transition strategy received 30% of the votes. Shareholders
will get the opportunity to vote again on our strategy in 2024.
In 2022, 80% of our shareholders voted in support of the
progress we had made in 2021 in implementing our energy transition
strategy. Along with other Board members, I met many of our largest
investors following that vote, including during investor
engagements in September. I am grateful for their time and
feedback, and look forward to our next engagements in April
2023.
The publication of annual progress reports, along with the
advisory votes, have resulted in a more informed dialogue with our
institutional investors. We heard, for example, that some large
investors did not follow the Board’s recommendation to vote in
support of Shell’s progress in 2022, because they mainly focused on
Shell’s energy transition strategy overall, and not on our
progress. Some shareholders also indicated that societal pressure,
potential media coverage, and expectations from investors in their
funds were reasons for not following the Board’s
recommendation.
Other investors told us they would like Shell to introduce
medium-term targets to reduce absolute Scope 3 emissions produced
by customers when they use our products. The Board has considered
setting a Scope 3 absolute emissions target but has found it would
be against the financial interests of our shareholders and would
not help to mitigate global warming.
This year, we are again asking shareholders to vote at our
Annual General Meeting on the progress we have made in 2022 as we
implement our energy transition strategy. As in previous years,
this vote on our progress measured against our targets and plans is
purely advisory, and not binding for our shareholders. The legal
responsibility for approving or objecting to Shell’s strategy lies
with the Board and Executive Committee.
We believe the progress we have made in line with our energy
transition strategy has been to the benefit of our customers, our
shareholders and wider society. The Board recommends that you vote
in favour of Resolution 25 in support of the energy transition
progress that Shell made in 2022, as described in this report and
in our Annual Report and Accounts 2022.
[A] According to our analysis and data from the International
Energy Agency.
Chief Executive Officer’s introduction
| |
| Wael Sawan, Chief
Executive Officer |
The Russian invasion of Ukraine has had significant effects on
the global energy system, with many countries needing to replace
the supplies of natural gas that previously came from Russia.
Governments acted swiftly. The European Union’s REPowerEU plan
and the Inflation Reduction Act in the USA gave strong support to
renewable energy. In Germany, two floating storage and
regasification terminals were up and running by the end of the
year, allowing the country to import more of the liquefied natural
gas (LNG) it needs.
But the energy system still faces huge challenges as high energy
prices continue to contribute to a cost-of-living crisis for many
people. These challenges have highlighted the need for a balanced
energy transition: one in which the world achieves net-zero
emissions, while still providing a secure and affordable supply of
energy.
Supplying vital energy
In this report, we show the progress we have made towards
becoming a net-zero emissions energy business by 2050, as we
continue to supply the vital energy the world needs during a time
of great volatility.
I am especially proud of the progress we have made in reducing
carbon emissions from our operations, with a 30% reduction by the
end of 2022, compared with 2016 on a net basis. That puts us more
than halfway towards our target to reduce them by 50% by 2030.
We also continued to change the energy mix of our portfolio. By
the end of 2022, the net carbon intensity of the energy products
sold by Shell had fallen by 3.8%, compared with 2016. Our analysis,
using data from the International Energy Agency, shows the net
carbon intensity of the global energy system fell by around 2% over
that time [A].
Beyond our immediate performance against our targets, we have
taken other important steps to advance our strategy. In LNG, for
example, we expanded what is already a world-leading business. We
expect that LNG will play a key role in a balanced energy
transition. It produces fewer greenhouse gas emissions than coal
when used to generate electricity, and fewer emissions than petrol
or diesel when used as a fuel for transport.
In 2022, we joined two exciting projects in Qatar, including
what will be the largest LNG project in the world. These projects
will use carbon capture and storage, helping to reduce
emissions.
Investing in low-carbon projects
At the same time, we made significant moves to increase our
supply of low- and zero-carbon energy, in line with our strategy.
In 2022, we invested $1.6 billion in Indian renewable power
developer Sprng Energy. We also announced the acquisition of
Denmark’s Nature Energy, which produces renewable natural gas from
agricultural, industrial and household waste, for around $2
billion.
Our Powering Progress strategy is designed to transform Shell
into a net-zero emissions energy business, while generating strong
returns for our shareholders. We will use the strength of our
brand, customer relationships and balance sheet to add value to
these acquisitions.
With Nature Energy, for example, we expect to make strong
returns from our investment because we already have customers for
biofuels in commercial road transport and shipping, and the trading
expertise to connect opportunities in supply and demand.
[A] For more details see shell.com/energytransitionfaq
Similarly, the strength of our integrated portfolio gives us
confidence in our investment in Holland Hydrogen 1 in the
Netherlands, which will be Europe’s largest renewable hydrogen
plant. The power for the electrolyser will come from an offshore
wind farm that is partly owned by Shell. The renewable hydrogen
will be used at the Shell Energy and Chemicals Park Rotterdam to
help decarbonise the production of products like petrol, diesel and
aviation fuel. Renewable hydrogen can also be used for commercial
road transport, a sector where we already have a leading position
in Europe.
Building on our strengths
In 2022, we invested $8.2 billion in low-carbon energy and
non-energy products, around a third of our total cash capital
expenditure. Of that, we invested $4.3 billion in low-carbon energy
solutions, including biofuels, hydrogen, charging for electric
vehicles and renewable power generation. The remaining $3.9 billion
was spent on non-energy products such as chemicals, lubricants and
convenience retail, which do not produce emissions when they are
used by our customers.
As we invest in the energy transition, we will continue to build
on our competitive strengths. We will earn the trust of investors
and the right to grow these emerging businesses by demonstrating
that we can deliver strong returns.
Shareholder support
In 2021, 89% of shareholders at our Annual General Meeting voted
in favour of Shell’s energy transition strategy, which centres on
our target to become a net-zero emissions energy business by 2050.
As you will read in this report, we have made good progress in the
first two years of that strategy by reducing emissions from our
operations, and by making more low- and zero-carbon products
available to our customers. Today, I ask our shareholders for their
continued support, by voting in favour of the progress we are
making on our journey to net-zero emissions.
Steps on the path to net-zero emissions
In 2023, for the second time, we are offering
shareholders an advisory vote on our progress in implementing our
energy transition strategy. This vote is part of our continuing
dialogue with shareholders as we work to become a net-zero
emissions energy business by 2050. Shareholders supported our
energy transition strategy in 2021.
2023
- Increased the weighting of the
energy transition performance metric in the Long-term incentive
plan from 20% to 25%.
2022
- Achieved our target to reduce the
net carbon intensity of the energy products we sell by 3-4%
compared to 2016.
- Made significant investment
decisions and portfolio changes. These include Nature Energy, a
renewable natural gas producer, Holland Hydrogen 1, and renewable
power developer Sprng Energy.
- Invested $4.3 billion in
low-carbon energy solutions and $3.9 billion in non-energy
products.
- Introduced three new metrics in
the annual bonus scorecard, to more fully reflect Shell’s role in
the energy transition.
- For the first time offered
shareholders an advisory vote on the annual progress made in
implementing our energy transition strategy.
- Simplified our share structure,
allowing us to manage our portfolio with greater agility in the
energy transition.
2021
- Launched our Powering Progress
strategy setting out how we will transform into a net-zero
emissions energy business.
- Offered shareholders an advisory
vote on our energy transition strategy. They overwhelmingly
supported the strategy.
- Set a new target to reduce
absolute emissions from our operations (Scope 1 and 2) by 50% by
2030, compared to 2016 on a net basis.
2020
- Announced target to become a
net-zero emissions energy business by 2050.
- Extended the energy transition
performance metric to around 16,500 employees through the
Performance Share Plan (PSP).
2019
- Published our first Industry
Associations Climate Review, which reviewed the alignment between
our climate-related policy positions and those of 19 key industry
associations of which we are a member.
2018
- Signed a joint statement with
institutional investors on behalf of Climate Action 100+ investor
group announcing steps that Shell has taken to demonstrate
alignment with the goals of the Paris Agreement on climate
change.
2017
- Announced ambition to reduce the
carbon intensity of the energy products we sell by around half by
2050, including the full life-cycle emissions from the use of our
energy products by customers.
