BAKU, Azerbaijan, May 27
By Leman Zeynalova - Trend:
Royal Dutch Shell may deliver Dutch court ruling on emissions by portfolio optimization, Artem Abramov, Head of Shale Research at Rystad Energy, said, Trend reports.
In a Dutch court ruling energy giant Shell was ordered to reduce its CO2 emissions by 45 percent by 2030, a decision the company said will appeal.
“If we are to hypothesize that Shell is set to deliver on the court decision, this can be done quite easily by portfolio optimization and a dedicated divestment program for high-emission assets. Shell has very competitive Scope 1 emission intensity among its major peers, but it still has significant variability in its own portfolio in terms of intensity for different assets. Divesting certain projects in the Middle East, Nigeria, Malaysia and few other countries would probably be the easiest way to comply with the court ruling if the company chooses or is forced to do so,” said the company.
Abramov noted that however, other than setting a precedence, there are no immediate implications for the general oil industry.
“Even if Shell divests high emission assets, they will just change hands, not be taken off the global energy map. Another way of viewing the company’s flexibility is by a closer look at its emissions. Our data shows that 45 percent of Shell's Scope 1 emissions come from only 14 percent of its total portfolio production,” noted the expert.
Lars Eirik Nicolaisen, Deputy CEO at Rystad Energy believes that it is unlikely but it may be a little early to conclude that the ruling will never stand and that E&Ps won’t at some point be made liable for their Scope 3 emissions.
“After all, the E&Ps that have decided to go down a fullhearted transition pathway have invited their stakeholder set to measure the carbon intensity of their energy mix. Given the mere fact that such a ruling now exists - albeit in a progressive jurisdiction like the Netherlands - is evidence in itself that a court of law can make these kinds of judgements. On another note when it comes to Scope 3 emissions, although a very different market, there is some analogy to the tobacco industry, where producers became more liable for the choices of their customers,” he added.
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