they are the clearest way to demonstrate changes to our mix of energy 
products over time, as we add and then shift to low-carbon energy 
products and services. 
 
   We have set specific carbon intensity reduction targets for the 
following years. These targets are compared with 2016 and linked to the 
remuneration of around 16,500 Shell employees: 
 
 
   -- 2-3% by 2021 
 
   -- 3-4% by 2022 
 
   -- 6-8% by 2023 
 
 
   We also have medium- and long-term carbon intensity targets, in step 
with society: 
 
 
   -- 20% by 2030 
 
   -- 45% by 2035* 
 
   -- 100% by 2050* 
 
   REDUCING THE CARBON INTENSITY OF ALL ENERGY SOLD 
 
   gCO(2) e/MJ 
 
 
   -- 2016 baseline 
 
   -- 2023: -6-8% (Carbon intensity incl. mitigation by Shell (Net Carbon 
      Footprint)) 
 
   -- 2030: -20% (Carbon intensity incl. mitigation by Shell (Net Carbon 
      Footprint)) 
 
   -- 2035: -45% (Carbon intensity incl. all mitigation actions (Shell & 
      customers)) 
 
   -- 2050: -100% (Carbon intensity incl. all mitigation actions (Shell & 
      customers)) 
 
 
   We measure our carbon intensity with our Net Carbon Footprint 
methodology [E] which calculates the carbon intensity of the portfolio 
of energy products sold by Shell expressed as grams of CO(2) equivalent 
(gCO(2) e) per megajoule (MJ) of energy delivered to, and consumed by, 
our customers. 
 
   *   These targets include mitigation actions by our customers such as 
carbon capture and storage and nature-based offsets. 
 
   [D]Carbon intensity as used in this report refers to net carbon 
intensity, which includes offsets and is measured by our Net Carbon 
Footprint methodology. 
 
   [E] https://www.shell.com/ncfmethodology 
 
   Petrochemicals and other products such as lubricants are not included in 
our short- and medium-term targets because they are not burnt and do not 
produce Scope 3 emissions. Their production and processing produce 
emissions, and we include these within our target to achieve net-zero 
emissions (Scope 1 and 2) from our operations by 2050. 
 
   ALIGNING OUR TARGETS WITH PARIS 
 
   Shell's target is to become a net-zero emissions energy business by 
2050, in step with society. We also have short-, medium- and long-term 
targets to reduce our carbon intensity, measured by our Net Carbon 
Footprint methodology. We believe these targets are aligned with the 
1.5degC scenarios used in the IPCC Special Report on Global Warming of 
1.5degC (SR 1.5), most of which show the global energy system reaching 
net zero between 2040 and 2060. 
 
   There is no established standard for aligning an energy supplier's 
decarbonisation targets with the temperature limit goal of the Paris 
Agreement. In the absence of a broadly accepted standard, we developed 
our own approach to demonstrate Paris alignment by setting carbon 
intensity targets using a pathway derived from the IPCC scenarios 
aligned with the Paris goal. 
 
   We determined our targets using scenarios taken from a database 
developed for the IPCC SR 1.5 [F]. We filtered out certain outlying IPCC 
scenarios to ensure that Shell's targets are aligned with earlier action, 
and low-overshoot scenarios. Overshoot refers to the extent to which a 
scenario exceeds an emissions budget and subsequently relies on sinks to 
compensate for the excess emissions. 
 
   We then take the following steps: 
 
   1. The total energy in each of the scenarios is calculated at the point 
of delivered energy (energy that is processed by refining or 
liquefaction, for example, but before it is used for electricity 
generation) using a fossil fuel equivalence approach for electricity. 
This more accurately reflects the energy delivered by an energy supplier 
like Shell to the market. 
 
   2. The total net emissions of each scenario are calculated taking into 
account emissions stored using carbon capture and storage and offset 
using natural sinks. 
 
   3. The carbon intensity for each scenario is calculated by dividing the 
net emissions by the total delivered energy. The range of carbon 
intensities of the scenarios allows for the construction of a benchmark 
range after removing any outliers. 
 
   By using the benchmark range produced by this approach to set our 
targets, we aligned them with the necessary reduction in carbon 
intensity shown in the 1.5degC scenarios. This is illustrated in the 
graphic on the right that demonstrates how Shell's targets are 
positioned within the range of 1.5degC pathways. The upper and lower 
lines represent the upper and lower boundaries of the benchmark range 
derived from the IPCC scenarios. 
 