Our Progress in 2022 towards net zero
Our performance
Reduced Scope 1 and 2 absolute emissions by
30%
More than halfway towards our target to reduce them by 50% by
2030, compared to 2016 on a net basis
Reduced net carbon intensity by 3.8%
Achieved 2022 target of 3-4% reduction, making progress towards
reducing our net carbon intensity by 20% by 2030 and 100% by 2050,
compared to 2016
Invested $4.3 billion in low-carbon energy solutions,
and $3.9 billion in non-energy products
Providing our customers with more
electricity
- Increased electric vehicle charge
points by 62% to around 139,000
- More than doubled renewable
generation capacity to 6.4 GW
- Acquired Sprng Energy, a leading
renewable power platform (India)
- Integrated Savion, a solar and
energy storage developer (USA)
- Won offshore wind bids (NL, UK,
USA)
Developing renewable hydrogen
- Took final investment decision
for Holland Hydrogen 1 in the Netherlands (200 MW electrolyser
capacity)
- Added 20 MW electrolyser capacity
in China
Growing our biofuels portfolio
- Blended 9.5 billion litres of
biofuels (6% of global consumption)
- Acquired Nature Energy (Denmark),
the largest producer of renewable natural gas in Europe
- Signed large, long-term agreement
to buy ethanol made from sugar-cane waste from Raízen (Brazil)
Providing conventional fuels
- Selected as partner in 2 large
LNG projects with carbon capture and storage in Qatar
- Delivered 194 LNG cargoes to
Europe (almost five times our usual average)
Carbon performance at a glance
Our carbon targets for absolute Scope 1 and 2 emissions and net
carbon intensity
In 2022, we continued to make progress towards our 2030 targets.
By the end of 2022, we had reduced our Scope 1 and 2 emissions from
our operations by 30%, compared with our 2016 reference year on a
net basis. The net carbon intensity of the energy products we sell
decreased by 3.8%, compared with our 2016 reference year. This
reduction in net carbon intensity reflects an increase in sales of
low- and zero-carbon energy, helping our customers to decarbonise
their energy use.
Reducing Scope 1 and 2 emissions under our operational
control
More than halfway towards our target to reduce Scope 1 and 2
emissions by 50% by 2030
|
|
2016 [B] |
2021 |
2022 |
Targets |
|
Scope 1 and 2 operational emissions [A]million tonnes CO2e |
83 |
68 |
58 |
by -50%in2030, net-zeroby2050 |
|
Routine flaring [A] [C] (million tonnes hydrocarbons flared) |
N/A |
0.2 |
0.1 |
N/A |
|
Methane intensity [A] [C](%) |
N/A |
0.06 % |
0.05 % |
N/A |
Reducing emissions associated with our customers’ use of energy
products
|
|
Actual |
Target |
|
unit |
2016 [B] |
2021 [E] |
2022[E] |
2023 |
2024 |
2025 |
2030 |
2035 |
2050 |
|
Net carbon intensity |
CO2e/MJ |
79 |
77 |
76 |
-6-8% |
-9-12% |
-9-13% |
-20% |
-45% |
-100% |
Net carbon intensity reduction target achieved for two
consecutive years. we believe our total absolute emissions peaked
in 2018 at 1.73 gigatonnes of carbon dioxide equivalent.
We believe our total absolute emissions peaked in 2018 at 1.73
gigatonnes of carbon dioxide equivalent GtCo2e
|
|
2016 [B] |
2021 |
2022 |
Targets |
|
Estimated total GHG emissions included in NCI (net) [B] |
1,645 |
1,375 |
1,240 |
Net zero by 2050 |
- Operational control boundary.
- Reference year.
- Our target is to eliminate routine gas flaring from the
upstream assets we operate and to have kept methane emissions
intensity of Shell-operated assets under 0.2% by 2025.
- Shell’s NCI is the average intensity, weighted by sales volume,
of the energy products sold by Shell. Estimated total greenhouse
gas (GHG) emissions included in NCI (net) correspond to
well-to-wheel emissions associated with energy products sold by
Shell, on an equity boundary, net of carbon credits. This includes
the well-to-tank emissions associated with the manufacturing of
energy products by others that are sold by Shell. Emissions
associated with the manufacturing and use of non-energy products
are excluded.
- 2021 target 2-3% reduction, 2022 target 3-4% reduction, both
achieved.
- There was a decrease in 2020 from 2019 related to volumes
associated with additional contracts being classified as held for
trading purposes with effect from January 2020. We estimate that
netting of oil products sales volumes resulted in a reduction in
GHG emissions of 102 million tonnes CO2e
For more details of climate-related definitions and
methodologies, please see our Annual Report and Accounts
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Our
Performance Read about our performance against our climate
targets and how we are working to achieve net-zero emissions by
2050. |
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|
|
Absolute
emissions |
|
| |
|
|
Net carbon
intensity |
|
| |
|
|
Net carbon
intensity |
|
| |
|
|
Reducing carbon
intensity |
|
Absolute emissions
Reducing our absolute Scope 1 and 2
emissions
To achieve net-zero emissions by 2050, we are transforming how
we produce energy. In October 2021, we set a target to halve the
emissions from our operations (Scope 1), plus the energy we buy to
run them (Scope 2), by 2030 compared with 2016 levels on a net
basis.
To decarbonise our operations, we are focusing on:
- making portfolio changes such as
acquisitions and investments in new, low-carbon projects. We are
also decommissioning plants, divesting assets, and reducing our
production through the natural decline of existing oil and gas
fields;
- improving the energy efficiency
of our operations;
- transforming our remaining
integrated refineries into low-carbon energy and chemicals parks,
which involves decommissioning plants;
- using more renewable electricity
to power our operations; and
- developing carbon capture and
storage (CCS) for our facilities.
If required, we may choose to use high-quality carbon credits to
offset any remaining emissions from our operations, in line with
the mitigation hierarchy of avoid, reduce and compensate.
The chart below shows our progress since 2016 in reducing our
Scope 1 and 2 emissions and gives an indication of how we expect to
achieve our target in 2030. The actions we will take to achieve our
target will depend on the evolution of our asset portfolio and the
continued development of technologies which reduce carbon
emissions. Following divestment activity in 2022, we expect that on
a net portfolio basis, new investments across our portfolio will
increase our Scope 1 and 2 emissions between 2023 and 2030 and that
they will exceed reductions associated with planned divestments and
natural decline. Our investments in producing low-carbon energy
such as biofuels will increase our Scope 1 and 2 emissions, while
reducing the net carbon intensity of the products we sell.
Subsequent reductions in our emissions are reflected in the
mechanisms outlined below and reflect an expected path to meeting
our target in 2030.
Working to reduce our absolute Scope 1 and 2
emissions
Scope 1 and 2 emissions in million tonnes per annum [A],[B]
|
Emissions |
2016 |
2019 |
2020 |
2021 |
2022 |
2030 |
|
actual |
actual |
actual |
actual |
actual |
target |
|
Scope 1 |
72 |
70 |
63 |
60 |
51 |
|
| Scope 2 |
11 |
10 |
8 |
8 |
7 |
|
| Total |
83 |
80 |
71 |
68 |
58 |
41 |
| Reduction |
|
|
|
|
-30% |
-50% |
|
Indication of how we expect to achieve our 2030 target |
Expected impact of
action |
|
Portfolio changes |
Increase |
| Efficiency
improvements |
Decrease |
| Energy and chemicals
park transformation |
Decrease |
| Use of renewable
power |
Decrease |
| Carbon capture and
storage |
Decrease |
| Carbon credits
[C] |
Decrease |
- The 2016 Base Year was not
recalculated in 2022. The 2016 Base Year may be recalculated in
future years if an acquisition or a divestment has an impact of
more than 10% on the total Scope 1 and 2 emissions.
- Operational control boundary.
- Including nature-based solutions.
Absolute emissions progress
In 2022, our total combined Scope 1 and 2 absolute greenhouse
gas (GHG) emissions (from assets and activities under our
operational control) were 58 million tonnes on a CO2 equivalent
basis, a 15% reduction compared with 2021, and a 30% reduction
compared with 2016, the reference year. Our direct GHG emissions
(Scope 1) decreased from 60 million tonnes of carbon dioxide
equivalent (CO2e) in 2021 to 51 million tonnes
CO2e in 2022. This reduction was achieved through
divestments in 2021 and 2022 (such as the Deer Park and Puget Sound
refineries in the USA) and the handover of operations in OML 11 in
Nigeria in 2022; shutdowns or conversion of existing assets,
including the shutdown of some units at the Shell Energy and
Chemicals Park Singapore; GHG abatement projects and purchase of
renewable electricity. These decreases were partly offset by the
commissioning of Shell Polymers Monaca.
Our Annual Report and Accounts 2022 provides more details of how
we reduced our Scope 1 and 2 emissions. To date, we have not used
carbon credits to achieve our Scope 1 and 2 emissions
reductions.
|
Scope 1 and Scope 2 greenhouse gas emissions changes from
2016 to 2021 and from 2021 to 2022million tonnes carbon
dioxide equivalent (CO₂e) |
|
Period |
Emissions [A] in first year of period |
Changes |
Emissions [A] in last year of period |
|
Acquisitions |
Divestments |
Reduction activities and purchased renewable electricity [B] [C]
[D] [E] |
Change in output [F] |
Other |
|
2016 to 2021 |
83 |
5.0 |
(15.4) |
(9.2) |
6.6 |
(2.3) |
68 |
|
2021 to 2022 |
68 |
0.0 |
(7.5) |
(2.0) |
(0.9) |
0.4 |
58 |
- Total Scope 1 and Scope 2 emissions, rounded to the closest
million tonnes. Scope 2 emissions were calculated using the
market-based method.
