New research: Shell’s LNG lobbying clouds its Paris commitments

Shell’s investors still lack clear visibility over the company’s lobbying activities - including whether they are Paris-aligned and how they support Shell’s LNG growth strategy - new ACCR research finds.

Commitment Issues: Shell's LNG lobbying risks undermining its Paris pledge identifies numerous instances of Shell lobbying in key emerging markets for higher, long-term gas and liquefied natural gas (LNG) use – activities that do not appear aligned with Paris pathways or the company’s commitment to lobby in support of the Paris goals.

While investor pressure led to Shell incrementally improving its lobbying disclosures over the past year, the research shows this has not delivered investors with adequate insight into the extent and impact of the company’s lobbying. Its disclosures do not address the tension between Shell’s ambitious LNG growth strategy, which does not appear Paris-aligned, and the company’s commitment to lobbying in line with the Paris Agreement.

Key findings:

• Investor pressure has seen Shell incrementally improve its disclosures and acknowledge its lobbying engagement in emerging markets. However, investors still do not have adequate insight into the impact or Paris alignment of Shell’s lobbying, or the extent to which its lobbying supports and shapes strategy.

• The report analyses Shell’s long-standing lobbying in four emerging markets which are material for Shell’s gas and LNG business, and where Shell has recently added climate-related lobbying disclosures:

  • China: Shell used its scenario modelling to promote Paris-misaligned gas use to policymakers for more than a decade. Its scenario modelling likely influenced China to pursue a more expansionary gas policy during its 13th Five Year Plan (2016-2020). Shell continues to advocate for elevated Chinese gas use in its scenarios, but it is unlikely to maintain its influence given policy and technology headwinds.
  • India: Shell used its scenario modelling to increase its access to policymakers and funded a study which appears to have influenced policy for developing a domestic LNG trucking market. This is despite LNG trucking not having clear greenhouse gas emissions benefits in India.
  • Malaysia: Shell lobbied for long-term gas use directly and via the Malaysian Gas Association (MGA), where it is a key member. The MGA helped shape Malaysia’s National Energy Transition Roadmap and endorses its plan to significantly increase gas use while targeting net zero by 2050. This contradicts Shell’s modelling of Malaysian decarbonisation, developed with a government climate agency, which contains much less gas and more renewables.
  • Nigeria: Shell is extensively involved in shaping the government’s Decade of Gas policy initiative, which aims to make Nigeria “gas-powered” by 2030. By targeting large increases in gas production and consumption, it risks pushing Nigeria’s rapidly growing economy onto a heavy-emitting development pathway.

Commenting on the research, Nick Mazan, ACCR Oil and Gas Strategy Lead, said:

“While strong investor pressure has driven some improvement in Shell’s lobbying disclosures, it seems that investors are still unable to properly assess the Paris alignment of the company’s lobbying and its relationship to Shell’s strategy.

“Shell’s improvements to its disclosures have not adequately addressed the friction between its advocacy for gas and LNG growth, and its pledge to lobby in line with Paris.

“Shell’s LNG growth strategy is a gamble on LNG playing a major role in the energy mix of emerging markets. As such, the company may have an incentive to lobby for increased gas and LNG use at the expense of its commitment to Paris-aligned lobbying.

“It may well be the case that Shell will not materially change its Paris-misaligned lobbying while its corporate strategy remains Paris-misaligned. Tackling the source of the inconsistency via ongoing scrutiny of Shell’s LNG growth strategy remains an important pathway for investors.”

Background

Over the last two years, ACCR has published extensive research and analysis that addresses Shell’s lobbying:

• Investor Bulletin: Shell expands lobbying disclosures, but picture still not clear
• Investor Bulletin: Shell’s lobbying disclosures make incremental improvements, but step-change is needed
• In the dark: gaps in Shell’s climate lobbying disclosures