Shell Pledges to Achieve Carbon Neutrality by 2050

Investors weren't impressed by the plan, sending shares in the oil giant 3% lower intraday.
Anthony RussoFeb 11,2021,17:49

Royal Dutch Shell (NYSE: RDS-A) has laid out a plan that aims to help the company achieve carbon neutrality by 2050.

The Netherlands-headquartered oil and gas giant said Thursday after the markets closed that it plans on cutting its net intensity in the range of 6% and 8% from its 2016 levels by 2023. By 2030, the cuts will increase to 20%, followed by 45% and 100% in 2035 and 2050, respectively.

In the near term, Shell will spend at least $5 billion per year on its Growth pillar. The investment includes $3 billion in Marketing and around $2-$3 billion in renewables and energy solutions. For integrated gas and chemicals and products, Shell will spend $8-$9 billion. It will also invest $8 billion in its upstream oil business.

“We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society," Ben van Beurden, the chief executive officer of Shell, said.

He added that the company will use its “global scale and trusted brand to grow in markets where demand for cleaner products and services is strongest, delivering more predictable cash flows and generating higher returns.”

In addition, Shell said it plans to cut its net debt to $65 billion.

While the unveiled plan will be vital in the long term, investors were not impressed today. By midday, the stock was trading at $37.26 per share, 3% lower from Wednesday’s close.

In the full year 2020, Shell lost $21.7 billion as oil demand dropped significantly amid the pandemic. Fellow gas and oil giants including Exxon Mobil (NYSE: XOM) and Chevron (NYSE: CVX) were also hit hard last year, posting $22.4 billion and $5.5 billion in losses, respectively.

Despite the abysmal 2020, oil and gas prices have been rallying since the fourth quarter on encouraging vaccine news, economic stimulus hopes, as well as production cuts from OPEC+ members.

Since the end of October, shares of Shell have surged 46%.

Topics:Royal Dutch Shell, Exxon Mobil, Chevron