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Shell defies ESG agenda, boosts fossil fuel production as oil companies circumvent unrealistic net-zero emission goals

U.S. Congressional leaders are expressing concerns about the impact of unrealistic clean energy and net zero goals and the damaging impact ESG is having on fossil fuel energy companies

Oil fields with background of the American flag
Oil fields with background of the American flag | Shutterstock

June 20, 2023 9:14am

Updated: June 22, 2023 11:58am

Shell is angling to boost its fossil fuel production during the next several years until 2030 despite the oil company saying it will still zero out greenhouse gas emission level by 2050, a plan that some feel puts its short term tactical goals at odds with its purported long term strategy.

In a comprehensive review of recent energy reports, ADN America found Shell’s plan is just one example of a common oil and gas pattern to continue natural gas drilling for the immediate short term future while pledging to make robust changes in the future, a path that ultimately results in circumventing ESG (Environmental, Social and Governance) and “net zero emissions” policies.

Shell’s announcement comes just days after an environmental watchdog report indicated that while more publicly held fossil fuel companies are declaring goals to reach net-zero emissions, they are long term objectives that exclude short-term reduction strategies, a reality that has raised the concerns of climate change advocates.

News of Shell’s fossil fuel production plans came to light during a corporate presentation to company investors in Manhattan last week. The oil company’s representatives said they plan to expand Shell’s natural gas endeavors. Company executives argued that since natural gas only emits half the carbon dioxide as coal when it is burned for the purpose of generating electricity, the company can still achieve its environmental objectives.

Those objectives were dictated in 2021 when a Dutch court ordered the oil company to lower its 2019 greenhouse gas emissions 45% by 2030. While Shell is appealing the decision, and its new chief executive, Wael Sawan, says he believes the company can still remain compliant with the court’s order.

To that end, Shell already reduced its projected fossil fuel production so that it drops by 20% before the end of the decade, the result of selling $9.5 billion of its shale oil operations to ConocoPhillips in the U.S. Permian Basin.

“Our target of a reduction in oil production by 2030 has not changed,” a Shell spokesperson said, according to a June 14 report in The Guardian. “We’ve just met it eight years early.”

The company previously planned to cut oil production 1-2% each year, but now says its production will remain stable until 2030, saying it would only invest $40 billion each year between 2023-2035 compared with $10-15 billion in low carbon products.

In February 2021, The Guardian reported that the company was planning “to offset its own emissions and those from fossil fuels from carbon capture projects and ‘nature based solutions’ such as planting trees and restoring natural habitats.”

Sawan, who took over the oil company in January, said Shell is taking a "pragmatic" approach when it comes to alternative energy and climate change movement.

“Oil and gas will continue to play a crucial role in the energy system for a long time to come," Sawan said during the Manhattan investor meeting. "It is critical that the world avoids dismantling the current energy system faster than we are able to build the clean energy system of the future."

Recent reports have indicated the company plans to increase its gas production business while keeping oil production steady, a methodology they believe will stabilize liquid production by 2030.

Sawan, who took the helm in September said Shell is still committed to achieving net zero emissions by 2050, but added the disclaimer that may change, “if society is not net zero in 2050.”

June 11, 2023 report from climate analyst website Net Zero Tracker found that while more publicly held fossil fuel companies are publicly declaring goals to reach net-zero emissions, they are long term objectives.

According to the report, the list of such companies has doubled from 417 to 929 in the last two years, but that “a significant share of subnational and corporate entities still lack any emission reduction target whatsoever, at the global level and within the G7. Collectively there are very limited signs of improvement in the robustness of subnational and corporate net zero targets and strategies.”

The report added that while more oil and gas companies say they are going to use carbon dioxide removals (CDR) in their value chain, “no major producer countries or companies have committed to phasing out fossil fuels,” making the case that companies volunteering net zero standards need to offer clearer strategies to have credibility.

Shell PLC is a British owned multinational oil and gas company headquartered in London that was owned by the Dutch until last year. It was ranked the ninth largest producer of greenhouse gas in the world from 1988-2015, according to a 2017 Carbon Majors Database Report.