- In addition to reductions from GHG abatement and energy
efficiency projects, this category also includes reductions from
permanent shutdown of Convent and Tabangao refineries and the
impact of transformational activities at our Shell Energy and
Chemicals Park in Singapore.
- Excludes 5.80 million tonnes of CO₂ captured and sequestered by
the Shell-operated Quest CCS facility in Canada in 2016-2021. Scope
1 and 2 GHG emissions from operating Quest are included in our
total emissions.
- Excludes 0.97 million tonnes of CO₂ captured and sequestered by
the Shell-operated Quest CCS facility in Canada in 2022. Scope 1
and 2 GHG emissions from operating Quest are included in our total
emissions.
- Of the 2,010 thousand tonnes of reduction activities and
purchased renewable electricity in 2022, around 80 thousand tonnes
related to purchased renewable electricity.
- Change in output relates to changes in production levels,
including those resulting from shutdowns and turnarounds as well as
production from new facilities.
Methane emissions
Methane emissions are included in our Scope 1 and 2 emissions
reporting. In 2022, we reduced total methane emissions from our
operations by 27% to 40,000 tonnes, compared with 55,000 tonnes in
2021. Our target to keep methane emissions intensity below 0.2% was
met in 2022 with Shell’s overall methane emissions intensity
at 0.05% for facilities with marketing gas and 0.01% for facilities
without marketing gas.
Routine flaring
In 2022, routine flaring from our upstream operations fell to
0.1 million tonnes of hydrocarbons from 0.2 million tonnes of
hydrocarbons in the previous year. Our aim is to eliminate routine
gas flaring from our upstream operations by 2025.
| |
We undertake external verification of our greenhouse gas (GHG)
emissions annually. Our Scope 1 and 2 GHG emissions from assets and
activities under our operational control and emissions associated
with the use of our energy products (Scope 3) included in our net
carbon intensity have been verified to a level of limited
assurance. |
|
Net carbon intensity
We use net carbon intensity [A] to show our progress in changing
the mix of energy products we sell to customers. Net carbon
intensity measures emissions associated with each unit of energy we
sell. It reflects changes in sales of oil and gas products, and
changes in sales of low- and zero-carbon products and services --
such as biofuels, hydrogen and renewable electricity.
Net carbon intensity measures the transformation that is
happening in our portfolio as we implement our energy transition
strategy. Achieving net-zero emissions by 2050 is the same as
achieving 100% reduction in net carbon intensity.
Unlike Scope 1 and 2 emissions, reducing the net carbon
intensity of the products we sell requires action by both Shell and
our customers, with the support of governments and policymakers to
create the right conditions for change.
[A] Shell’s net carbon intensity is the average intensity,
weighted by sales volume, of the energy products sold by Shell. It
is tracked, measured and reported using our Net Carbon Footprint
(NCF) methodology.
Aligning our targets with Paris
Shell's target is to become a net-zero emissions energy business
by 2050. We also have short-, medium- and long-term targets to
reduce our carbon intensity, measured using our net carbon
intensity metric. We believe these targets are aligned with a 1.5°C
pathway derived from the scenarios used in the IPCC Special Report
on Global Warming of 1.5°C (SR 1.5), most of which show the global
energy system reaching net zero between 2040 and 2060.
There is no established standard for aligning an energy
supplier’s decarbonisation targets with the temperature limit goal
of the Paris Agreement. In the absence of a broadly accepted
standard, we have developed our own approach for demonstrating
Paris alignment by setting carbon intensity targets within a
pathway derived from the IPCC SR 1.5 scenarios. This pathway is
aligned with the more ambitious temperature goal of the Paris
Agreement to limit global average temperature rise to 1.5°C above
pre-industrial levels by 2100.
When constructing the pathway, we started by filtering out
certain scenarios to ensure that Shell’s targets are aligned with
earlier action and low-overshoot scenarios. Overshoot refers to the
extent to which a scenario exceeds an emissions budget and
subsequently relies on sinks to compensate for the excess
emissions. Next, we calculated the carbon intensity (grammes of
CO2/MJ of energy) for each of the remaining scenarios by dividing
net emissions by total final energy consumption, with electricity
represented as a fossil fuel equivalent.
To set a starting point, we then indexed the resulting carbon
intensities to a common value of 100 in 2016 to remove the impact
of differences between Shell’s historical net carbon intensity and
the intensities calculated from the IPCC scenarios. Finally, the
pathway was constructed using the range of carbon intensity
reductions over time. Outlying values at the top and bottom of the
range were removed, which had the effect of narrowing the final
pathway.
By using the 1.5°C pathway produced by this approach to set our
targets, we aligned them with the necessary reduction in carbon
intensity shown in the 1.5°C scenarios. This is illustrated in the
table, which shows that our targets are positioned within the range
of the 1.5°C pathway. The upper and lower limits represent the
upper and lower boundaries of the 1.5°C pathway derived using the
approach described above.
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Shell’s Paris-aligned targets |
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2023 |
2024 |
2025 |
2030 |
2035 |
2050 |
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IPCC-derived upper range |
-4% |
-5% |
-7% |
-15% |
-34% |
-68% |
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IPCC-derived lower range |
-10% |
-13% |
-17% |
-36% |
-64% |
-104% |
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Shell target range |
6-8% |
9-12% |
9-13% |
20% |
45% |
100% |
Until 2035, our calculation of the total net emissions of each
scenario includes only the expected mitigation actions by Shell,
such as carbon capture and storage and offsetting using natural
sinks. Any use of offsets included in the carbon-neutral energy
products we offer our customers is also part of our calculation.
After that date, we include mitigation actions taken separately by
our customers. This is because we expect that customers will need
to take action to mitigate their emissions from the use of our
products if society is to achieve the goals of the Paris
Agreement.
To account for reductions in emissions across full energy value
chains it is necessary to build new protocols to include mitigation
actions by both energy suppliers and users. Currently, energy
suppliers report the Scope 3 emissions from the use of their
products, which are equivalent to the Scope 1 emissions reported by
the users of those products. However, when users of energy products
mitigate their Scope 1 emissions by the use of carbon capture and
storage or offsets there is no protocol for reflecting a
corresponding reduction in the Scope 3 emissions reported by the
energy supplier. We will continue to engage stakeholders on these
carbon protocols and will seek to align with new frameworks as they
evolve.
As an energy provider, Shell has set a target to reduce the net
carbon intensity of the energy products it sells by 20% by 2030. We
believe that this target is aligned with a 1.5°C pathway derived
from the IPCC SR 1.5 scenarios. We also believe that the pace of
change will vary around the world by region and by sector, taking
into consideration the time needed for energy users to invest in
large-scale equipment, and the energy infrastructure changes needed
for Shell to deliver more low- and zero-carbon energy.
Reducing carbon intensity
The biggest driver for reducing our net carbon intensity is
increasing the sales of and demand for low-carbon energy. The chart
below illustrates how changes in the volume of products and
services we sell could result in net carbon intensity reductions
through to 2030. The change in our sales of these products and
services will also reflect the development and adoption of new
technologies and infrastructure, and the adoption of public
policies designed to encourage the energy transition.
Working to reduce our net carbon intensity
Net carbon intensity in gCO2e/MJ [A]
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2016 |
2021 |
2022 |
2030 |
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Actual |
Actual |
Actual |
Target |
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Net carbon Intensity |
79 |
77 |
76 |
63 |
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Net carbon intensity reduction |
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-3.8% |
-20% |
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Levers to reduce our net carbon intensity between the end of 2022
and 2030 |
Action |
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Hydrocarbon sales [B] |
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Electricity sales [C] |
Grow power sales |
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Low-carbon fuels sales [D] |
Grow biofuels, develop hydrogen |
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Carbon capture and storage [E] |
Develop CCS |
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Carbon credits [F] |
High quality carbon credits |
- Grams of carbon dioxide equivalent
per megajoule.
- Hydrocarbon sales reflect the effect of lower sales of oil
products, and higher sales of natural gas. Emissions associated
with gas are lower than those of oil products.
- Electricity sales show the expected growth of our integrated
power business and increasing sales of renewable electricity.
- Sales of low-carbon fuels reflect higher sales of biofuels and
hydrogen, which are low- and zero-carbon products.
- Carbon capture and storage (CCS) reduces carbon emissions by
capturing them at source.
- Carbon credits such as nature-based solutions can be used to
offset remaining carbon emissions, particularly in hard-to-abate
sectors such as aviation and industries including cement
and steel.
