How will a future CEO of Shell judge what I have just announced? Will they look back to the end of 2017 and consider it a turning point? In 20 years? 30 years?
If things move as I expect, they probably will.
By then, I believe Shell will be at least as profitable and successful as today but it will be a very different company.
We will still have plenty of oil and gas in our energy mix but other areas of the business, which are small today, will have grown.
That means Shell is likely to be highly involved in the generation, trading and distribution of renewable and low-carbon power.
We will probably have significant operations capturing carbon dioxide and storing it safely underground. And I expect the company to have substantial interests in forestry and in wetlands, natural carbon sinks helping to clean up the atmosphere.
What will drive all that change is the announcement I have just made, which is that, by 2035, Shell aims to have achieved a 20% reduction in the net carbon footprint of the energy we sell.
That means, across Shell’s energy mix, 20% less greenhouse gases produced for each unit of our energy consumed. And if we achieve that aim, we will be well on the way to reaching our long-term aspiration: by 2050, to have cut by half the carbon footprint of the energy we sell.
In step with society
We have designed these aspirations to set Shell to the same task as the rest of society.
The world must stop adding to the stock of greenhouse gases in the atmosphere. It must do this by 2070 if it is to tackle climate change and meet the Paris Agreement goal of restricting global warming to under 2 degrees Celsius.
Shell’s 2035 and 2050 aims are intended to make sure we are in step with that global drive for a solution. By 2050 we intend to match the net carbon footprint of the global energy system.
To make sure we remain in step, Shell will review and report on progress every five years, ensuring we neither fall behind nor get too far ahead of society’s own progress.
This is important because businesses cannot succeed by becoming out of touch with their customers.
Helping customers reduce emissions
Too often the debate about climate change has involved somebody pointing at somebody else. Shell’s approach is meant to be different.
The world must change the way it uses energy, and Shell must help to make this happen by providing solutions that can help our customers reduce their emissions.
This feels to me like a much more collaborative approach, one that is mutually supportive and rewarding.
That does not mean it will be easy. To achieve our aims, Shell has further to go than others in the energy system. This is because we have so much oil and gas in our energy mix, little wind and solar to date, and no hydro or nuclear. We will have to catch up. We know that.
But the direction of the company is now set and I am glad that these aims are now public. I feel they are ambitious, clear and solid.
Importantly, I believe Shell will be able to achieve them without destroying value in the company. We cannot, and we will not, meet them by destroying value. This is about identifying real business opportunities to thrive through the energy transition.
Does that mean I can predict exactly how much solar Shell will have in our energy mix by 2035? How much in wind, biofuels or gas? How many carbon capture facilities? How many trees we will help to grow?
No, I cannot. So much will depend on how governments behave, how consumers act and how technology evolves. Our aspiration may evolve as well.
But Shell’s work towards our aims is already underway. We must play our part with humility, conviction and financial discipline. I am very confident we will get there. I know this company and I know it is very resourceful.
And I do believe that Shell CEOs of the future will look back at the closing weeks of 2017 as a turning point. I think they will see it as the moment when the company took a decisive step into the future, in step with our customers and in step with the world.