That report said that just 100 companies were responsible for 70% of the world’s greenhouse gas emissions. Other companies ranking in the top 10 include Exxon and Mobil, BP and Chevron.

While a 2015 Carbon Tracker report suggested the oil and gas industry could waste up to $2 trillion in producing fossil fuel energy in light of international recalibration toward climate change energy goals, some skeptics, even those who are proponents of clean energy believe a shift to “net zero emissions” is unrealistic and unattainable.

In April 2021, three climate scientists, James Dyke, Robert Watson and Wolfgang Knorr warned in a report published by The Conversation, that the concept of “net zero emissions” was a “dangerous trap” that would most likely result in the oil and gas industry taking a long term, not short term approach.

“The current consensus is that if we deploy these and other so-called ‘carbon dioxide removal’ techniques at the same time as reducing our burning of fossil fuels, we can more rapidly halt global warming, the three scientists wrote. “Hopefully around the middle of this century we will achieve ‘net zero.’ This is the point at which any residual emissions of greenhouse gases are balanced by technologies removing them from the atmosphere.

The scientists said while this sounded like “a great idea, in principle” in practice it perpetuates a belief in ‘burn now, pay later’ approach which has seen carbon emissions continue to soar.”

Vaclav Smil, a world renowned Czech-Canadian scientist who escaped to the U.S. from the communist Iron Curtain has said that achieving a transition to clean energy will take much longer than some predict, and has advocated for more realistic goals, such as focusing on energy saving measures.

Smil said in 2018 that coal, oil and gas still make up 90% of the primary energy sources around the globe and that while renewable energy technology continues to have advances, the worldwide share of energy produced from fossil fuels in the last two decades has increased. He has thus argued that replacing fossil fuels in the production of ammonia, cement, iron and plastics will be much more difficult than net zero emissions advocates want to believe.

In an April 2022, 2022 New York Times interview, Smil talked about his new book, “How the World Really Works: The Science Behind How We Got Here and Where We’re Going,” in which he made his case.

The book, which the Times called “a rebuke to those calling for rapid decarbonization in order to combat global warming” instead examines more realistic approaches.

“I am not talking about what could be done, I’m looking at the world as it is,” he told the Times. He then explained that the most important element to understand is the scale of what the world is facing as a whole.

An energy transition affecting a country of one million people is very different from a transition affecting a nation of more than one billion,” he explained. “It is one thing to invest a few billion dollars, another to find one trillion. This is where we are in terms of global civilization: This transition has to happen on a billion and trillion scales.

Smil also cites what he believes are unrealistic projections from COP26, (the 26th United Nations Climate Change Conference, held in Glasgow last fall), which said the world should reduce carbon dioxide emissions by 45%by 2030 as compared with 2010 levels.

“This is undoable because there’s just eight years left, and emissions are still rising,” he explained. “People don’t appreciate the magnitude of the task and are setting up artificial deadlines which are unrealistic… What’s the point of setting goals which cannot be achieved? People call it aspirational. I call it delusional.

Smil made clear while he is skeptical about unrealistic goals, he is not against realistic ones.

“I’m not against setting a goal. I’m all for realistic goals,” he clarified. “I will not yield on this point. It’s misleading and doesn’t serve any use because we will not achieve it, and then people say, What’s the point? I’m all for goals but for strict realism in setting them.”

U.S. Congressional leaders are also expressing their own concerns about the impact of unrealistic clean energy and net zero goals, and the damaging impact that ESG is having on fossil fuel energy companies.

Reps. Pat Fallon and Lisa McClain recently announced a joint hearing titled, “ESG Part II: The Cascading Impacts of ESG Compliance to examine how environmental, social and governance (ESG) initiatives impact businesses, consumers, and retirees,” which slammed the Biden administration for “imposing damaging restrictions” on the energy sector.

“No administration should be able to impose damaging restrictions that burden American energy companies, disincentivize investment, and gamble with Americans’ retirement to fund its own far-left political agenda in the private market,” the two Congressional Republicans said in a May 30 statement. “The Biden administration has routinely prioritized its progressive ESG schemes over the real economic, energy, and national security interests of the United States. We look forward to hearing from experts as we continue to investigate and expose the harmful effects of ESG practices.”