Carbon intensity performance
In 2022, Shell’s NCI was 76 grams of carbon dioxide equivalent
per megajoule of energy (gCO2e/MJ), a 1.3% decrease from the
previous year and a 3.8% reduction compared with 2016, the
reference year. The decrease in Shell’s NCI in 2022 was primarily
due to an increased proportion of renewable power and corresponding
reduction in the carbon intensity of our power sales. Shell’s 2022
NCI includes 4.1 million tonnes of carbon credits, compared with
5.1 million tonnes which were included in Shell’s 2021 NCI.
The net carbon intensity only includes carbon credits that are
retired against energy products.
Share of energy delivered per energy product
type[A]-[F]
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| Energy product
type |
2016 Share |
2020 Share |
2021 Share |
2022 Share |
2022 carbon
intensity (gCO2e/MJ) |
| Oil products and
gas-to-liquids (GTL) |
54% |
47% |
45% |
44% |
91 |
| Gas |
24% |
21% |
25% |
22% |
65 |
| Liquefied natural
gas |
14% |
19% |
18% |
20% |
70 |
| Biofuels |
1% |
1% |
1% |
1% |
39 |
| Power |
7% |
12% |
12% |
12% |
58 |
- Percentage of delivered energy may not add up to 100% because
of rounding.
- Total volume of energy products sold by Shell, aggregated on an
energy basis, with electricity represented as fossil equivalents.
This value is derived from energy productsales figures disclosed by
Shell in the Annual Report and the Sustainability Report.
- Lower heating values are used for the energy content of the
different products and a fossil-equivalence approach is used to
account for electrical energy, so that it is assessed on the same
basis as our other energy products.
- The NCI calculation uses Shell’s energy product sales volumes
data, as disclosed in the Annual Report and Sustainability Report.
This excludes certain contracts held for trading purposes and
reported net rather than gross. Business-specific methodologies to
net volumes have been applied in oil products and pipeline gas and
power. Paper trades that do not result in physical product delivery
are excluded. Retail sales volumes from markets where Shell
operates under trademark licensing agreements are also excluded
from the scope of Shell’s carbon intensity metric.
- Emissions included in the carbon intensity of power have been
calculated using the market-based method.
- The carbon intensity of biofuels provided in the graph "Share
of energy delivered per energy product type" reflects the global
average for biofuels sold by Shell for 2022.
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Decarbonising our portfolio Read how Shell is helping
customers reduce their emissions. |
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Transforming the
energy system |
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Electricity |
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Hydrogen |
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Biofuels |
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Conventional
fuels |
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In focus: Carbon
capture and storage |
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In focus: Carbon
credits |
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Energy Transition
in action |
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Transforming the energy system
To help to transform the energy system, we:
- provide more electricity to
customers, while also driving a shift to renewable
electricity;
- develop low- and zero-carbon
alternatives to traditional fuels, including biofuels, hydrogen,
and other low- and zero-carbon gases;
- work with our customers across
different sectors to decarbonise their use of energy; and
- address any remaining emissions
from conventional fuels with solutions such as carbon capture and
storage and carbon credits.
Electricity
In 2022, we sold 243 terawatt hours (TWh) of electricity, and we
took significant steps to invest in renewable generation and grow
our electric vehicle charging network.
We more than doubled our solar and wind generation capacity in
operation, under construction and/or committed for sale to 6.4
gigawatt (GW), from 3 GW in 2021. This includes 2.2 GW in operation
and 4.2 GW in development. We also have a further 45 GW of
renewable generation capacity in our pipeline of future
projects.
Our single biggest investment was the $1.6 billion acquisition
of Sprng Energy, a solar and wind platform in India. It added 2.3
GW to our renewable generation capacity and 7.5 GW to our pipeline
of future projects. We have integrated Savion, a solar and energy
storage company in the USA, into our business after acquiring it in
2021.
We also won bids with our partners to build two offshore wind
farms in the UK, one in the USA and one in the Netherlands. These
will have the potential to generate around 7.3 GW (Shell share 3.7
GW). The UK joint venture will develop two of the world’s first
floating wind farms off the east coast of Scotland, which are
expected to be operational in the early 2030s.
In 2022, we also made strong progress in rolling out our
electric vehicle (EV) charging network to 28 countries, making it
easier for motorists around the world to reduce their emissions. We
increased the number of EV charge points we own or operate by 62%
to around 139,000 in 2022, up from around 86,000 the previous year.
In November 2022, we completed our acquisition of German company
SBRS GmbH, which provides electric charging services for buses,
trucks and vans. It will allow us to offer more charging services
to business customers who need to decarbonise their fleets and
improve their depot charging capabilities.
Renewable power generation and the marketing and trading of
power sit within our Renewables and Energy Solutions business
segment. Mobility, including electric vehicle charging services,
sits within Marketing.
Read more about our power business:
www.shell.com/energy-and-innovation/electricity
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In Focus |
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Helping
our customers reduce their emissionsWe are helping
software company SAP move to an emissions-free global car fleet by
2030 in support of its net-zero targets. Through our Accelerate to
Zero programme, Shell is providing on-the-go and home charging for
electric vehicles, as well as other fleet solutions, for SAP
employees in several countries. At SAP’s headquarters in Walldorf,
Germany, we are working to build solar generation capacity to help
the company decarbonise and become more self-reliant in its energy
use. In 2022, we also helped wine producer Treasury Wine
Estates get closer to achieving its net-zero target and become a
renewable energy producer by installing 9,500 solar panels on
rooftops and on the ground at two of its Australian sites. These
solar panels are expected to generate more than 5,500
megawatt-hours of electricity a year. Shell Energy is working with
Treasury Wine Estates, which has 13,000 hectares of vineyards
around the world, to provide renewable energy across the company’s
operations. A further 9,000 solar panels are being installed at its
California vineyards. Read more about how we help our
customers decarbonise and meet their net-zero commitments on our
website: www.shell.com/business-customers |
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Hydrogen
Hydrogen can play a crucial role in helping the world reach
net-zero emissions. It is particularly suitable for use in
hard-to-electrify sectors like heavy-duty transport, heavy
industry, shipping and aviation because of its high energy density.
We are increasing our investment in the production and supply of
hydrogen.
In July 2022, we took the final investment decision to build
Holland Hydrogen 1 in the Netherlands, which will be Europe’s
largest renewable hydrogen plant once operational. The 200 MW
electrolyser will produce up to 80 tonnes of renewable hydrogen a
day, enough to meet up to 10% of the annual hydrogen demand from
Shell Energy and Chemicals Park Rotterdam. Holland Hydrogen 1 could
also meet future demand for renewable hydrogen from the transport
and industrial sectors.
This adds to our 20 MW hydrogen electrolyser project in
Zhangjiakou, China, which was completed in time to supply
renewable-based hydrogen to the 2022 Winter Olympics in February.
By the end of 2022, our total electrolyser capacity was 30 MW. This
is about 6% of the global capacity of installed electrolysers in
2021, according to the International Energy Agency (IEA).
Hydrogen is not yet widely used by motorists or commercial road
transport customers. We have more than 50 hydrogen retail sites in
Europe and North America, where drivers can fill up their vehicles
with hydrogen fuel. To encourage some commercial road transport
customers to gain experience with hydrogen, we ordered 25 hydrogen
trucks in Germany. The trucks will be rented out in a pay-per-use
system, allowing us to better understand what it will take to
increase the uptake of hydrogen by commercial drivers.
Hydrogen sits within our Renewables and Energy Solutions
business segment.
Read more about our hydrogen business at
www.shell.com/energy-and-innovation/new-energies/hydrogen .
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In Focus |
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The new
technologies behind the energy transitionWe continue to
invest in the research and development of new technologies that
will help to decarbonise our operations and reduce emissions for
our customers. In 2022, research and development expenditure on
projects that contributed to decarbonisation was around
$440 million, representing about 41% of our total research and
development spend.We launched our Energy Transition Campus
Amsterdam, creating opportunities for others to join us in finding
solutions to the world’s energy challenges. One such project is a
collaboration between Shell and Dow, an American chemicals company,
to electrify steam cracking furnaces with renewable energy. Steam
cracking is one of the most carbon-intensive processes in
petrochemical production. E-cracking furnaces operated using
renewable electricity have the potential to reduce Scope 1
emissions from steam cracking by up to 90%.Shell invests in
start-ups that develop new technologies and business models which
have the potential to accelerate the energy transition. Globally,
Shell Ventures is one of the most active venture capital investors
in climate technology and mobility. In 2022, Shell Ventures
invested in more than 20 start-ups, including Statiq, a company
that is building a charging network for electric vehicles in India;
the Dutch company enie.nl, which installs solar panels on roofs in
the Netherlands and Africa; and Li-Industries, an American company
that has developed a unique technology to recycle lithium
batteries.Read more about the role technology plays at
www.shell.com/energy-and-innovation/the-role-technology-plays and
www.shell.com/energy-and-innovation/new-energies/shell-ventures |
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Biofuels
Biofuels such as renewable natural gas (RNG), sustainable
aviation fuel (SAF), biodiesel and bioethanol can help customers
reduce their emissions without having to change their aeroplanes,
cars, trucks, or ships.
