SHELL PLC The Clean Skies for Tomorrow Coalition consists of airlines, airports, fuel providers and engine manufacturers. It is working to reduce emissions from the aviation sector by making sustainable aviation fuel more widely used and available. The Clean Skies for Tomorrow Coalition has jointly developed and published policy proposals which it has put to the European Union to promote debate on how to accelerate the transition to climate neutrality and increase the uptake of sustainable aviation fuels [G]. [G]https://www.weforum.org/reports/joint-policy-proposal-to-accelerate-the-deployment-of-sustainable-aviation-fuels-in-europe-a-clean-skies-for-tomorrow-publication SHARING INSIGHTS INTO THE TRANSITION Our strategy includes participating in coalitions of companies and organisations to accelerate the transition to net-zero emissions. We will help to develop paths to low-carbon energy in different sectors, identify opportunities for low-carbon solutions, and advocate government policies and financial market regulations that support the transition. In the shipping and road freight sectors, for example, we have partnered with Deloitte to explore paths to reducing emissions [H]. [H]https://www.shell.com/energy-and-innovation/the-energy-future/decarbonising-shipping.html; https://www.shell.com/energy-and-innovation/the-energy-future/decarbonising-road-freight.html SIX LEVERS TO HELP DECARBONISE ENERGY As Shell works with our customers to identify the best paths to decarbonisation, we seek to avoid, reduce and only then mitigate any remaining emissions. We have six levers to help Shell and our customers decarbonise energy in the short, medium and long term: -- Pursuing operational efficiency in our assets; -- Shifting to natural gas; -- Growing our low-carbon power business; -- Providing low-carbon fuels such as biofuels and hydrogen; -- Developing carbon capture and storage; and -- Using natural sinks. ENERGY EFFICIENCY IN OUR OPERATIONS Our production sites are increasingly using lower-carbon energy sources. For example, we are installing eight new cracker furnaces at our Moerdijk petrochemicals complex in the Netherlands, replacing 16 older units. This is expected to reduce the site's energy consumption, and to lower greenhouse gas emissions by around 10% compared with 2019. In the USA, we are building a 250 MW co-generation plant at our Pennsylvania chemicals facility that will also supply electricity to local homes. The chemicals plant has been designed with an energy-efficient gas cracker that will also use hydrogen as a fuel source. As we implement our strategy, we are aiming for milestones which are supported by our business plans and planned capital investment. EXAMPLES OF ENERGY TRANSITION MILESTONES BY 2030 Operational Natural gas Low-carbon Low-carbon CCS Natural sinks efficiency(1) shift power business fuels (biofuels, hydrogen) ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- -------------------------------------------------------- ----------------------------------------------- ---------------------------------------------------- -- Eliminating routine flaring -- Oil production peaked in 2019, expected to decline -- Doubling electricity sold -- Producing 8 times more low-carbon fuels than today -- Targeting more than 25 mtpa CCS (by 2035) -- Aiming for 120 mtpa of nature-based solutions -- Maintaining methane emissions intensity <0.2% (2025) 1-2% per annum -- Delivering equivalent of >50 million households with -- Increasing low-carbon fuels sales to >10% of -- High-quality offsets only -- No new frontier exploration entries anticipated after renewable electricity transport fuels (up from 3% in 2020) 2025 -- Operating 2.5 million electric vehicle charge points -- Growing gas share of hydrocarbon production to 55% ---------------------------------------------------------- ----------------------------------------------------------- ----------------------------------------------------------- -------------------------------------------------------- ----------------------------------------------- ---------------------------------------------------- Milestones for 2030 unless otherwise stated. This chart is illustrative of the potential impact across these levers. 1 For assets we operate EV charge points include charge points at Shell forecourts and new locations as well as operated charge points owned by customers and third parties. INVESTING IN NATURE The protection and restoration of natural ecosystems could play an important role in limiting global warming to below 1.5degC, while bringing additional environmental and social benefits, according to the IPCC [I]. Nature-based solutions, or natural climate solutions, are projects that protect, transform or restore land. In this way, CO(2) emissions from the natural environment are reduced and more CO(2) emissions from the atmosphere are absorbed. These projects can lead to the marketing, trading and sale of carbon credits. Each carbon credit represents the avoidance or removal of 1 tonne of CO(2) . The market for nature-based solutions and the number and type of projects which are being developed to meet this market demand is growing rapidly. McKinsey Nature Analytics estimates that there is the potential for nature-based projects to store an additional 6.7 gigatonnes of CO(2) every year by 2030. Based on current net-zero commitments from more than 700 of the world's largest companies, there have already been commitments of carbon credits of around 0.2 gigatonnes of CO(2) by 2030 [J]. The Taskforce on Scaling Voluntary Carbon Markets (TSVCM), sponsored by the Institute of International Finance (IIF), estimates that the market for carbon credits could be worth more than $50 billion in 2030 [K]. [I] IPCC, 2019: Summary for Policymakers. In: Climate Change and Land: an IPCC special report on climate change, desertification, land degradation, sustainable land management, food security, and greenhouse gas fluxes in terrestrial ecosystems [J]https://www.mckinsey.com//media/McKinsey/Business%20Functions/Sustainability/Our%20Insights/Why%20investing%20in% 20nature%20is%20key%20to%20climate%20mitigation/Nature-and-net-zero-vF.pdf [K] https://www.globenewswire.com/Tracker?data=IbFm0X2pnm2MYhgEJiluvVKLQwifDVi9LOv0f_0XnOBY6jc9ySp7NnUpIXSpWkrfsnd7JbI8EyRaaX-7y-Schmd4XOtvxsqWXb5T9Zl9xG4= https://www.iif.com/tsvcm HIGH-QUALITY CREDITS Nature-based solutions have a role to play in reducing the impact of the CO(2) emissions from the energy products that we sell. Shell will use high-quality nature-based solutions, independently verified to determine their carbon impact and their social and biodiversity benefits. In line with our approach of avoid, reduce and only then mitigate, we expect to offer our customers nature-based solutions to offset around 120 million tonnes per annum of our Scope 3 emissions by 2030. Today, for example, we offer customers carbon-neutral driving using nature-based carbon offsets in seven countries. We also offer carbon-neutral liquefied natural gas cargoes, which use nature-based carbon credits to offset full life-cycle emissions, including methane. BUILDING OUR PORTFOLIO In 2020, we invested around $90 million in the future development and purchase of nature-based offsets, and we expect to invest around $100 million a year. In 2020, we acquired Select Carbon in Australia, which runs more than 70 carbon farming projects that span an area of around 10 million hectares. We are also working with project developers to invest in and develop new projects based on reforestation, agroforestry and mangroves. In 2030, we expect our own portfolio of nature-based projects to supply most of the credits for our customers. Our trading business will purchase the rest from project developers that we screen to ensure the credits meet the same independently verified high standards. In 2020, we purchased more than 4 million tonnes of credits on behalf of our customers sourced from projects around the world. CAPTURING CARBON Most climate scientists are clear that using technology to store carbon plays an important role in the transition of the energy system. The IPCC 1.5degC scenarios show that even when the energy system reaches net-zero emissions, there will be residual emissions because some sectors and end users will not be able to eliminate the use of hydrocarbons. Some of these residual emissions will need to be stored. Today, carbon capture and storage (CCS) facilities around the world can capture and store around 40 million tonnes per annum (mtpa) of CO(2) . Accelerating the pace of CCS deployment requires continued collaboration
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