Shell Sets Out Strategy for Dealing with Shift from Fossil Fuels

In a report issued on Thursday on its strategy for adapting to a lower-carbon energy system, Royal Dutch Shell said it saw little risk of being left with “stranded assets” as the world begins to shift away from fossil fuels and promised to keep pace with the global transition to cleaner energy. In its report, Shell acknowledged that oil demand was likely to peak and subsequently decline but said the process would take decades to unfold. Under the most rapid transition to low-carbon energy considered plausible by Shell, oil demand would grow by 1 per cent a year between 2020 and 2025, then fall by 1 per cent a year until about 2040. The Anglo-Dutch group said 80 per cent of its current proved oil and gas reserves would be produced by 2030, when it expects demand for those hydrocarbons to be higher than it is today even under its most aggressive scenario for growth in alternative forms of energy. Shell said it was confident that its reserves would remain competitive over that period at prices as low as $40 a barrel, compared with about $70 today, and that the group had enough flexibility to adjust longer-term investments in line with the changing energy landscape. Shell committed last year to disclose more information about “climate risks” to its business in response to mounting scrutiny from investors and regulators. – Financial Times