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Shell and BP’s Tightrope Walk: Plan B: Diversify or Bust

Posted by John Donovan: 23 November 2023

Shell and BP’s Net Zero Balancing Act: A Pricey Path to Clean Energy

Shell PLC and BP PLC might need to break their piggy banks and cough up a staggering US$35 billion yearly until 2050. Why? To keep strutting their stuff as major energy players while playing nice with the planet.

The Cost of Going Green (While Staying Black)

Here’s the deal: if these oil tycoons want to keep pumping out oil and gas but not be the bad guys of climate change, they’ve got to get serious about carbon capture and removal. The International Energy Agency (IEA) laid it out: around 60 Mt CO2 of carbon capture, utilization, and storage (CCUS) capacity, and about 200 Mt CO2 of carbon removal capacity.

Getting to these lofty goals means shelling out (pun intended) about US$25 billion each year for the tech, plus another US$10 billion to keep their oil and gas party going.

The IEA’s not mincing words: this is a Herculean task. It’s 3.5 times what these giants have been spending annually over the past five years.

Plan B: Diversify or Bust

There’s a Plan B, though. Shell and BP could turn their attention to low-emission fuels. To stay on the net zero track and meet today’s energy hunger, they’d need over 300 gigawatts from renewables, 85 kboe/d of biofuels, and 12 billion cubic meters of low-emission hydrogen.

This route is a bit gentler on the wallet, demanding around US$20 billion a year until 2050.

By then, the script would flip: less than 10% of their capital would be in oil and gas, with the lion’s share in clean energy.

Shell and BP’s Tightrope Walk

So, Shell and BP are facing a tightrope walk: spend big to keep their oil and gas glory while greening up, or pivot hard to renewables. Either way, their bank accounts and business models are in for a wild ride towards 2050.

Disclaimer: The information presented here is based on current news and reports. Named parties are encouraged to point out any inaccuracies for prompt correction. As Shell is aware, our aim is to maintain the highest standards of accuracy, reliability and impartiality in our news coverage of the polluting ruthless oil giants.

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