Shell eyes faster energy transition after court ruling

Shell said it plans to accelerate its energy transition strategy and is likely to take "some bold but measured steps over the coming years" after a Dutch court ruled last month that the company must sharply reduce its CO2 emissions this decade.

Shell's energy transition strategy envisages the firm becoming a net-zero emissions business by 2050, but it does not set shorter-term absolute emissions reduction targets. Instead the company aims to cut its carbon intensity by 20pc by 2030, 45pc by 2035 and 100pc by 2050, all compared with 2016. These targets came under scrutiny last month when the Hague District Court ordered Shell to cut its worldwide net carbon emissions, including those from its suppliers and customers, by 45pc by the end of 2030 compared with 2019 levels.

Shell chief executive Ben van Beurden reiterated today that the company expects to appeal the ruling, but "the court has said its decision applies immediately and should not be suspended pending an appeal", he noted. "For Shell, this ruling does not mean a change, but rather an acceleration of our strategy," van Beurden said, without providing further details.

Environmentalists say companies such as Shell can increase their oil and gas output while bringing down carbon intensity by adding "green" energy projects into the mix. But if a firm sets absolute emissions reduction targets, it would have to sell some oil and gas assets, delay or cancel hydrocarbon projects or significantly ramp up carbon offsets. Shell estimates that its absolute carbon emissions peaked in 2018 and its oil production peaked in 2019, and that both will continue to decline. But its existing strategy envisages growing gas output in the coming years.

"Now we will seek ways to reduce emissions even further [than envisaged in the existing strategy] in a way that remains purposeful and profitable," van Beurden said today. "That is likely to mean taking some bold but measured steps over the coming years."

Even if Shell decided to stop selling gasoline and diesel today, it would cut the company's carbon emissions but "would not help the world one bit", according to van Beurden. "Demand for fuel would not change. People would fill up their cars and delivery trucks at other service stations," he said. "Society needs to take urgent action on climate change. But a court ordering one energy company to reduce its emissions — and the emissions of its customers — is not the answer."

Although Shell disagrees with the court order, it will continue to "embrace the leading role we must play in helping to develop a low-carbon energy system", van Beurden said. Campaigners hope the Dutch court ruling will create a precedent, and it is likely to open the floodgates to similar cases against other oil firms around the world.

By Konstantin Rozhnov