Shell Pledges to Halve Emissions by 2030 as it Announces Lower Profits | Royal Dutch Shell
Royal Dutch Shell has set itself a target of halving its carbon emissions by the end of the decade following calls to investors for the company to end its “inconsistent” stance on the climate action by going their separate ways.
Shell set the new carbon target days before the Cop26 climate talks in Glasgow, as it revealed worse-than-expected profits for the third quarter, despite a global surge in oil and gas markets.
Climate activists said the promised emission reduction was a “symbol” as it only applies to 10% of Shell’s total emissions – those produced by its own operations, such as oil extraction and the transport of fuel to the forecourt. The remaining 90% comes from the use of its oil and gas by transportation, homes and industry.
The company’s latest results have been described as “messy” and “muddy” by analysts after missing their profit targets for the quarter.
The Anglo-Dutch fossil fuel company received the double blow a day after US hedge fund Third Point, led by Daniel Loeb, accused Shell of having “a set of inconsistent and contradictory strategies attempting to appease multiple interests but satisfying none “.
The fund, which reportedly acquired a stake in Shell worth nearly $ 750 million, called on the company to split into “several stand-alone companies,” including an “inherited” branch focused on oil and gas .
Third Point said its “bold strategy” was likely to lead to an acceleration of CO2 reduction as well as a significant increase in returns for shareholders, “a victory for all stakeholders”.
Shell boss Ben van Beurden refuted the accusations saying the company had “an incredibly coherent strategy” which would be “very difficult to replicate” if Shell were to split up.
“A very important part of the energy transition that we are talking about will be financed by the heritage activity,” said van Beurden. He added that the strategy was voted on by shareholders earlier this year, with 90% in favor of his plans, and was “well understood by the majority of shareholders”.
Shell’s share price fell nearly 2% on Thursday after reporting a profit of $ 4.13 billion (£ 3 billion) for the last quarter, well below the expected $ 5.42 billion by analysts, and below the $ 5.5 billion reported in the previous quarter, even though its cash flow reached a new record of $ 17.5 billion.
The company has not been able to take full advantage of soaring international gas prices, as many of its supply contracts were made in advance at lower prices and production problems at its gas plants. Liquefied natural gas as a result of Hurricane Ida resulted in lower gas volumes.
Shell plans to grow its gas business in the coming years, although it has set itself a target of total zero carbon by 2050 with the help of low-carbon companies, including renewables and the hydrogen.
Environmental activists have called on the company to urgently reduce its total impact on global warming.
“The operational emissions targets are symbolic,” said Mark van Baal, a climate activist. “Operational emissions represent around 10% of Shell’s total emissions. The elephant in the room consists of the emissions that occur when fossil fuels are burned. Setting operational emissions targets is like a tobacco producer promising to smoke less himself while continuing to sell more cigarettes. “
The new climate target emerged months after a Dutch court ordered the company to accelerate its plans to cut emissions in line with global climate targets, which Shell plans to appeal.
It also comes days after Dutch fund ABP, one of the world’s largest pension funds, announced that it would sell all of its stakes in fossil fuel companies, including shares of Shell, to protect long-term savings from the impact of the climate crisis.
Shell plans to grow its gas business by more than 20% over the next few years. The strategy includes a modest decline in oil production, through the sale of oil fields or the natural decline of their reserves, and an increase in gas production and gas exports to the world market.