Net Carbon Footprint

Lowering our Net Carbon Footprint

We want to play our part and contribute to the global effort to tackle climate change and meet the goal of the Paris Agreement. 

In 2017, Shell announced a long-term ambition to reduce the Net Carbon Footprint of the energy products we sell. This is a carbon intensity measure that takes into account their full life-cycle greenhouse gas (GHG) emissions, including customers’ emissions when they use these products.

By 2050, our ambition is to align our Net Carbon Footprint with the average footprint of the energy mix in the global energy system. We aim to reduce the Net Carbon Footprint of the energy products we sell – expressed in grams of carbon dioxide (CO₂) equivalent per megajoule consumed – by around 50% by 2050. As an interim step, by 2035, and predicated on societal progress, we aim for a reduction of around 20% compared with our 2016 level.

While we seek to enhance our operations’ average energy intensity through both the development of new projects and divestments, we have no immediate plans to move to a net-zero emissions portfolio over our investment horizon of 10-20 years.

Visit www.shell.com/what-is-shells-net-carbon-footprint-ambition for more on our Net Carbon Footprint ambition.

We are building on our long-term ambition with a commitment to set specific Net Carbon Footprint targets for shorter periods. Shell will set the target each year, for the following three- or five-year period. Starting in 2019, we linked these targets and other measures to our executive remuneration policy.

In 2019, we set a target to reduce our Net Carbon Footprint by 2-3% compared to 2016, by 2021. In early 2020, we decided to set a Net Carbon Footprint target for 2022 of 3-4% lower than our 2016 Net Carbon Footprint of 79 grams of CO₂ equivalent per megajoule.

The calculation of the Net Carbon Footprint includes:

• emissions directly from Shell operations associated with the production and processing of energy products;
• emissions generated by third parties who supply energy to us;
• our customers’ emissions from their use of our energy products; and
• carbon offsets such as reforestation as well as carbon capture and storage (CCS) emissions reduction.

Also included are emissions from elements of this life cycle not owned by Shell, such as oil and gas that we process but do not produce, or from oil products and electricity marketed by Shell that have not been processed or generated at a Shell facility. The calculation also includes biofuels, as well as emissions that we offset by using CCS or natural carbon sinks, such as forests and wetlands. Chemicals and lubricants products, which are not used to produce energy, are excluded from the scope of this ambition.

Achieving our ambition

To meet the decarbonisation goals of the Paris Agreement, society needs an increasing supply of energy products that produce lower or zero GHG emissions over their full life cycle, and needs to use those products more efficiently and to store emissions that cannot be avoided in sinks. Within this framework, our strategy is to keep increasing the share of such low-carbon energy products in our portfolio, while also developing carbon sinks.

By broadening our focus to the full life-cycle emissions from the energy products that we sell to our customers, instead of solely on our operational emissions, we believe we will be better aligned with societal need and growing customer demand for more energy with lower life-cycle GHG emissions. Our strategy is to reduce our Net Carbon Footprint, mainly by increasing the proportion of lower-carbon products such as natural gas, biofuels, electricity and hydrogen in the mix of products we sell to our customers.

We are also investing in ways to mitigate emissions through capturing and storing CO₂ safely underground, or by planting and protecting natural ecosystems.

Net Carbon Footprint performance

Shell’s Net Carbon Footprint values between 2016 and 2019 inclusive are shown in the table below. We express our Net Carbon Footprint as the grams of CO₂ equivalent per megajoule (gCO₂e/MJ) produced for each unit of energy delivered to, and used by, a consumer.

The reduction in our Net Carbon Footprint was due to an increase in sales of electricity in markets with declining grid intensity and growth in customer demand for carbon-neutral product offerings.

Lloyd’s Register Quality Assurance Ltd has provided limited assurance for our Net Carbon Footprint assertion for each year from 2016 to 2019. Limited assurance means nothing has come to the auditor’s attention that would indicate that the Net Carbon Footprint data and information as presented in the Net Carbon Footprint Assertions were not materially correct.

While the Net Carbon Footprint is an intensity measure and not an inventory of absolute emissions, a notional estimate of the amount of CO₂e emissions covered by the scope of the Net Carbon Footprint calculation can be derived from the final Net Carbon Footprint value for any year. Similarly, a fossil equivalent estimate of the total amount of energy sold included in the calculation can also be determined. These estimated values for the years 2016 to 2019 are presented in the table below.

For more information, see www.shell.com/net-carbon-footprint-additional-information.

Data sources

The Net Carbon Footprint calculation uses production and product sales data taken from the Annual Report and Form 20-F. Any other product sales data used for the calculation but not disclosed in the Annual Report or Form 20-F is disclosed in the Sustainability Report, this includes the gas and power data given below.

Sales of gas and power produced by third parties

Gas and power produced or generated by third parties but sold by Shell are included in the Net Carbon Footprint calculation. The figures in the table below show the global volumes of third-party gas and power sold by Shell between 2016 and 2019.

Watch the film at https://youtu.be/ArHy4vK4g0I

Scope of our Net Carbon Footprint

Emissions from energy products included within the Net Carbon Footprint framework.

Other actions needed: energy productivity and carbon sinks

Choices made by energy end users will affect energy productivity and extent of use of carbon sinks.