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Rolls Royce : outlines plans for net zero emissions by 2050

06/17/2021 | 11:06am EDT
The logo of Rolls Royce is pictured on an engine of an Airbus A330-800 aircraft after a flight event presentation in Colomiers near Toulouse

LONDON (Reuters) - Britain's Rolls-Royce, which makes engines for planes and ships, outlined plans to reach net zero emissions by 2050 through investing more in decarbonising technologies and, in the short term, using more sustainable aviation fuel.

Major companies are under increasing pressure from investors and climate change activists to report the emissions that result when customers use their products.

Rolls-Royce chief executive Warren East said that made decarbonising a particularly "challenging task" for the company given the current use of fossil fuels in its products and the increasing demand for power globally.

But he said it was also a commercial opportunity as Rolls-Royce outlined plans for all its new products to be compatible with net zero targets by 2030, en route to achieving net zero by 2050 at the latest.

To ensure it reaches that target, the company said it will lift its research and development spending on low carbon and net zero technologies to 75% of its total budget by 2025 from about 50% now.

The company spends over 1 billion pounds annually on R&D, although that fell in 2020 from 2019 as the pandemic strained Rolls-Royce's finances. East said that figure would grow as aviation recovered.

In the aviation sector, its biggest business, Rolls-Royce plans to make all its commercial engines compatible to run on 100% sustainable aviation fuels (SAF), which produces up to 70% less carbon than conventional fuel, by 2023.

The challenge for SAFs is that there is a shortage of supply. East said for that help was needed.

"We see a huge role for governments here in terms of policy," East told a media call on Thursday.

In the longer term, Rolls-Royce is also working on less carbon-intensive hybrid, electric or hydrogen options.

"We're in the process of discussing hydrogen with Airbus now," said Chief Technology Officer Paul Stein.

By the mid-2030s, he said the company could also look to use its small modular reactors to produce an e-fuel, which could eventually replace sustainable aviation fuel.

(Reporting by Sarah Young; Editing by Andrew MacAskill and Bill Berkrot)

© Reuters 2021
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Sales 2021 11 812 M 16 426 M 16 426 M
Net income 2021 -164 M -227 M -227 M
Net Debt 2021 5 845 M 8 128 M 8 128 M
P/E ratio 2021 -43,1x
Yield 2021 -
Capitalization 8 304 M 11 547 M 11 547 M
EV / Sales 2021 1,20x
EV / Sales 2022 1,07x
Nbr of Employees 48 200
Free-Float 99,8%
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Technical analysis trends ROLLS-ROYCE HOLDINGS PLC
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Income Statement Evolution
Mean consensus HOLD
Number of Analysts 19
Last Close Price 99,71 GBX
Average target price 110,97 GBX
Spread / Average Target 11,3%
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Managers and Directors
David Warren Arthur East Chief Executive Officer & Director
Panos Kakoullis Chief Financial Officer & Executive Director
Ian Edward Lamert Davis Non-Executive Chairman
Anita Margaret Frew Chairman-Designate
Paul Stein Chief Technology Officer
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