Shell plc’s energy transition strategy got a thumb’s up Tuesday from shareholders during an annual general meeting that was disrupted for hours by protestors.
During a live feed of the proceedings in London, demonstrators shouted insults and sang protest songs, which led Chairman Andrew Mackenzie to formally delay the event. Before police arrived, some protestors screamed obscenities and a few were glued – literally – to their seats. Others were singing “We will, we will stop you!” to the tune of Queen’s “We Will Rock You.”
Stalled for around four hours, the meeting resumed. Shareholders then approved, by an 80% margin, Resolution 20 regarding the ongoing transition to net-zero greenhouse gas emissions by 2050. Last year shareholders had approved the strategic progress report by nearly 89%.
In opening the meeting, Mackenzie noted that Russia’s invasion of Ukraine was not only a “human tragedy,” but it has caused “rising energy prices and uncertainty about supplies.
“This extreme disruption in global energy markets has shown that affordable, secure and reliable energy cannot be taken as a given. It must be protected and managed, through international cooperation of companies, governments and wider society working together.
“This cooperation includes working with our shareholders and maintaining their support,” Mackenzie said.
Leading The Way
Shell expects to play a “leading role as the world’s energy systems change. We will continue to supply the oil and gas that people need today. As one of the world’s largest suppliers of liquefied natural gas, we can ship natural gas to where it is needed most. At the same time, we are accelerating the transition to low- and zero-carbon energy, which is at the heart of our strategy.”
Essentially, he said, “an accelerated transition is the best way to ensure security of energy supplies. It is also the best way to help people in some parts of the world who do not yet have access to energy, which is essential for a better quality of life.”
Regarding the energy transition progress, the directors urged shareholders to continue supporting those efforts.
Shell has set “climate targets that it believes are aligned with the more ambitious goal” of the 2015 United Nations climate accord. The accord urged voluntary limits to ensure average global temperature does not surpass 1.5 C degrees above pre-industrial levels.
The targets cover Shell’s short-, medium-, and long-term emissions of “the operations and our customers’ emissions from the use of energy products.” The emissions targets are categorized as Scope 1 (direct), 2 (indirect), and 3 (customer), “with the end goal of achieving net-zero emissions by 2050.”
The strategy “supports an orderly transition, one that maintains the supply of oil and gas where it is still needed, and that accelerates the shift to low- and zero-carbon energy,” the board noted. The plan is “in the best interests of our shareholders as a whole and wider society.”
CEO Ben van Beurden said, “It will take bold moves for Shell to achieve net zero. In 2021, we took some significant steps. We completed one of the biggest restructurings in our history, making us a more agile company.” One change was moving the headquarters to the United Kingdom from the Netherlands.
“From today, our target to achieve net-zero emissions by 2050 is no longer conditional on society’s progress, marking a further step forwards,” van Beurden said. “This reflects the leading role we will play in the energy transition. We must find ways to be ahead of society where we can, while remaining a successful and profitable company.”
Still, most capital spending remains tilted to natural gas and oil. Shell is planning to increase spending on low-carbon energy projects to around 25% by 2025. It now spends about 15% of the capital on energy alternatives.
While it is continuing to produce gas and oil, “at the same time, our investments in the energy system of the future will increase significantly,” the CEO said. “By 2025, we expect around half of our total expenditure (cash capital expenditure and operating expenses) to be on low- and zero-carbon products and services including biofuels, hydrogen, power, charging for electric vehicles, carbon capture and storage, nature-based solutions, chemicals and lubricants.”
“In 2022, we expect that around one-third of our total expenditure will be on these low- and zero-carbon products and services.”
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