Shell has unveiled plans to invest £20-25bn ($26-33bn) in the UK energy system over the next ten years.

More than 75pc of this is intended for low- and zero-carbon products and services, including offshore wind, hydrogen, carbon capture and storage (CCS), and electric mobility.

The company will lay out more details about its strategy in the coming months.

“These investments, subject to board approval, aim to propel the UK closer to net zero and help to ensure security of supply while stimulating economic growth and jobs,” says Shell’s UK country chair, David Bunch.

Shell’s global profits for 2021 rose to $19.3bn from $4.85bn the year before, partly due to strong earnings from its LNG division following high gas prices—leading to calls for a windfall tax in the UK.

$19.3bn – Shell profits in 2021

Bunch calls on the UK government to provide more policy certainty to help lay the groundwork for these investments. “Investing this money requires urgency of action across government to deliver the enabling policy and business case frameworks,” he says.  

“These must address both the supply and demand side of the energy transition (in areas such as hydrogen and CCS, for example).”

Potential policies

On the supply side, the government has signalled its readiness to offer a contract-for-difference (CfD) scheme to support green and blue hydrogen projects, but there is no official policy yet. It is analysing feedback from a consultation on the design of a CfD, which closed in October.

A new UK energy strategy in response to Russia’s invasion of Ukraine is expected imminently.

On the demand side, a key part of the strategy for hydrogen is the creation of low-carbon clusters. The government also has a plan for hydrogen to be used in natural gas-fired power plants at times of peak demand.

Tackling the transition

Last year, Shell announced its plan to achieve net-zero emissions by 2050 to shareholders.

A court ruling in the Netherlands then upheld a claim by NGOs and a group of private individuals that Shell should reduce its carbon emissions faster than planned. Partly as a result of this, Shell aims to push ahead with significant new investments in hydrogen production and CCS in 2022, according to CEO Ben van Beurden.

Fellow major BP said in February it would invest 'more than double’ the profits it generated in the UK every year until 2025, rejecting a call for windfall tax on its profits. The firm is already involved in a green hydrogen project in Teesside.

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Author: Tom Young