5. Shell plc (NYSE:SHEL)
Number of Hedge Fund Holders In Q2 2024: 49
Shell plc (NYSE:SHEL), like BP, is another mega oil firm that is focusing on developing cleaner fuels. Consequently, during the first half of 2024, 92% of its exploration, upstream, and renewable revenue come from natural gas or renewable sources. However, Shell plc (NYSE:SHEL)’s largest business is still its marketing division which includes revenue from selling wholesale commercial fuels. It earned the firm $62 billion in sales in H1, which accounted for 42% of the firm’s overall sales. This dependence has also forced Shell plc (NYSE:SHEL) to shift its strategies lately. It now aims to maintain current production volumes until 2030, which is a marked change over the previous plan to cut it by 55%. Shell plc (NYSE:SHEL)’s pivot to natural gas and liquefied natural gas (LNG) can set it up well for a future that prefers cleaner burning fuels. The firm also aims to invest up to $15 billion in clean energy by 2025, to create exposure to markets such as EV charging.
Here’s what Shell plc (NYSE:SHEL)’s management is planning for its clean energy initiatives:
“Firstly to say, we have talked about $10 billion to $15 billion of investment between 2023 and 2025 in the low carbon space. We have also said that these are nascent businesses, suspending that amount of money, we have to really be conscious of the business cases that we are driving. And critically, I would say, we are doing this for shareholder value creation. So we have to really be clear that we have line of sight to be able to actually get accretive value as a result of this.
Now we are learning through the process. I will admit to you that there are certain things which we have gotten into where we said, let’s pause come out of such as, for example, our Power Home business. At one point, we got out of it, hydrogen into mobility. We’ve gotten out of it. So we’re really trying to make sure that we lean in, we learn and then we focus. What do we see that creates the most opportunities right now, biofuels, as I’ve talked about earlier, my convictions, including, by the way, renewable natural gas such as our Nature Energy platform. Green hydrogen has to come in within the right context of regulatory support. I’ll leave Sinead to unpack that a bit more. We do like the nexus of power trading, including with flex generations of battery storage, combined cycle gas turbines, et cetera.
Those are areas where we are continuing to lean in because we are now seeing that we can create value out of them. Where does CCS fit into that? CCS, we think in the — for the coming years is a critical part of our own decarbonization journey to get to the 50% reduction in Scope 1 and 2. The Polaris one, which was in Canada, is linked to our Scotford asset, where we expect to capture some 650,000 tonnes per year from that facility. And the reason we like that is we’ve done it in Canada before. We’ve done it with Quest. We’ve done it for that facility. So it’s derisked. We know what we’re doing in that space. And the business model is one where the credits in Canada allow us to be able to create value from that investment. So it’s very much the ability to be able to monetize some of those opportunities and to sell the products, the low carbon products to our customers at a premium is what we go after.”