Shell is already one of the world's largest traders and blenders
of biofuels. In 2022, around 9.5 billion litres of biofuels,
which is around 6% of the global biofuels consumption, went into
Shell’s fuels worldwide. This is up from 9.1 billion litres in 2021
and includes sales made by Raízen, our non-operated joint venture
in Brazil (Shell interest 44%).
We continued to grow our biofuels business in 2022 through
projects and acquisitions. We acquired Nature Energy for around $2
billion, our biggest acquisition in the energy transition to date.
Nature Energy is the largest producer of renewable natural gas in
Europe, with 14 biogas plants. The company also has around 30 new
plant projects in the pipeline in Europe and the USA. This
acquisition complements our growing RNG business in the USA.
Our Brazilian joint venture Raízen is one of the world's largest
biofuels producers. In November 2022, Shell announced an agreement
with Raízen to buy 3.25 billion litres of ethanol made from
sugar-cane waste. Raízen’s second-generation ethanol technology can
produce about 50% more ethanol from the same amount of land. The
low-carbon fuel is expected to be produced by five plants that
Raízen will build in Brazil, bringing its total portfolio of
ethanol facilities to nine.
Earlier in the year, we began construction of a bio-LNG plant at
the Energy and Chemicals Park Rheinland in Germany to make
liquefied natural gas from biological waste. Once operational, the
plant will produce 100,000 tonnes of bio-LNG each year. In the
Netherlands, Shell became the first fuel retailer to offer bio-LNG
blended with regular LNG to all its customers. Trucks using this
blend emit around 30% less CO2.
In the aviation sector, we became the first company to supply
SAF to customers in Singapore in February 2022. By the end of the
year we were supplying SAF to airlines at seven airports around the
world. We also acquired Malaysian waste oil recycling firm EcoOils,
securing long-term access to advanced biofuels feedstock that will
enable the production and supply of low-carbon fuels like SAF to
customers.
Biofuels is part of our Marketing business segment.
Read more about our biofuels business at
www.shell.com/energy-and-innovation/new-energies/low-carbon-fuels
Conventional fuels
Oil and gas currently meet more than half of the world’s energy
needs, according to the International Energy Agency (IEA). The
volatility caused by Russia’s war in Ukraine has highlighted the
need for a global supply of secure and affordable energy. We
continue to supply the conventional fuels needed to help meet this
demand, including natural gas and traditional fuels (such as fuel
oil, gasoline, diesel and jet fuel), while lowering emissions from
our own operations.
Natural gas
In 2022, as one of the world's largest suppliers of liquefied
natural gas (LNG), we shipped natural gas to where it was needed
most. We delivered 194 cargoes of LNG to Europe – almost five times
our usual average. In total, we sold 66.0 million tonnes of LNG in
2022 compared with 64.2 million tonnes in 2021.
LNG plays an important role in enabling countries to replace
coal-fired power generation with a lower-carbon alternative. For
example, combined-cycle gas turbines emit about 50% less CO2 per
unit of electricity generated than an average coal-fired power
plant, according to the IEA. LNG also helps to decarbonise shipping
operations and commercial road transport. In 2022, we completed
more than 250 ship-to-ship LNG bunkering operations. We provide LNG
to ships at 15 ports in 10 countries. We also expanded our LNG
refuelling network to more than 60 operated sites, bringing the
number of sites where Shell customers can access LNG in Europe to
more than 160.
Shell was selected as a partner in two projects in Qatar: the
expansion of the North Field East, which is the largest LNG project
in the world, and the North Field South project [A]. By using
carbon capture and storage, these landmark projects will help
provide LNG with a lower carbon footprint to our customers. Shell’s
share of these two projects will be around 3.5 million tonnes per
annum (mtpa) of LNG when production starts later in the decade.
In 2022, we also took final investment decisions to develop
offshore gas projects in Malaysia, the UK and Australia. One of
them, the Rosmari-Marjoram project, situated 220 kilometres off the
coast of Malaysia, will mainly be powered by renewable energy.
Traditional fuels
From exploration to refining and distribution, traditional fuels
continue to play a key role in the energy system. We estimate that
our oil production peaked in 2019. In 2022, our crude oil and
natural gas liquids production available for sale was 13% lower
than in the previous year. This larger than usual decline was
mainly driven by portfolio changes, including the sale of our
Permian business in late 2021 and the derecognition of volumes
related to Sakhalin in Russia.
In 2022, we continued the transformation of our integrated
refineries into Energy and Chemicals Parks. This involves
developing new facilities and converting or dismantling existing
units. We plan to process less crude oil and use more renewable and
recycled feedstocks such as hydrogen, biofuels and plastic waste.
In the USA, we completed the sale of our Mobile refinery in Alabama
and of our interest in the Deer Park refinery in Texas.
We have implemented a variety of measures to reduce the energy
use and increase the energy efficiency of our operations, with
estimated total savings of around 1,155 million kilowatt hours
(kWh). Please refer to the “Our journey to net zero” section in our
Annual Report and Accounts 2022 for examples of the measures we
took in 2022.
Our conventional fuels activities are part of our Upstream,
Marketing, Integrated Gas and Chemicals and Products business
segments.
[A] Shell participation in the North Field South project remains
subject to clearance of remaining customary conditions
precedent.
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In Focus |
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Carbon
capture and storage (CCS)Shell continues to work with
governments, customers and partners to unlock the potential for CCS
to reduce emissions where there are currently few viable low-carbon
alternatives.In 2022, Shell's spending on CCS opportunities
(operating expenses and cash capital expenditure) amounted to
around $220 million, an increase of 51% from the $146 million
invested in 2021. Shell’s equity share of captured and stored CO2
was around 0.4 million tonnes in 2022, in line with the 2021
amount.In Norway, our Northern Lights CCS joint venture (Shell
interest 33%) signed a letter of intent on cross-border CO2
transport and storage in August. Under this agreement, some 800,000
tonnes of CO2 will be captured, compressed and liquefied at a Yara
ammonia and fertiliser plant in the Netherlands from early 2025.
The CO2 will then be transported to Norway for permanent storage
2,600 metres below the seabed in the North Sea. In November 2022,
construction started on the first two ships that will be used to
transport CO2 to the Northern Lights facilities.We are making
progress in other CCS projects in our portfolio. In Canada, for
example, the Alberta government selected the Atlas Sequestration
Hub (with Shell as 50% partner) to move to the next stage for
further evaluation in April 2022.CCS is part of our Renewables and
Energy Solutions business segment.Read more about CCS on our
website:
https://www.shell.com/energy-and-innovation/carbon-capture-and-storage |
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In Focus |
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Carbon
credits, including nature-based solutions (NBS)Carbon
credits may be used by Shell and our customers to compensate
emissions in line with the mitigation hierarchy of avoid, reduce
and compensate. We are clear that carbon credits need to have a
robust carbon benefit but also deliver a positive impact on
ecosystems and communities. We work closely with local partners to
ensure that the carbon credits projects we invest in are of a high
quality.In 2022, we invested $69 million in nature-based projects
and $23 million in technology-based projects, such as
fuel-efficient cookstoves. The nature-based projects include
reforestation and the prevention of landscape degradation and
destruction. The spend on nature-based projects includes a $40
million investment in Brazilian carbon credit developer Carbonext.
