Shell to invest in hydrogen, CCS and EV charging to develop options for future
In its Capital Markets Day 2023 presentation that took place in New York, Shell has revealed its business strategy on downstream, renewables and energy solutions, with an objective of decarbonizing its customers in transport and industrial sectors, thereby furthering clean energy transition in global market.
The oil giant has affirmed an investment of up to $1 billion annually in hydrogen and CCS (carbon capture and storage) technology in 2024 and 2025, thereby making investments in a disciplined manner to create options for the future.
In an effort to achieve net-zero emissions energy business by 2050, by reducing emissions from its operations, and from the fuels and other energy products it sells to its global customers, Shell is planning to invest $10-15 billion across 2023 to 2025 to support the development of low-carbon energy solutions including biofuels, hydrogen, electric vehicle charging and CCS.
Huibert Vigeveno, Director - Downstream and Renewables, Shell, said, "With hydrogen and CCS, we are seeding growth for the energy businesses of the future, which will be supported by power".
He noted that the capital expenditure on developing hydrogen solutions would be focused on regions such as Northwest Europe, the Middle East and here in North America. "To Shell, these regions are already having a decent footprint, where policy support exists, where demand from customers is expected to be strong, and where we see a pathway to profitability", he added.
In his presentation, Vigeveno pointed out the benefits of Inflation Reduction Act (IRA]) in the United States, which according to him can make his company's investments "more resilient and competitive." The legislation provides for tax credits of up to $3 per kilogram of green hydrogen produced in the US soil, along with incentives for CCS projects.
Further, Shell is planning to strengthen its positions in low-carbon fuels and electric vehicle charging. About $0.5 billion has been earmarked for cash capex in EV charging segment in 2024-25 period per annum.
"We are investing to provide the secure energy customers need today and for a long time to come, while transforming Shell to win in a low-carbon future. Performance, discipline, and simplification will be our guiding principles as we allocate capital to enhance shareholder distributions, while enabling the energy transition," said, Wael Sawan, Chief Executive Officer, Shell, at his keynote presentation.
"We need to continue to create profitable business models that can be scaled at pace to truly impact the decarbonisation of the global energy system. We will invest in the models that work – those with the highest returns that play to our strengths," said Sawan.