Seventy per cent of Africa’s energy comes from fossil fuels. And as the continent faces rapid population growth and rising energy demands, Shell is committed to supporting the transition to a low-carbon future. Wael Sawan, Shell’s Chief Executive Officer, discusses their focus on reducing emissions towards a more resilient energy future.

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Shell has an important role to play in providing the energy the world needs today, and in helping to build the low-carbon energy system of the future. It is an opportunity to take stock of our progress, to reflect on what we have learned, and to look forward as we transform Shell into a net-zero emissions energy business by 2050.

Over the past three years we have seen the critical importance of secure and affordable energy for economies and people’s lives. As the world’s population grows by an estimated 2 billion people by 2050, and the benefits of energy are extended to the hundreds of millions who do not have it today, demand for energy will only grow.

At the same time, the world must achieve an orderly transition away from fossil fuels to low-carbon energy to achieve net-zero emissions. Today, fossil fuels meet around 80 per cent of global energy demand, with an even greater reliance in many developing countries. We support a balanced energy transition, one that maintains secure and affordable energy supplies as the world moves to net zero.

I am encouraged by the rapid progress in the energy transition in many countries and technologies in recent years, including the continued growth in demand for liquefied natural gas (LNG), a critical fuel in the energy transition, and for low carbon energy solutions such as solar and wind power, and electric vehicles. This progress reinforces my deep conviction in the direction of our strategy.

There are exciting opportunities to use the strength of our innovation capabilities in the areas where we can have the greatest impact. Our purpose – to provide more and cleaner energy solutions – sets the direction for everything we do.

Progress towards our targets

Since we launched our Powering Progress strategy, we have made good progress against our climate targets, and learned where we have competitive strengths. By the end of 2023, we had achieved more than 60 per cent of our target to halve emissions from our operations by 2030, compared with 2016. We achieved this by adapting our portfolio, including by repurposing refineries, and making changes to our operations, such as powering some oil and gas platforms with renewable energy.

We continue to be one of the leaders in reducing methane emissions, a potent greenhouse gas that can be released during oil, gas, and LNG production. We were one of the first companies to set a target to achieve near-zero methane emissions by 2030. In 2023, we kept our methane emissions intensity well below 0.2 per cent. We made good progress towards our target to eliminate routine flaring from our upstream operations, compared with 2016. We also met our short-term target to reduce the net carbon intensity of the energy products we sell, with a 6.3 per cent reduction against our target of 6-8 per cent compared with 2016.

More value, less emissions

At our Capital Markets Day in June 2023, we outlined how our Powering Progress strategy delivers more value with fewer emissions, emphasizing the “more value” part of our strategy. In this energy transition update, we are focusing on how the same strategy delivers “fewer emissions”.

Our energy transition plans cover all our businesses. In Integrated Gas, we are growing our world-leading LNG business with lower carbon intensity. In Upstream, we are reducing emissions from oil and gas production. In Downstream and Renewables and Energy Solutions, we are growing sales of low-carbon products and solutions such as biofuels, electric vehicle charging and renewable power, while investing in hydrogen and other fuels of the future.

Our focus on performance, discipline and simplification is driving clear choices about where we can create the most value for our investors and customers through the energy transition. Our ability to raise and invest capital depends on delivering strong returns to shareholders, shaping the role that Shell can play on the journey to net zero. We believe this focus makes it more, not less, likely that we will achieve our climate targets and ambitions.

Reducing emissions from production

We believe the world will continue to need oil and gas for many years — produced with much lower emissions — alongside cleaner energy such as advanced biofuels, renewable power and hydrogen.

We expect LNG will play a critical role in the transition. It continues to provide a secure supply of energy in many European countries. It also offers flexibility to electricity grids as wind and solar power grow, and opportunities to lower carbon emissions from industries such as cement and steel by replacing coal.

In the future, by powering our LNG plants with renewable electricity, and adding carbon capture and storage, we aim to lower the carbon intensity of our LNG plants.

Supporting our customers as they decarbonize

We aim to lead in the energy transition where we have competitive strengths, see strong customer demand, and identify clear regulatory support from governments. The transport sector is a good example.

We are building on our customer relationships and expertise to help drive the decarbonization of passenger cars, heavy duty trucks, planes and ships. We aim to grow our public charging network for electric vehicles, and stay a leader in biofuels including sustainable aviation fuels or renewable diesel made from waste. By repurposing our remaining integrated refineries to focus on four regional energy and chemicals parks, we are creating the low-carbon production hubs of the future.

As we grow sales of low-carbon fuels we expect to reduce sales of oil products such as petrol and diesel. We have set a new ambition to measure our progress, to reduce customer emissions from the use of our oil products by 15-20 per cent by 2030 compared with 2021. Our ambition is in line with the European Union’s climate goals for transport, which are among the most progressive in the world.

Our focus on value has led to a strategic shift in our power business towards select markets and segments. One example is selling more power to commercial customers, including renewable power, and less to retail customers. As a result, we expect lower growth in sales of power overall. We have updated our net carbon intensity target to reflect that change, with a 15-20 per cent reduction by 2030, compared with 2016, against 20 per cent previously.

Towards net zero

In total, we invested US$5.6 billion in low-carbon solutions in 2023, which was 23 per cent of our capital spending. We are spending US$10 to 15 billion on low-carbon solutions between 2023 and 2025, making us a significant investor in the energy transition. With our focused approach, we believe our investments will have an important impact, allowing us to develop low-carbon solutions at increasingly affordable prices for our customers.

Shell will provide the different kinds of energy the world needs. We will invest in producing LNG with lower carbon intensity, in reducing emissions from oil and gas production, and in providing cleaner energy solutions. As we transform Shell into a net-zero emissions energy business, we believe we are the investment case and the partner of choice through the energy transition.