Delivering Carbon Neutral¹ Solutions to Our Customers

We plan to deliver 700,000 tonnes of CO₂e offset annually, covering all stages of the life cycle of the key lubricants brands in our portfolio and this represents a key milestone in our ongoing commitment to deliver on two key, strategic initiatives:

1. Reducing the CO₂e intensity of our products

This is achieved through:

• Avoiding emissions, by:
  • Embedding circular economy thinking at the heart of our business
    Shell will use more recycled content in our plastic bottles. In Europe, we are working on plans to technically prove the use of recycled resin in our bottles, and in the US we are testing higher loads, which we plan to be above the existing 25% recycled resin content required by current legislation. We are also moving some of our larger plastic packaging, for example pails, to contain recycled resin.
  • Designing products with reduced greenhouse gas (GHG) and less packaging
    We are exploring different packaging concepts that are more sustainable (i.e. different materials or different supply chain models). For example, Ecobox, used in the US and China is an alternative to traditional plastic packaging for motor oil for light-duty vehicles, which can reduce plastic usage in the packaging by more than 80% and CO₂e emissions by more than 60%⁵.

• Reducing emissions, by:
  • Improving the energy efficiency of our facilities
    We have reduced our carbon intensity in our operations by over 30% since 2016⁶.
    Energy monitoring systems (EMS) and LED lighting have been installed at all our facilities which allow us to improve the energy efficiency of our sites. For example, the EMS pilot at the Tianjin plant helped to achieve an 8.5% reduction in electricity use between 2017 to 2018.
  • Increasing our use of renewable energy
    Over 50% of electricity used in our Shell Lubricant Blending Plants now comes from renewable sources, including renewable electricity contracts and we plan to increase this amount through expansion of solar installations in the rest of our Shell facilities. Combined, these panels generate more than 7,500 MWh of electricity annually, and can result in the avoidance of GHG emissions of approximately 4,500 tonnes on a CO₂e basis per year.
  • Reducing the CO₂e emissions of our supply chain
    Shell has implemented LNG trucks for some routes, which have a lower CO₂e impact than traditional trucks, while optimised networks help reduce road transport by over a million miles and low viscosity synthetic lubricants reduce fuel consumption.
     
• Offsetting emissions, by
  • Compensating for CO₂e emissions from the life cycle of our products.
    Life cycle of lubricants covers: the raw material extraction, transport, production, distribution, usage and end-of-life.
  • Using globally diverse, externally verified, and high-quality, nature-based carbon credits.
    Each carbon credit represents the avoidance or removal of GHG equivalent to one tonne of CO₂e.
  • Protecting and restoring natural ecosystems.
    Shell Lubricants support internationally accredited, carbon offsetting projects such as the Katingan Mentaya project in Indonesia or the Qinghai Afforestation Project in China. They naturally remove CO₂ from the atmosphere every year while also improving biodiversity, protecting endangered species and supporting local communities.

2. Helping customers to manage their sustainability needs

This is achieved through providing high-quality products and leading-edge technology that can:

• Reduce friction, wear and tear
• Extend the life of engines and machinery
• Increase fuel economy, oil-drain interval and energy efficiency
• Reduce the amount of resources required, waste produced, and emissions emitted.

Low viscosity lubricants can increase fuel economy by up to 3%⁷ and increase energy efficiency in industrial applications by up to 4%⁸, while many of our industrial lubricants deliver significant ODI benefits such as reduced maintenance needs and fewer parts replacement. For example, Shell Mysella S7 N, our latest generation natural gas engine oil, more than doubles the previous industry typical oil drain for gas engine oils.

As we all move towards a lower-carbon future, combining these two aims will help to provide customers across the globe with more and cleaner energy solutions. And this is sustainability without compromise, as Shell Lubricants is dedicated to enabling customers to retain the best in operational performance while contributing to lower emissions, less waste and fewer natural resource usage.

¹ CO₂ compensation is not a substitute for switching to lower emission energy solutions or reducing the use of fossil fuels. Carbon credits are purchased and retired to compensate the calculated lifecycle CO₂e emissions of the product. Although these carbon credits have been generated in accordance with international carbon standards, the compensation may not be exact.
² Kline & Co [https://www.shell.com/business-customers/lubricants-for-business/news-and-media-releases/2019/shell-retains-leadership-of-global-lubricants-market-for-thirteen-consecutive-year.html]
³ CO₂e (CO₂ equivalent) refers to CO₂, CH₄, N₂O.
⁴ The CO₂e lifecycle emissions of this product have been offset with verified Nature-Based Carbon Credits.
⁵ over 80% plastic reduction in box liner vs. 5 individual 4L Shell Helix bottles.
⁶ Own operations involved in manufacturing of lubricants and based on Shell Internal Reporting.
⁷ Based on ACEA M111 fuel economy results compared with the industry reference oil
⁸ Shell Tellus S4 VE can help save up to 4.4% of the energy per hour in a plastic injection moulding machine (Shell and third-party field trial)

LEGAL DISCLAIMERS:

SHELL LUBRICANTS CARBON NEUTRAL FULL LEGAL DISCLOSURE

INDEPENDENT EXTERNAL ASSURANCE

To support our carbon neutral⁹ product offerings, Lloyd’s Register Quality Assurance (LRQA), an independent, accredited Verification Body, provided external assurance on the associated processes and underlying product level carbon footprint calculations.

