Royal Dutch Shell plc pledged on Tuesday to continue investing in global natural gas projects while increasing its stakes in renewables as it strives to cut its carbon emissions in half by 2050.

Europe’s largest oil and gas producer and a major player in the U.S. onshore and Gulf of Mexico, Shell held a management day to update investors about its near- and long-range strategy.

CEO Ben van Beurden guided the webcast conversation from London, where he attempted to balance his comments about reducing carbon emissions while reassuring investors that returns can be increased in the core fossil fuels business.

“We have been on a transformational journey since 2014,” he said, referring to the commodity price downturn and its decision to build its natural gas arsenal, particularly for export projects, with the merger of BG Group plc.

The merger “strengthened the four levers that we could pull for our transformation: operating cost reduction, capital discipline, portfolio restructuring and accelerating growth…And I believe that we have been delivering on a very ambitious agenda.”

Integrated gas, conventional oil and gas, and oil products are the current cash engines, with deepwater and chemicals the main priorities today. Shales and New Energies, i.e. renewables, are the emerging opportunities, he explained.

Deepwater, Shales Each A Priority

“The intention is for deepwater to have become a cash engine by 2020, and shales to have become a growth priority by 2020,” van Beurden said, reiterating a strategy laid out last year.

“Over the last few years, we have established tremendous clarity of purpose that’s inside the company, but I trust also for our shareholders,” he said. “We have developed a differentiated strategy that gives us competitive advantage, and we are reshaping the portfolio profoundly to align to that strategy. And I clearly see it’s working.”

In the last two years, he noted, “we have transformed the financial metrics of our business,” with the current return on average capital employed at around $50/bbl, or around 5%. “That’s expected to grow to around 10% at $60/bbl by 2020.”

The CEO said he wanted to convey “our confidence in the differentiation, the financial resilience, the long-term business relevance of our portfolio, through the ups and downs of the oil price cycle, but of course also through the energy transition.”

Since taking the helm in early 2014, van Beurden has been preaching about strengthening the gas portfolio in part to reduce the carbon footprint.

The “resilience and good financial performance” of the integrated gas business have been underpinned by Shell’s leading position in both global liquefied natural gas (LNG) and gas-to-liquids value chains, “as well as by the underlying strength Shell sees in natural gas and LNG markets,” he said.

Van Beurden offered few details, but he said Shell planned to sustain its competitive LNG advantage through the 2020s, by focusing “opportunities for selective growth,” with “cost competitiveness” key to all decisions.

The Big Oil major today is weighted almost equally to gas and oil, with its LNG dominance rivaling all global producers.

However, Shell also is catching the renewables wave, as it evolves from an “oil and gas” producer to an “energy” operator. To demonstrate its commitment in reducing carbon emissions, investments are being stepped up within the New Energies business to reduce the net carbon footprint, “in step with society’s drive to align to the Paris agreement goals,” van Beurden said.

Shell is committed to the goals of theglobal climate change accord reached in December 2015, to keep global temperatures from rising more than 2 degrees C above pre-industrial levels.

“We have to start somewhere, and we have to build a platform that can participate and grow actively in further electrifying the world,” he said. “Tackling climate change is a cross-generational, global and multi-faceted effort.

“This is a challenge for the whole planet, for all of society, for customers, for governments and indeed for businesses. It will mean meeting increasing energy demand with an ever-lower carbon footprint. And it is critical that our ambition covers the full energy lifecycle from production to consumption. We are committed to play our part.’’

Portfolio Shifting For Greater Good

From 2018 to 2020, Shell has earmarked up to $2 billion/year for the New Energies ventures, including wind, solar, hydrogen power and by investing in European electric vehicle (EV) charging stations. The goal is to reduce carbon emissions 20% by 2035 and 50% by 2050.

Shell is collaborating with automakers BMW, Daimler AG, Ford Motor Co. and Volkswagen to install fast-charging EV stations on European highways.

By expanding the global EV fleet over the next decade, Shell would appear to be working against its self interest, as gasoline demand should fall sharply. Van Beurden pushed aside any criticism of the shift.

“This is a challenge for the whole planet,” he told the audience. Besides, he said, he has shareholder support. The pledge to reduce emissions follows a shareholder resolution, backed by Shell, which called on the producer to improve performance targets to help control climate change.

The New Energies division is set to become one of Shell’s primary growth engines after 2020, generating returns of 8-9% a year, CFO Jessica Uhl said.

Today, with free cash flow moving higher and oil prices strengthening, Shell revived its all-cash dividend, ending a program that gave shareholders the option to receive share dividends, which have remained low.

The Anglo-Dutch producer also confirmed it has begun a share buyback of at least $25 billion from now until 2020, “subject to progress on further debt reduction and recovery in oil prices,” van Beurden said.

In addition, Shell is increasing its organic free cash flow outlook for 2020, and now expects to deliver up to $30 billion/year by 2020 at $60/bbl oil prices (Brent). That’s a $5 billion increase from projections issued last year.

Since early 2016, Shell has ramped up production on 11 major projects, adding an average of 500,000 boe/d at peak production. It also continues on a $30 billion divestment program, in part to reduce debt following the massive BG acquisition.

To date $23 billion in sales has been completed, with an additional $2 billion announced and another $5 billion in advanced marketing stages. Divestments are to continue at a rate of around $5 billion/year until at least 2020.