Shell reached peak oil production in 2019, according to a recent statement made by the fossil fuel giant itself. It said that from now on, a decline of 1 to 2% per year is expected. It also said that its total carbon emissions peaked the year before at 1.7 gigatons.
Ben van Beurden, the Royal Dutch Shell Chief Executive Officer, said in the statement:
Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers, and wider society.
This is the first time Shell made such an announcement, but it’s not a shocker. The oil market hasn’t been doing well for many years, and the COVID-19 pandemic only made matters worse. Oil is on the decline as prices are only getting higher.
In a previous announcement, Shell pledged to achieve net-zero carbon emissions by 2050. The latest statement reiterated the commitment by presenting new targets and an accelerated plan on how it will be phasing out emissions.
The ramped-up targets promise a net reduction of 6-8% by 2023, 20% by 2030, 45% by 2035, and 100% by 2050, compared with 2016 levels. (Before, it was at least 3% by 2022, 30% by 2035, and 65% by 2050.)
The plan includes increasing investment in hydrogen, biofuels, and renewable power.
- By 2030, 10% of its portfolio will be hydrogen and biofuels. However, biofuels are just as polluting, so that’s not a significant improvement.
- It will add another 7 million tons of new liquefied natural gas capacity by 2025, also polluting.
- It will spend $2 to $3 billion in renewable energy a year, a fraction of what it will pay on oil and gas explorations and much less than that other fossil fuel companies promise to invest.
Friends of the Earth Netherlands said:
Shell will continue to invest more than 80% in oil and gas in the upcoming years, while investments in renewable energy are lagging far behind.
Since its strategy involves increasing dirty energy production, it will have a challenging time reducing emissions – a fact it knows and therefore has a fallback plan for. It said it’s going to boost the use of carbon capture and storage (CCS) and “nature-based” forest offsets. By 2035, it aims to have 25 million tons a year more CCS capacity. It will offset 120 million tons of CO2 emissions a year by 2030 through investments in nature-based solutions.
Shell already uses CCS and offsets to produce “carbon neutral” natural gas. However, offsetting greenhouse gas pollution isn’t a real climate solution because it doesn’t stop emissions from happening. And CCS hasn’t been proven to work at scale yet, and even if it works, it only eliminates emissions from one point.
A 2017 report found that there are 100 companies responsible for 71% of global greenhouse gas emissions – and Shell is one of them. There is also proof that Shell knew about the hazards of fossil fuel use on the climate as early as 1986 but continued to lobby against climate action and invest in oil and gas exploration.
So, while it’s excellent to hear the company acknowledging the end of oil on the horizon, it would be sensible for governments to take a more active role in making sure the end is reached swiftly and in a fair and just manner. Fossil fuel production needs to stop much sooner than Shell’s plans allow.
Furthermore, it would be good if the government or industry devised a strategy to ensure laid-off fossil fuel workers have a decent job to transition into. Shell made it clear that it would be forced to lay off 10% of its workforce as it transitions to low-carbon energy.
