Shell fails to meet its own green investment targets

Shell has not met its own targets for investments in renewable energy in the past five years. The oil and Gas Group invested $ 3.2 billion in the new Energies business during that period. As a result, the company has remained below the level of the least ambitious scenario.

New Energies was founded in 2016 and should provide a future after oil and gas. In the first year, a budget of 200 million dollars was made available for this purpose. In March 2017, this budget was increased to a maximum of 1 billion per year. Later in 2017, it was further increased to 1 to 2 billion dollars for the years 2018 to 2020.

In addition, Shell set itself the goal of investing between $ 3.4 billion and $ 7.2 billion in renewable energy in the years 2016 to 2020. A survey the company published last week shows that Shell invested 200 million dollars less than the minimum plan in those years.

‘Radical shift needed’

In the same years Shell invested a total of $ 106 billion. “3 percent of the total goes to renewable energy,” says Mark van Baal of the activist shareholder Follow this. “Then you’re not really in the middle of a transition. To achieve the Paris Accords, a radical shift from fossil to renewable energy is needed. Then the investment must be tens of percent.”

Mark van Baal, shareholder Follow this

According to Shell, it was not possible to invest more. “In the past period, we simply saw too few opportunities to make commercially meaningful investments,” says a spokesperson. “Shell wants to play a leading role in the energy transition, but investments must be commercially meaningful. Every investment must yield competitive returns and fit within our financial framework.”The company says that projects must yield at least 10 percent return.

Shell points out that it also makes investments outside the new Energies business unit that contribute to lower CO2 emissions. For example, biofuels fall under another branch of the company and the stoves of the chemical complex Shell Moerdijk are replaced.

Shell’s answers testify to a “lack of imagination beyond oil and gas,” says Van Baal. According to him, Shell needs to look for new revenue models. “Where vision is lacking, the accountants seize the power to calculate every new initiative.”

More options
Since this year, The New Energies Department has a new name: Renewables and Energy Solutions. This name indicates that the department has ‘energy solutions’ such as hydrogen on its agenda as well as renewable energy sources. For these activities together, Shell will spend 2 to 3 billion dollars a year in the coming years.

The company expects to achieve this goal. “We see that the energy transition is accelerating globally and the market is changing as a result. We now see more opportunities to make commercially meaningful investments.”

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Our customers are still asking for oil and gas, and if we stop doing that tomorrow, they would just go to someone else.

Harry Brekelmans, board member Shell
Out of the total annual investment budget of around 20 billion dollars in the coming period, 8 billion dollars a year will be devoted to the search for new oil and gas resources. Shell does not see stopping oil as the solution to the social problem.

“Our customers demand for, oil and gas, and we’ll be there tomorrow to stop them, they would just go to someone else,” said Shell member, Harry Brekelmans, earlier this month.

“Nobody is asking for oil and gas, everyone is asking for energy”, van Baal reacts. He acknowledges that, for example, in heavy transport and the aviation industry, no affordable alternatives are available on a large scale. “But we need Shell to change that.”