Shell's Sunday Scaries

Welcome back to The Strawman, the daily climate newsletter that’s like when you hear the ice cream truck on a summer’s day. Best part? Our Mr Whippy is still just 99p.

Today we’re looking at Shell and plans from the new CEO. Historically, Shell has been one of the best from a bad bunch in the oil and gas industry. In 2021 they set out clear plans to reach net zero by 2050. Now, just two years later, new CEO Wael Sawan has taken a good hard look at these plans.

Heads up - it’s not looking great.

What are companies meant to do anyways?

Hol’ up there buckaroo - there’s a new sheriff in town. Management change at any company is often a time of shifting strategy - but in the case of Shell, this has a direct impact on our transition to Net Zero.

Sawan has promised to be “ruthless” in his pursuit of higher returns for shareholders - what this means practically? Focusing on oil and gas investments and cutting the flab from less profitable sectors.

While Sawan claims the company's 2021 emission reduction strategy remains unchanged, the map to reach there seems to have some detours now.

Under the new plans, $40bn of investment over the next three years will go towards new oil and gas production by 2025 - in the same period, $10bn to $15bn — or about 20 per cent of total spending — will be invested in low-carbon technology, such as hydrogen, biofuels and vehicle charging.

One step forward, two steps back.

Oil, Gas, and Clean Energy: Striking the Balance

Shell, under Sawan, is taking the Goldilocks approach to energy—trying to strike the perfect balance between 'too much' oil and gas and 'too little' clean energy.

While the company plans to maintain its oil production and even expand its natural gas business, it's also becoming more picky about the clean energy projects it backs.

Shell's New Strategy and its Ripple Effects

Shell's new direction is causing quite a stir. While some investors have welcomed the cost-cutting and oil-focused approach with open arms, others have raised eyebrows and questioned Shell's commitment to net-zero emissions by 2050.

For instance, the UK's largest asset manager, Legal & General Investment Management, is scrutinizing Shell's plans. The million-dollar question remains, will Shell manage to walk the tightrope of profitability and sustainability?

Only time will tell.

See ya tomorrow,

The Strawman