This includes the following:

• Processes for calculation of the life cycle greenhouse gas emissions in carbon dioxide equivalents associated with a product (documentation here)

In addition, LRQA independently assured Shell Lubricants’ product level carbon footprint calculations, used for quantification of carbon intensity in kg CO₂ equivalent per liter of product, against the following standards:

• International standard of ISO 14067:2018 Greenhouse gases - Carbon footprint of products - Requirements and guidelines for quantification
• Publicly available specification of PAS2050:2011 Specification for the assessment of the life cycle greenhouse gas emissions of goods and services.

LRQA implements and maintains a comprehensive management system that meets accreditation requirements for ISO 14065 Greenhouse gases – Requirements for greenhouse gas validation and verification bodies for use in accreditation or other forms of recognition and ISO/IEC 17021 Conformity assessment – Requirements for bodies providing audit and certification of management systems that are at least as demanding as the requirements of the International Standard on Quality Control 1 and comply with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants.

The associated documentation (assurance statement) has been reproduced in full and can be found here.

⁹ Carbon neutral: CO₂ compensation is not a substitute for switching to lower emission energy solutions or reducing the use of fossil fuels. Carbon credits are purchased and retired to compensate the calculated lifecycle CO₂e emissions of the product. Although these carbon credits have been generated in accordance with international carbon standards, the compensation may not be exact.

CO₂e CONVERSION ANALOGY DISCLAIMER:

These analogies are for illustrative purposes only. Shell does not make any representation or warranty, whether express or implied, regarding the accuracy, completeness, reliability or relevance of the analogies, and is not liable in any way for any loss, damages or expenses arising out of, or in connection with the calculation of the analogies, or with the use of or claims made regarding such analogies. Actual emissions from driving are sensitive to parameters that vary in each individual application, for which assumptions are required here: size or type of car; number of passengers; and city vs. highway driving, among others. As such, these numbers should not be taken as representative of any specific case or activity. Driving analogies are based on direct CO₂, CH₄ and N₂O emissions from the vehicles and do not include emissions from fuel production and distribution (life cycle emissions). Fuel emissions factors are from UK DEFRA (2019), driving distances are from Google Maps (2020), and US and EU driver distances are from US DOT (2018) and EU ODYSSEE-MURE (2017).

OTHER DISCLAIMERS:

This document contains data and analysis from Shell’s Sky scenario. Shell’s scenarios are not intended to be projections or forecasts of the future. Shell’s scenarios, including the scenarios contained in this report, are not Shell’s strategy or business plan. When developing Shell’s strategy, our scenarios are one of many variables that we consider. Ultimately, whether society meets its goals to decarbonise is not within Shell’s control. While we intend to travel this journey in step with society, only governments can create the framework for success. The Sky 1.5 scenario starts with data from Shell’s Sky scenario, but there are important updates. First, the outlook uses the most recent modelling for the impact and recovery from COVID-19 consistent with a Sky 1.5 scenario narrative. Second, it blends this projection into existing Sky (2018) energy system data by around 2030. Third, the extensive scale-up of nature-based solutions is brought into the core scenario, which benefits from extensive new modelling of that scale-up. (In 2018, nature-based solutions required to achieve 1.5°C above pre-industrial levels by the end of this century were analysed as a sensitivity to Sky. This analysis was also reviewed and included in the IPCC Special Report on Global Warming of 1.5°C (SR15).) Fourth, our new oil and natural gas supply modelling, with an outlook consistent with the Sky 1.5 narrative and demand, is presented for the first time. Fifth, the Sky 1.5 scenario draws on the latest historical data and estimates to 2020 from various sources, particularly the extensive International Energy Agency energy statistics. As with Sky, this scenario assumes that society achieves the 1.5°C stretch goal of the Paris Agreement. It is rooted in stretching but realistic development dynamics today but explores a goal-oriented way to achieve that ambition. We worked back in designing how this could occur, considering the realities of the situation today and taking into account realistic timescales for change. Of course, there is a range of possible paths in detail that society could take to achieve this goal. Although achieving the goal of the Paris Agreement and the future depicted in Sky 1.5 while maintaining a growing global economy will be extremely challenging, today it is still a technically possible path. However, we believe the window for success is quickly closing.

FULL CAUTIONARY NOTE

Additionally, it is important to note that as of 23^rd February 2021, Shell’s operating plans and budgets do not reflect Shell’s Net-Zero Emissions ambition. Shell’s aim is that, in the future, its operating plans and budgets will change to reflect this movement towards its new Net-Zero Emissions ambition. However, these plans and budgets need to be in step with the movement towards a Net-Zero Emissions economy within society and among Shell’s customers. 

Also, in this document we may refer to Shell’s “Net Carbon Footprint”, which includes Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbon emissions associated with their use of the energy products we sell. Shell only controls its own emissions. The use of the term Shell’s “Net Carbon Footprint” is for convenience only and not intended to suggest these emissions are those of Shell or its subsidiares.