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Will Shell Shift to Greener Fuel?

Are fossil fuels still driving Shell? Will they shift gear to greener fuels? What will the impact of this decision have on the Australian energy industry?

Over the last couple of weeks several executives in Shell’s clean energy arm have resigned. Announcements about the companies strategy for the energy transition have been made. Executives in the clean energy arm have pushed for a more aggressive shift toward clean energy and away from fossil fuels. Senior management prefers to stay with the current path of oil and gas.

Shell Chief Executive Officer, Ben van Beurden has told the media that his “single biggest” regret would be retreating from the oil business prematurely. Shell will be focused on fossil fuels for some time. Shells strategy update is planned for February and it is expected the business will lay out its plans to become a net zero emissions business.

As a sign of clean energy losing favour with Shell, in recent weeks the Head of Solar, Storage and Onshore Wind, the General Manager of the New Energies division and leaders in the energy transition strategy team have left the company. The Vice-President for offshore wind will also leave the business in coming months.

Shells CEO has said investment into lower-carbon businesses such as biofuels and solar power “needs to accelerate”. However, he has also said that oil will continue to be a huge cash generator and the company will expand its gas division. “There is going to be a place for our upstream business for many decades to come.”

BP, Shells main competitor announced in August that it would cut oil and gas production by 40% by 2030 as part of its energy transition plan.

It is likely the senior executives at Shell would prefer to invest into the traditional fossil-fuel divisions that provide better returns than the greener markets. They also believe the company has already moved aggressively in the green space and only needs to communicate better.

What is the impact of this stance in Australia?

Shell Energy Australia has been trying to build its business. Offering the backing of Shell with the innovation to provide innovative energy products including, energy from intermittent renewable energy sources. In November 2019 Shell also acquired ERM power.

ERM was to become Shell’s core power platform in Australia. In early 2020, Shell announced it would build and operate the 120MW Gangarri Solar Project near Wandoan in Queensland.