Shell will be releasing its transition plan on March 14th, with an advisory vote on its transition plan at its May 21st AGM. Based on FY23 results, we expect a wholesale change to Shell’s transition strategy and emissions targets to better reflect its narrowed approach to low carbon.

Key findings

• Capex for FY23 was $24.4bn, -2% from FY22, in line with guidance. Renewables and Energy Solutions (R&ES) capex declined 23% to $2.7bn, and total capex for Low-carbon energy solutions (incl renewables within R&ES segment) increased 30% to $5.6bn. 

• For the first time Shell provided clear guidance on capex for Low-carbon energy solutions of $10-15bn FY23-FY25 (implies $2.2-4.7bn pa. for FY24-25). This will make assessing transition performance easier, given gas based power is a large contributor to R&ES capex.

• The swing away from renewables is evident. As a percentage of group capex, Renewables & Energy Solutions hit a 3-year low of 11% in FY23, while Upstream hit a 3-year high of 34%. Shell’s total renewables pipeline declined 9% in FY23 to 46.8 GW. This compares to BP (+16%) and Total (+17%) YTD, signaling a divergence from integrated peers.

• Net carbon intensity targets set by its prior CEO (20% by FY30) appear unachievable to us, with only -3.8% delivered as of FY22.