Royal Dutch Shell Plc said its carbon emissions and oil production have peaked and will decline in the coming years as the company laid out a detailed plan for its transition to cleaner energy.
In a sign of how much the petroleum industry has shifted away from its mantra of growth and exploration, Shell said its oil production will fall by 1% to 2% a year. Assuming an annual reduction on the upper end of that range, the oil major’s production would fall by 18% by the end of the decade. Output of “traditional fuels” will be 55% lower by 2030.
In a wide-ranging strategy update published on Thursday, the Anglo-Dutch company set new targets for electric-car charging, carbon capture and storage, and electricity sales. It also sought to reassure investors that it could maintain returns through the energy transition, reiterating its pledge for an annual dividend increase of about 4% and the resumption of share buybacks once its net-debt target has been achieved.
Shell’s measured approach to the energy transition stands apart from its peers BP Plc and Total SE, which have announced large deals to rapidly boost its clean-energy capacity. BP has promised to slash its oil production by 40% and ramp up low-carbon spending to $5 billion annually by the end of the decade, prompting some to say the firm is overpaying for renewables. Meanwhile, Shell’s investments in the space will remain at $2 billion to $3 billion a year.
Shell said its net carbon intensity will fall by 6% to 8% in 2023, compared with 2016. That reduction will widen to 20% in 2030, 45% in 2035 and 100% by 2050.
Power will remain central to Shell’s future business, targeting 560 terawatt hours a year of electricity sales by the end of the decade. That’s double what it sells currently. It’s also aiming for a rapid expansion in electrical vehicle charge points to half a million points by 2025, from 60,000 today.