   Until 2035, our calculation of the total net emissions of each scenario 
includes only the expected mitigation actions by Shell such as carbon 
capture and storage and offsetting using natural sinks, including any 
use of offsets included in the carbon-neutral energy products we offer 
our customers. After that date, we also include mitigation actions taken 
separately by our customers. 
 
   Today, we do not include any mitigation steps taken separately by our 
customers. That is because the accounting standards to include those 
actions do not exist. Under existing protocols, energy suppliers report 
the Scope 3 emissions from the use of their products, which are 
equivalent to the Scope 1 emissions reported by the users of those 
products. 
 
   However, when users of energy mitigate their Scope 1 emissions by use of 
carbon capture and storage or offsets, there is no accounting protocol 
for reflecting the corresponding reduction in the Scope 3 emissions 
reporting by the energy supplier. 
 
   To account for reductions in emissions across full energy value chains 
it is necessary to build on the existing greenhouse gas reporting and 
accounting protocols to include mitigation actions by both energy 
suppliers and users. Shell is in discussions with standard-setting 
bodies such as Greenhouse Gas Protocol, the World Resources Institute 
and CDP to develop the accounting protocols and frameworks to include 
mitigation actions by energy suppliers and energy users. 
 
   Reporting and accounting for mitigations in this way will also need new 
systems for the exchange of data between suppliers and users of energy. 
We expect these developments will take three to five years. Our carbon 
intensity targets for 2035 and 2050 reflect this expected change in 
accounting approach. 
 
   [F] These scenarios do not include Shell's Sky 1.5 scenario. 
 
   SHELL'S CARBON INTENSITY TARGETS 
 
   gCO(2) e/MJ 
 
   OUR APPROACH 
 
   We have set our targets to be in line with climate science and in step 
with society's progress as it works towards the Paris Agreement goal of 
limiting the increase in the average global temperature to 1.5degC. 
 
   This progress will depend on whether governments and businesses, 
including Shell, provide the right conditions and incentives for low- 
and zero-carbon choices, and on whether consumers embrace these changes. 
 
   We must work towards our long-term target of net-zero emissions 
immediately. That is why we have set a series of short-term targets that 
are reflected in the remuneration of 16,500 employees. These short-term 
targets are not conditional on whether society progresses towards the 
goal of net-zero emissions; and while extremely challenging, they are 
aligned with our current operating plans. 
 
   If we moved too far ahead of society, it is likely that we would be 
making products that our customers are unable or unwilling to buy. That 
is why we wish to work together with customers, governments and across 
sectors to accelerate the transition to net-zero emissions. Shell cannot 
get to net zero without society also being net zero. 
 
   For example, if we invested in producing sustainable aviation fuel, and 
made it available on commercial terms at all the airports Shell serves 
today, the investment would not significantly lower our or society's 
carbon emissions. Most aircraft are not yet certified to fly on 100% 
sustainable aviation fuel and the cost of the fuel is considerably more 
than traditional jet fuel, making it an uncompetitive choice for the 
airlines. 
 
   Our strategy instead is to work with partners -- including aircraft 
manufacturers, airlines, airports, major airline users and governments 
-- to stimulate and accelerate demand for sustainable aviation fuel. As 
demand grows, we will increase our investments. 
 
   WORKING TO MEET OUR TARGETS 
 
   The transport sector is a good illustration of how the energy transition 
is likely to unfold. As in other sectors, the reductions in carbon 
intensity will be slow at first, reflecting the challenge of switching 
today's forms of transport to new technologies. The IPCC Special Report 
shows that the energy intensity of fuels in the transport sector has 
fallen only slightly in the past 10 years, through the blending of 
biofuels with traditional fuels, the increased use of liquefied natural 
gas as a transport fuel, and the growth in electric vehicles. But as the 
cost of low-carbon vehicles comes down, for example, they will replace 
vehicles powered by internal combustion engines. The IPCC scenarios show 
the tipping point to be somewhere between now and 2030, leading to 
net-zero transport after 2050. 
 
   Shell will reduce the carbon intensity of our energy products by working 
with our customers, sector by sector, to help them navigate the energy 
transition. As we do so, we intend to build even deeper relationships 
with our customers and meet more of their energy needs. We will start by 
adding more low-carbon products, such as biofuels and electricity, to 
the mix of energy products we sell. Eventually, low-carbon products will 
replace the higher carbon products that we sell today. This 
transformation of our business will require a fundamental change to 
energy-related infrastructure and assets across economies (see box 
Structural change on page 14). 
 
   We are working with partners -- including aircraft manufacturers, 
airlines, airports, major airline users and governments -- to stimulate

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