This company’s portfolio protects more than 2 million hectares of
the Amazon rainforest.We offer carbon credits to drivers and
business customers who wish to compensate for the life-cycle
CO2-equivalent emissions of the Shell product they buy. In 2022,
this offer was extended to motorists at more than 4,000 service
stations in Austria, Canada, Denmark, Germany, Hungary, the
Netherlands, Switzerland and the UK.We delivered 11
carbon-compensated liquefied natural gas (LNG) cargoes to our
customers across the globe, and for the first time, a GHG-neutral
LNG cargo in line with the GIIGNL Framework [A]. We also launched
our Avgas carbon-compensated offer for aviation customers in
selected markets in Europe and in Singapore, through our airport
network.In 2022, we retired 5.8 million carbon credits, including
4.1 million credits included in our net carbon intensity, and 1.7
million carbon credits associated mainly with the sale of
non-energy products and with Shell’s business travel. One carbon
credit represents the avoidance or removal of 1 tonne of CO2. We
carefully source and screen the credits we purchase and retire from
the market, and work with certification standards and ratings
agencies to check that our requirements are met.Carbon credits,
including nature-based solutions are part of our Renewables and
Energy Solutions business segment.Read more about how we ensure
high-quality carbon credits on our website: www.shell.com/nbs[A]
This framework, published by the International Group of Liquefied
Natural Gas Importers, provides a common source of best practice
principles in the monitoring, reporting, reduction, offsetting and
verification, of GHG emissions associated with a delivered cargo of
LNG. |
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Energy transition in Action: a selection of 2022
developments (map)
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Financial frameworkRead about our investments through the energy
transition and our targeted returns. |
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Investments and
returns |
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Investing in net
zero |
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Investments and returns
Since the first quarter of 2022, we have reported separately on
the performance of our five business segments [A]:
- Our Marketing business has
targeted returns of 15-25%. It comprises Mobility, Lubricants, and
Sectors and Decarbonisation. Mobility operates Shell's retail
network, including electric vehicle charging services. Lubricants
produces, markets and sells lubricants for road transport, and
machinery used in manufacturing, mining, power generation,
agriculture and construction. Sectors and Decarbonisation sells
fuels, speciality products and services, including energy solutions
that help customers reduce emissions in the aviation, marine,
commercial road transport and agricultural sectors, among
others.
- Our Renewables and Energy
Solutions business has targeted returns of more than 10% [B]. It
includes renewable power generation, the marketing and trading of
power and pipeline gas, as well as carbon credits, and digitally
enabled customer solutions. Renewables and Energy Solutions also
includes the production and marketing of hydrogen, development of
commercial carbon capture and storage hubs, investment in
nature-based projects that avoid or reduce carbon emissions
(Nature-based solutions), and Shell Ventures, which invests in
companies that work to accelerate the energy and mobility
transformation.
- Our Integrated Gas business has
targeted returns of 14-18%. It includes liquefied natural gas
(LNG), conversion of natural gas into gas-to-liquids (GTL) fuels
and other products. It includes natural gas and liquids exploration
and extraction, and the operation of the upstream and midstream
infrastructure necessary to deliver these to market. Integrated Gas
also includes the marketing, trading and optimisation of LNG,
including LNG as a fuel for heavy-duty vehicles.
- Our Chemicals and Products
business has targeted returns of 10-15%. It includes chemicals
manufacturing plants with their own marketing network, and
refineries which turn crude oil and other feedstocks into a range
of oil products. These are moved and marketed around the world for
domestic, industrial and transport use. The business also includes
pipelines, trading of crude oil, oil products and petrochemicals,
and oil sands activities, which involves the extraction of bitumen
from mined oil sands and its conversion into synthetic oil.
- Our Upstream business has
targeted returns of 20-25%. It explores for and extracts crude oil,
natural gas and natural gas liquids. It also markets and transports
oil and gas, and operates the infrastructure necessary to deliver
them to the market. Shell’s Upstream business delivers reliable
energy from conventional oil and gas operations, as well as
deep-water exploration and production activities. We are focusing
our Upstream portfolio to become more resilient, prioritising value
over volume to provide the energy the world needs today whilst
funding the energy system of tomorrow.
For all these businesses, our target returns consider the risks
and uncertainties associated with our investments, and the scale of
spending that is required to develop opportunities. For example, in
our Upstream business, they reflect the costs of exploration,
feasibility studies and construction, as well as risks linked to
commodity prices.
In 2022, our cash capital expenditure [C] was around $25 billion
and our operating expenses were around $39 billion. The table below
shows how much we spent and the cash flow from operations in 2021
and 2022 across our businesses.
[A] On January 31, 2023, we announced that our Integrated Gas
and Upstream businesses will be combined to form a new Integrated
Gas and Upstream Directorate. The Downstream business will be
combined with Renewables and Energy Solutions to form a new
Downstream and Renewables Directorate. These changes are expected
to take effect on July 1, 2023 and will not affect Shell’s
financial reporting segments in 2023. Please refer to the “Our
organisation” section in the Annual Report and Accounts 2022.
Please refer to the “Our organisation” section in the Annual Report
and Accounts 2022.
[B] The IRR target for Renewables and Energy Solutions covers
Integrated Power only. The target of more than 10% relates to the
integrated value chain returns over time and includes equity
returns from minority investments.
[C] Please refer to the Annual Report and Accounts 2022 for the
definitions of cash capital expenditure and operating expenses.
|
2022 delivery |
|
Net debt end 2022 $45 billion |
Cash capital expenditure[A] |
Operating expenses[A] |
Cash flow from operations (CFFO) $ billion |
|
2022 |
2021 |
2022 |
2021 |
2022 |
2021 |
|
Marketing |
20% |
12% |
21% |
20% |
2.4 |
5.0 |
|
Renewables and Energy Solutions |
14% |
12% |
9% |
7% |
(6.4) [B] |
0.5 |
|
Integrated Gas |
17% |
18% |
13% |
13% |
27.7 |
13.2 |
|
Chemicals and Products |
16% |
27% |
28% |
28% |
12.9 |
3.7 |
|
Upstream |
33% |
32% |
29% |
32% |
29.6 |
21.6 |
[A] Excluding Corporate segment. Operating expenses include
exploration expenses.
[B] Negative CFFO primarily driven by net cash outflows related
to derivatives and working capital outflow partly offset by
Adjusted EBITDA .
Read more about our Outlook for 2023 and beyond in the Annual
Report and Accounts 2022
Investing in net zero
In 2022, we invested $8.2 billion in low-carbon energy and
non-energy products, around a third of our total cash capital
expenditure [A] of $25 billion. Of that, we invested $4.3 billion
in low-carbon energy solutions, an increase of 89% compared with
the previous year. This includes capital spending on biofuels,
hydrogen and charging for electric vehicles, as well as wind and
solar power [B]. The remaining $3.9 billion was invested in
non-energy products such as chemicals, lubricants and convenience
retail, which do not produce emissions when they are used by our
customers. Our investment in non-energy products decreased by 9%
compared with 2021.
These investments advance a central part of our strategy which
is to sell more products with low-carbon emissions to help both
Shell and our customers meet their climate targets.
Two-thirds of our capital spending in 2022 was on maintaining
supplies of the vital energy the world needs today. We invested
$4.2 billion in liquefied natural gas (LNG) as well as gas and
power marketing and trading, an increase of 17% compared with the
previous year. We expect LNG will remain an important part of the
energy mix for many years to come because of its role in reducing
emissions from power generation and transport.
We also increased our investments in oil production and oil
products by 30% to $12.5 billion. This includes investments of $8.1
billion in our Upstream business, helping maintain our assets and
make up for the natural decline in oil and gas production. It also
includes investments in refining and trading, as well as fuels
marketing, which are important to maintain supplies of fuels for
motorists, commercial road transport, aviation and industry.
[A] Please refer to the Annual Report and Accounts 2022 for the
definition of cash capital expenditure.
[B] The $4.3 billion investment does not include the acquisition
of Nature Energy for around $2 billion, which closed at the
beginning of 2023.
|
Investing through the energy transition |
| |
|
Total cash capital expenditure of $25 billion in 2022 |
| Non-energy products
[A] $3.9 billion |
Low-carbon energy
solutions [B] $4.3 billion |
| LNG, gas and power
marketing and trading [C] $4.2 billion |
Oil, oil products
and other [D] $12.5 billion |
- Products for which usage does not cause
Scope 3, Category 11 emissions: Lubricants, Chemicals, Convenience
Retailing, Agriculture & Forestry, Construction &
Road.
- E-Mobility and Electric Vehicle Charging Services, Low-Carbon
Fuels (Biofuels/HEFA), Renewable Power Generation (Solar/Wind),
Environmental Solutions, Hydrogen, CCUS. We define low-carbon
energy products as those that have an average carbon intensity that
is lower than conventional hydrocarbon products, assessed on a
lifecycle basis (including emissions from production, processing,
distribution and end use).
- LNG Production & Trading, Gas & Power Trading, and
Energy Marketing.
- Upstream segment, GTL, Refining & Trading, Marketing fuel
and hydrocarbon sales, Shell Ventures, Corporate segment.
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Policies
and governanceRead about our climate-related governance and policy
engagement, and our disclosures linked to climate standards and
benchmarks. |
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Climate policy
engagement |
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Climate
governance |
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A just
transition |
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Climate standards
and benchmarks |
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Climate policy engagement
National and international climate and energy transition
policies play an increasingly important role in steering and
enabling the energy transition. Shell engages with governments,
regulators and policymakers in different ways to help shape policy,
legislation and regulation.
