Shell Says its Oil Production Has Peaked

Shell has announced that its oil production peaked in 2019 and that it expects a decline of 1% to 2% a year from here on out. Additionally, the company claims that its total carbon emissions also peaked in 2018 and that it will now work toward a goal of net-zero by 2050 at the latest. It’s all part of what CEO Ben Van Beurden describes as the oil giant’s “customer first” approach to the energy transition:

“We must give our customers the products and services they want and need – products that have the lowest environmental impact. At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”

The company’s plan includes several elements that – if done right – could make a real, substantive contribution to a lower carbon society. Chief among the ones worth watching are:

• Growth in electric vehicle charging stations to 500,000 by 2025 (up from 60,000 today).
• Doubling of the amount of electricity Shell sells to 560 terawatt-hours a year by 2030.
• Growth in sugarcane-based bioethanol production (which is not without its problems).

Activists, however, were quick to point out that Shell still sees a very long tail for oil and gas production. In fact, the plan includes the company extending its leadership in liquid natural gas and also relies heavily on tree-planting and other carbon capture technologies to get even close to net-zero by 2050.

In a statement, Mel Evans, head of Greenpeace UK’s oil campaign, criticized what she called Shell’s “delusional reliance” on tree planting, and also pointed out that the plan relies primarily on exploiting existing production capacity until it begins to decline:

“Communities around the world have been flooded, while others are on fire. Governments are upping their commitments on renewables, while competitors are pivoting – but Shell’s big plan is to self-destruct and take the planet down with it.”

Meanwhile, podcaster and journalist Amy Westervelt – whose Drilled podcast series explores the role of oil majors in climate denial – argues that it’s not the job of the climate movement to praise inadequate progress. Talking to TreeHugger via email, she suggests that the tendency to hype half measures was a distraction from what really needs to be done:

“Any progress is good, but that doesn't mean every little thing should be applauded. It can be good without being praised or overstated, especially when these steps are being taken decades later than they ought to have been. More charging stations is great, but that doesn't mean that Shell shouldn't be pushed to divest further from fossil fuels, or held accountable for delaying climate action to suit its bottom line.”

Asked about how current efforts compare to previous attempts by the oil industry to pivot, Westervelt says that it’s a somewhat mixed bag. In the 80s, for example, scientists at Exxon were making very serious attempts to become what they called "The Bell Labs of Energy." Meanwhile, she argues that BP’s later Beyond Petroleum efforts amounted to little more than greenwashing. Westervelt actually pointed to more recent efforts by BP to diversify as being significantly more substantive than Shell’s, mostly because they involve actually divesting from fossil fuel production – albeit under the pressure of a COVID-related slowdown.

Regardless of the arguments over which oil major is doing what, and whether they are doing enough, it is certainly true that fossil fuel companies are becoming increasingly vocal about their lower carbon efforts. That may be in part because some – Shell and BP for example – are headquartered in countries that are signed up to the Paris Agreement. It may also be because they are coming under increasing pressure, both from investors and in the courts.

In the UK, for example, the Supreme Court has just ruled that Nigerian farmers can sue Shell for damage to their land from oil spills. Meanwhile, Nigerian farmers also won compensation from the giant in the Dutch courts. And that’s before we even get started on the potential of young people suing over climate impacts, or major investment groups pulling their money.

Whether or not oil companies can successfully move away from fossil fuels remains to be seen. It seems likely, however, that we’ll be hearing a lot more about their various efforts to try.