Shell to grow its gas business by more than 20% in next few years

Shell has vowed to accelerate its plan to become a net zero carbon energy company by 2050, but will continue to grow its gas business by more than 20% in the next few years.

Shell’s oil production reached a peak in 2019, and will continue to fall by 1-2% a year, but the fossil fuel multinational plans to expand its capacity for exporting gas by 7m tonnes a year by the middle of the decade.

Shell has capacity to export 33.3m tonnes of liquefied natural gas (LNG) on super-chilled tankers every year, meaning its near-term plan to grow the business will increase its LNG capacity by more than a fifth within a crucial decade for avoiding a climate catastrophe.

It plans to offset its own carbon emissions, and the carbon emissions from the fossil fuels it sells, by accessing carbon capture projects and “nature-based solutions” such as planting trees or restoring natural habitats.

Shell is involved in three carbon capture projects, one of which is operational, that will be able to capture 4.5m tonnes of carbon a year once complete. It hopes to directly access enough projects to capture another 25m tonnes of carbon a year by 2035.

The company has also promised to invest more in hydrogen, which can be used as a clean-burning gas in industry and transport. The plan also includes growing its network of electric vehicle charge points from more than 60,000 to 500,000 by 2025.

Ben van Beurden, Shell’s chief executive, said the plan would “drive down carbon emissions” while continuing to deliver “value for our shareholders, our customers and wider society”.

Shell faced criticism last year after setting a target to become a net zero company by 2050 that did not include the emissions created when using its products. The new target will cover both the company’s operations and its customers’ emissions.

Shell said its executive pay would be linked to achieving a net carbon intensity reduction of between 6% to 8% in 2023, compared with 2016, which would widen to 20% by 2030 and 45% in 2035 before reaching 100% by 2050. A carbon intensity target is not the same as an absolute emissions target, because it could be lowered by selling more clean energy alternatives without reducing the amount of fossil fuels produced.

Shell set out the plans at its annual strategy day for investors, amid growing pressure to prove how it plans to become a net zero company by 2050. Van Beurden said the company would sell products and services with “the lowest environmental impact” while continuing to use the company’s “established strengths”.

He assured investors that the shift from oil to cleaner energy projects would create “more predictable cash flows” and help to generate higher returns. This would help the company to grow its dividends by 4% a year, and reduce the company’s net debt to $65bn.