Shell to cut carbon, lift renewables investment

Shell has announced improved cash flow guidance as it plans to cut carbon and lift renewables investment.

Shell plans to slash its carbon emissions in half by 2050, setting an early goal of a 20 per cent reduction by 2035, aligning itself with the Paris international climate accord agreement benchmarks.

“Tackling climate change is a cross-generational, global and multifaceted effort,” Shell chief executive Ben van Beurden said. “This is a challenge for the whole planet,” he said.

“It will mean meeting increasing energy demand with an ever-lower carbon footprint. And it is critical that our ambition covers the full energy life cycle from production to consumption. We are committed to play our part.”

Mr van Beurden said increased investment in renewable energy would be a major part of Shell’s long-term strategy.

Shell will focus on “new energies” as part of its future growth program, and increase investment capital to between $US1 billion ($1.3 billion) and $US2 billion until 2020.

These energies include wind, solar and hydrogen power.

“Our next steps as we reshape Shell into a world-class investment aim to ensure that our company can continue to thrive, not just in the short and medium term but for many decades to come,” Mr van Beurden said.

The company said the shift came in the wake of ongoing energy sector volatility.

“Shell will continue to target opportunities in new fuels and power, two businesses adjacent to its downstream and gas businesses that play to Shell’s existing strengths in brand and value-chain integration,” it said.

Concerns were raised by analysts earlier this week over Shell’s Australian Prelude Floating LNG platform potentially delaying its slated start up, and achieving cash flow in 2018.

A Shell spokesman rejected these statements, telling Fairfax Media the projected start up in the first half of 2018, and cash flow in the year, were still on target.

The energy business remains focused on driving down its debt levels, stating that 20 per cent gearing is in sight.

This has been aided by the company’s recent $US23 billion in divestments as well as a rising oil price, which has increased Shell’s outlook for annual organic free cash flow.

Shell said it had raised its outlook by $US5 billion, to between $US25 billion and $US30 billion by 2020 at a Brent crude oil price of $US60 a barrel.

Citibank and Macquarie analysts have pointed to $US60 a barrel as the new price floor, after Brent crude reached a high point of $US64.27 in early November, before settling to a trading point of around $US63 a barrel.

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