We advocate directly to governments and policy
makers, offering relevant information, views, and
policy recommendations on new proposals. For example, Shell
supports the European Union’s Fit for 55 package, which aims to
enable the EU’s transition to climate neutrality by 2050. As part
of our engagements with the EU institutions in 2022, we called for
binding targets in the Renewable Energy Directive to accelerate the
use of renewable hydrogen in hard-to-abate sectors such as industry
and transport by 2030.
We engage governments and policymakers indirectly, for example
through our participation in coalitions and industry associations.
We recognise that industry associations may represent many members
and sometimes we may have different views on a topic. We join
coalitions where there is likely to be a common advocacy
objective.
In the USA, for example, Shell supported the US Inflation
Reduction Act, which was signed into law in 2022. We advocated
different clean energy provisions, such as expanded tax credits for
carbon capture utilisation and storage, and the creation of a tax
credit for hydrogen production. We engaged with Members of Congress
and the Biden Administration directly, as well as through advocacy
coalitions, including the CEO Climate Dialogue, the Clean Hydrogen
Future Coalition and the Carbon Capture Coalition.
In India, we continued to engage with the government, industry
partners, think tanks and academic institutions to collectively
find ways to promote low-carbon energy choices. In 2022, we
launched a carbon capture utilisation and storage industry
coalition with our partners. It aims to encourage the creation of
government policies to support the development of carbon capture
and storage projects in India.
We also aim to help shape the wider debate around the energy
transition in other ways, including through speeches and articles.
Ahead of a meeting of the EU Parliament in June 2022, for example,
Shell published an opinion piece on the European news website
Euractiv. We supported the proposal to ban the sale of new petrol
and diesel cars and vans in the European Union from 2035, which was
agreed a few months later.
We aim to be at the forefront of the drive for greater
transparency around climate and energy-transition-related policy
engagement. We set out our approach, policy and advocacy positions,
and information about our industry association memberships, on our
website.
In March 2023, we plan to publish our first Climate and Energy
Transition Lobbying Report. This report reviews our lobbying in
2022 and our memberships of industry associations. We continue to
work to ensure our memberships of industry associations support our
climate and energy transition policy positions.
Read more at www.shell.com/advocacy
Climate governance
Our climate governance ensures our strategy, processes and
incentives are aligned to drive our progress in the energy
transition.
In 2022, the Board continued to consider energy transition
matters throughout the year when reviewing and guiding the
implementation of our Powering Progress strategy, assessing the
risk management policies in place, and challenging and endorsing
the business plans and budgets - including overseeing major capital
expenditures, acquisitions and divestments.
To foster the delivery of our strategy, we have further aligned
staff remuneration with progress in the energy transition, by
making changes to the annual bonus scorecard, which helps determine
bonus outcomes for most Shell employees, including Executive
Committee members.
From 2022, we introduced new metrics to the measure called
Shell’s Journey in the Energy Transition (15% of the annual bonus
scorecard). These are:
- Selling lower carbon products –
we help customers to reduce their emissions by supplying low-carbon
products. We measure our success by the earnings share of our
Marketing activities from low-carbon energy products as well as
non-energy products and convenience retail.
- Reducing operational emissions –
our target is to achieve a 50% reduction by 2030; and this measure
is based on reducing our Scope 1 and 2 operational emissions.
- Partnering to decarbonise – we
seek to collaborate with our customers to help them reduce their
emissions. In 2022, we measured success in this area in terms of
our progress in rollingout our electric vehicle charging
network.
We also introduced a customer excellence measure on the annual
bonus scorecard, to emphasise the importance of building ever
stronger customer relationships in the energy transition.
Our Long-term incentive plan (LTIP) and Performance share plan
(PSP) tie pay for around 16,500 employees directly to achieving our
strategic ambitions for the energy transition. From 2019 onwards,
we have included an energy transition performance metric in our
LTIP. This element vested for the second time in 2022, at 180% of
target, based on performance between 2020 and the end of 2022,
reflecting our progress in transforming Shell’s business for a
lower-carbon future. The weight of this metric will be increased
from 20% to 25% for the most senior employees for the upcoming LTIP
cycle (2023-2025).
For further details see “Governance of climate-related risk and
opportunities” in our Annual Report and Accounts 2022.
A just transition
Shell supports the Paris Agreement on climate change, which
recognises the importance of a just transition. A just transition
means a fairer distribution of the costs and benefits of the
world’s transition to a net-zero emissions energy system.
Our aim is to contribute to a just transition by making a
positive impact on the communities where we operate, our customers
and our workforce. This is part of our strategic goal to power
lives. In 2022, we pledged £100 million to help communities in the
UK develop skills and find jobs linked to the energy transition.
This includes establishing educational skill centres, part of a
wider aim to help 15,000 people find employment by 2030.
Shell continues to work with governments and our partners, such
as Energy for a Just Transition, facilitated by Business for Social
Responsibility (BSR), and Ipieca’s Just Transition Taskforce.
We are committed to respecting human rights, as set out in the
United Nations Universal Declaration of Human Rights and the
International Labour Organization Declaration on Fundamental
Principles and Rights at Work.
We continue to help our own staff learn new skills needed for
the energy transition. In 2022, around 4,000 Shell employees – up
from 1,700 in 2021 – completed courses on a range of subjects,
including hydrogen production, carbon capture and storage, and
greenhouse gas and energy management.
You can read more about our approach at
www.shell.com/justtransition
Climate standards and benchmarks
Climate standards and benchmarks play a key role in supporting
Shell’s efforts in the energy transition. They promote an ongoing
dialogue between interested parties and highlight areas of progress
against externally established criteria.
Task Force on Climate-related Financial Disclosures
(TCFD)
Shell welcomes the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD). The TCFD is a global
initiative to get companies across all sectors to assess
climate-related risks and opportunities. The TCFD recommends
disclosure of qualitative and quantitative information aligned to
its four core elements: governance, strategy, risk management, and
metrics and targets. Please refer to our Annual Report and Accounts
2022 for Shell’s disclosures related to recommendations by the
TCFD, in the “Our journey to achieving net zero” section.
Climate Action 100+ Net Zero Company
Benchmark
Since the publication of Shell’s Energy Transition Strategy in
2021, Shell has continued to engage with the Climate Action 100+
investor group. The table below shows how Shell was assessed in the
October 2022 Climate Action 100+ Net Zero Company Benchmark.
|
Criteria |
Assessment of Shell Plans – March 2022 |
Assessment of Shell Plans – October 2022 |
2022 Progress |
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Net zero by 2050 |
Meets all criteria |
Meets all criteria |
No change |
|
Long-term greenhouse gas reduction target |
Partial, meets some criteria |
Meets all criteria |
Improved |
|
Medium-term greenhouse gas reduction target |
Partial, meets some criteria |
Partial, meets some criteria |
No change |
|
Short-term greenhouse gas reduction target |
Partial, meets some criteria |
Partial, meets some criteria |
No change |
|
Decarbonisation strategy |
Partial, meets some criteria |
Partial, meets some criteria |
No change |
|
Capital allocation alignment |
Does not meet any criteria |
Does not meet any criteria |
No change |
|
Climate policy engagement |
Meets all criteria |
Meets all criteria |
No change |
|
Climate governance |
Meets all criteria |
Meets all criteria |
No change |
|
Just transition |
n/a |
n/a |
n/a |
|
TCFD disclosure |
Partial, meets some criteria |
Meets all criteria |
Improved |
The Climate Action 100+ (CA100+) benchmark uses assessments by
the Transition Pathway Initiative (TPI). In its assessment, TPI
highlights that it has recalculated Shell’s net carbon intensity
according to its own methodology. It also highlights that Shell has
set further targets to reduce its net carbon intensity, but they
were not included in this assessment as it was not possible to make
them consistent with TPI’s methodology.
We are pleased to see that our ratings have improved in two
areas in the latest assessment, but we continue to be disappointed
with certain key aspects of the assessment due to differences in
the methodologies used. We will continue our engagement with CA100+
and TPI with the aim of ensuring that our current targets and
disclosures are reflected in their Benchmark and hope we can
continue to improve the outcome in their assessment.
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Litigation and activismRead about our position on climate
litigation and activism. |
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Climate
litigation and activism |
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Climate litigation and activism
During the past decade, environmental activists have
increasingly used litigation to hold governments and companies
accountable for the effects of climate change on individuals and
communities around the world. Shell is involved in more than 20
such court cases worldwide.
In March 2022, we appealed a ruling by the District Court of The
Hague in the Netherlands from May 2021, which requires Shell to
reduce emissions further and faster than even the most ambitious
energy scenarios published for the sectors in which we operate. As
we wait for the outcome of the appeal, we are taking active steps
to comply with the ruling. We believe the actions we are taking to
deliver our energy transition strategy are consistent with the
court ruling and its end of 2030 timeline. This includes the
investments we are making in low-carbon fuels, renewable power, and
hydrogen; in addition to making changes to our upstream and
refinery portfolios.
