This post was originally published on this site
Royal Dutch Shell shares traded lower on Thursday after the company presented its decarbonization strategy, which includes gradually reducing oil output.
Shell RDSA, -1.69% RDS.A, +0.29% shares fell 2% as it laid out its strategy to be a net-zero emissions energy business by 2050, which will include linking net carbon intensity to its remuneration. Shell said it will be the first industry to submit an energy transition plan to shareholders for a vote.
Shell said it will spend $5 billion to $6 billion each year growing its renewables business, compared with $8 billion to $9 billion on its “transition” portfolio of integrated gas and chemicals, and $8 billion on its upstream oil business. The upstream business will “generate the cash and returns needed to fund shareholder distributions while accelerating investment in the growth businesses to capture new market opportunities.”
Shell said it will gradually reduce oil production by between 1% and 2% each year, through both divestments and natural decline. It also will reduce its refinery footprint and production of traditional fuels by 55% by 2030, while ramping up its electric-vehicle charge points network, extend its biofuels production and distribution, and develop hydrogen hubs.
“Shell’s strategy is differentiated by its tilt towards customers and shares the same decarbonization aims as its European peers,” said Jon Rigby, a UBS analyst, ahead of Shell’s conference call to discuss the shift.
Over the last 52 weeks, Shell shares have dropped 34%, outperforming the 44% slide by rival BP BP, -1.04% over the same time frame.
The broader FTSE 100 UKX, +0.08% edged up 0.1% shortly after midday. Coca-Cola HBC CCH, +4.60% rose 5% to lead the FTSE 100 risers, as the bottler reported better-than-forecast earnings for the fourth quarter and said margins should improve this year.
AstraZeneca AZN, +0.95% rose 1%, as the U.K.-Swedish pharmaceutical reported smaller earnings but stronger revenue than expected, declared a steady dividend, and guided for low-teens percentage growth in revenue.
