ROYAL Dutch Shell has announced plans to become a net zero company in terms of carbon emissions by 2050 as the industry grapples with the problems caused by the crude price plunge.

The oil giant said it was stepping up its efforts to help tackle climate change by adopting the ambition to achieve net zero taking account of the emissions it generates and of those associated with the products it sells.

The move may provide some reassurance that oil firms will not stop investing in support of the transition to an energy system that results in lower emissions amid the tough times faced by the sector.

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Revenues have plunged as a result of the slump in the crude price in response to the impact of the Covid-19 coronavirus pandemic.

Brent crude sold for around $27.40 per barrel yesterday, compared with $70/bbl in January

Oil and gas firms came under sustained criticism in the months before the coronavirus crisis erupted, amid claims their activities were exacerbating the problem of climate change.

Shell’s chief executive Ben van Beurden said: “With the Covid-19 pandemic having a serious impact on people’s health and our economies, these are extraordinary times. Yet even at this time of immediate challenge, we must also maintain the focus on the long term.”

He added: “Society’s expectations have shifted quickly in the debate around climate change. Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner. Society, and our customers, expect nothing less.”

The measure will be calculated after taking account of emissions that are absorbed through carbon capture and storage projects and the like.

Shell had previously said it aimed to reduce the carbon footprint of its energy products by around half by 2050 without committing to a net zero target.

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Investors who had called for Shell to go further welcomed the change of approach.

Peter Ferket, chief Investment Officer of Robeco, said Shell had raised the bar and set out an approach for others in the oil and gas sector to follow.

But campaigners dismissed Shell’s move.

Richard George, head of Greenpeace UK’s climate campaign, said: “A credible Net Zero plan from Shell would start with a commitment to stop drilling for new oil and gas.

“Instead, investors are being fobbed off with vague aspirations that don’t tackle Shell’s monstrous carbon footprint and pass the buck to Shell’s customers to offset their emissions.”

Shell said its operating plans and budgets do not reflect the newly announced ambitions. It expects these to change in future to reflect the adoption of the new target.

The company has made clear that it expects oil and gas to be part of the energy mix for some time. It is a significant player in the UK North Sea.

Shell has said oil will be needed for use in hard to decarbonise sectors such as aviation. Gas could be used to meet demand for energy while renewables generating capacity is built up.

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The company’s net zero ambition will cover emissions associated with its own activities, which fall within the international Scope 1 and 2 categories. The target also covers Scope 3 emissions associated with the use of its products by others.

To help reduce Scope 3 emissions the company now aims to reduce the Net Carbon Footprint of the energy products it sells to its customers by around 65% by 2050.

It aims to sell more products with a lower carbon intensity, such as renewable power and hydrogen. Shell will work with firms in other sectors to help them reduce emissions.

To realise its ambition Shell may need to purchase carbon credits to offset the impact of emissions that are not eliminated.

Shell's plan was welcomed by Adam Matthews, Director of Ethics and Engagement of the Church of England Pensions Board.

He said: “It is indicative of Shell’s confidence in not only navigating the immediate situation but rightly sets the focus on developing net-zero pathways in key sectors that shape the demand for energy.”

Mr Matthews and Robeco’s Mr Ferket have led on discussions between the Climate Action 100+ investor group and Shell.

New BP boss insists oil giant can be force for good as it aims for net zero by 2050

In February BP announced its ambition to become a net zero company by 2050. It said it aimed to reduce the the carbon intensity of the energy products it sold by 50%.

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