In February 2023, environmental law group ClientEarth filed a
claim with the High Court in England against Shell plc and the
current Board of Directors challenging the board’s decision-making
regarding Shell’s climate strategy. This is a derivative action
brought by shareholders on behalf of the Company. The High Court
must grant permission for ClientEarth to proceed with the claim.
Investors representing less than 0.2% of Shell’s total shareholder
base have sent letters supporting the claim. We do not accept
ClientEarth’s allegations. We believe our directors have complied
with their legal duties and have, at all times, acted in the best
interests of the Company.
We agree there is an urgent need to change the world’s energy
system. We believe it is for governments to determine the right
trade-offs for society and to put in place the policies that bring
about fundamental changes in the way society consumes energy.
Litigation does not enable the global cooperation required to
change both supply and demand for energy, as well as the
infrastructure supporting the use of energy.
Shell is determined to play its part in helping to change the
world’s energy system. We believe our climate targets are aligned
with the more ambitious goal of the UN Paris Agreement on climate
change: to limit the increase in the global average temperature to
1.5oC above pre-industrial levels. Importantly, we have already
delivered results: Shell reduced Scope 1 and 2 emissions under our
operational control in 2022 by 30% compared with 2016.
Some shareholders, such as Follow This, have also called on us
to set even more ambitious targets to reduce Scope 3 emissions.
This is also a focus of some of the climate litigation against
us.
Shell would, among other things, have to decrease its sales of
oil products and gas to reduce its Scope 3 emissions in line with
the Follow This resolution. Doing so, without changing demand and
the way our customers use energy, would effectively mean handing
over customers to competitors. This would materially affect Shell’s
financial strength and limits its ability to generate value for
shareholders. It would also reduce our ability to play an important
role in the energy transition by working with customers to reduce
their emissions.
We are making progress in implementing our energy transition
strategy, which we believe is the best for society, our customers
and our shareholders. Read more about why Shell has appealed the
District Court ruling (in Dutch and English)
www.shell.nl/media/nieuwsberichten/2022/waarom-shell-in-hoger-beroep-gaat
Cautionary note
The companies in which Shell plc directly and indirectly owns
investments are separate legal entities. In this Report “Shell”,
“Shell Group” and “Group” are sometimes used for convenience where
references are made to Shell plc and its subsidiaries in general.
Likewise, the words “we”, “us” and “our” are also used to refer to
Shell plc and its subsidiaries in general or to those who work for
them. These terms are also used where no useful purpose is served
by identifying the particular entity or entities. “Subsidiaries”,
“Shell subsidiaries” and “Shell companies” as used in this Report
refer to entities over which Shell plc either directly or
indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
“joint ventures” and “joint operations”, respectively. “Joint
ventures” and “joint operations” are collectively referred to as
“joint arrangements”. Entities over which Shell has significant
influence but neither control nor joint control are referred to as
“associates”. The term “Shell interest” is used for convenience to
indicate the direct and/or indirect ownership interest held by
Shell in an entity or unincorporated joint arrangement, after
exclusion of all third-party interest.
Forward-looking statements
This Report contains forward-looking statements (within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995) concerning the financial condition, results of operations and
businesses of Shell. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management’s current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Shell to
market risks and statements expressing management’s expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and
phrases such as “aim”, “ambition”, “anticipate”, “believe”,
“could”, “estimate”, “expect”, “goals”, “intend”, “may”,
“milestones”, “objectives”, “outlook”, “plan”, “probably”,
“project”, “risks”, “schedule”, “seek”, “should”, “target”, “will”
and similar terms and phrases. There are a number of factors that
could affect the future operations of Shell and could cause those
results to differ materially from those expressed in the
forward-looking statements included in this Report, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell’s products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, judicial, fiscal and regulatory
developments including regulatory measures addressing climate
change; (k) economic and financial market conditions in various
countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with
governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; (m)
risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or
exceed previous dividend payments. All forward-looking statements
contained in this Report are expressly qualified in their entirety
by the cautionary statements contained or referred to in this
section. Readers should not place undue reliance on forward-looking
statements. Additional risk factors that may affect future results
are contained in Shell plc’s Form 20-F for the year ended December
31, 2022 (available at www.shell.com/investor and www.sec.gov).
These risk factors also expressly qualify all forward-looking
statements contained in this Report and should be considered by the
reader. Each forward-looking statement speaks only as of the date
of this Report, March 16, 2023. Neither Shell plc nor any of its
subsidiaries undertake any obligation to publicly update or revise
any forward-looking statement as a result of new information,
future events or other information. In light of these risks,
results could differ materially from those stated, implied or
inferred from the forward-looking statements contained in this
Report.
In the event of any discrepancy or inconsistency between this
Report and Shell plc’s Form 20-F for the year ended December 31,
2022, such discrepancy or inconsistency is unintended, and the
information included in Shell’s Form 20-F controls.
Shell’s net carbon intensity
Also, in this Report we may refer to Shell’s “net carbon
intensity”, which include Shell’s carbon emissions from the
production of our energy products, our suppliers’ carbon emissions
in supplying energy for that production and our customers’ carbon
emissions associated with their use of the energy products we sell.
Shell only controls its own emissions. The use of the term Shell’s
“net carbon intensity” is for convenience only and not intended to
suggest these emissions are those of Shell plc or its
subsidiaries.
Shell’s net-zero emissions target
Shell’s operating plan, outlook and budgets are forecasted for a
ten-year period and are updated every year. They reflect the
current economic environment and what we can reasonably expect to
see over the next ten years. Accordingly, they reflect our Scope 1,
Scope 2 and Net Carbon Intensity (NCI) targets over the next ten
years. However, Shell’s operating plans cannot reflect our 2050
net-zero emissions target and 2035 NCI target, as these targets are
currently outside our planning period. In the future, as society
moves towards net-zero emissions, we expect Shell’s operating plans
to reflect this movement. However, if society is not net zero in
2050, as of today, there would be significant risk that Shell may
not meet this target.
Forward-looking non-GAAP measures
This Report may contain certain forward-looking non-GAAP
measures such as [cash capital expenditure] and [divestments]. We
are unable to provide a reconciliation of these forward-looking
non-GAAP measures to the most comparable GAAP financial measures
because certain information needed to reconcile those non-GAAP
measures to the most comparable GAAP financial measures is
dependent on future events some of which are outside the control of
Shell, such as oil and gas prices, interest rates and exchange
rates. Moreover, estimating such GAAP measures with the required
precision necessary to provide a meaningful reconciliation is
extremely difficult and could not be accomplished without
unreasonable effort. non-GAAP measures in respect of future periods
which cannot be reconciled to the most comparable GAAP financial
measure are calculated in a manner which is consistent with the
accounting policies applied in Shell plc’s consolidated financial
statements.
The contents of websites referred to in this Report do not form
part of this Report.
We may have used certain terms, such as resources, in this
Report that the United States Securities and Exchange Commission
(SEC) strictly prohibits us from including in our filings with the
SEC. Investors are urged to consider closely the disclosure in our
Form 20-F, File No 1-32575, available on the SEC website
www.sec.gov.
Additional information
As used in this Report, “accountable”is intended to mean:
required or expected to justify actions or decisions. The
accountable person does not necessarily implement the action or
decision (implementation is usually carried out by the person who
is Responsible) but must organise the implementation and verify
that the action has been carried out as required. This includes
obtaining requisite assurance from Shell companies that the
framework is operating effectively. “Responsible” is intended to
mean: required or expected to implement actions or decisions. Each
Shell company and Shell-operated venture is responsible for its
operational performance and compliance with the Shell General
Business Principles, Code of Conduct, Statement on Risk Management
and Risk Manual, and Standards and Manuals. This includes
responsibility for the operationalisation and implementation of
Shell Group strategies and policies. CO2 compensation does not
imply that there is no environmental impact from the production and
use of the product as associated emissions remain in the
atmosphere. CO2 compensation is not a substitute for switching to
lower emission energy solutions or reducing the use of fossil
fuels. Shell businesses focus first on emissions that can be
avoided or reduced and only then, compensate the remaining
emissions. “carbon neutral” or "CO2 compensated" indicates that
Shell will engage in a transaction where an amount of CO2
equivalent to the value of the remaining CO2e emissions associated
with the raw material extraction, transport, production,
distribution and usage /end-of-life (if Lubricants or other
non-energy product) of the product are compensated through the
purchase and retirement of carbon credits generated from CO2
compensation projects. Although these carbon credits have been
generated in accordance with international carbon standards, the
compensation may not be exact. CO2e (CO2 equivalent) refers to CO2,
CH4, N2O.
LEI Number: 21380068P1DRHMJ8KU70
Published: March 16, 2023
Classification: Additional Regulated Information required to be
disclosed under the laws of the United Kingdom
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