Powering Progress. That's how I think about our role. That's what I believe we do
and we should continue to do. And that is what I think
is the case for Shell. Powering Progress sets out our strategy to accelerate the transition
of our business to a net-zero emissions business, purposefully and profitably. Powering Progress delivers value
for our shareholders, for our customers and for wider society. It builds a strong and a resilient company by putting customers
at the centre of our strategy. Powering Progress means partnering
with others to reduce carbon emissions, especially in sectors
that are hard to decarbonise. And this includes
supporting government policies to reduce carbon emissions
sector by sector. At our Q3 results,
we introduced you to our new approach, and today we build on that, explaining we are ready to seize the significant opportunities
at our fingertips in the energy transition. But first, let's look at a short film that illustrates a challenging
but a possible vision of the future. It underlines great opportunity but also the urgent need to accelerate
to meet Paris. The way the world produces
and uses energy is visibly changing. But to meet the most ambitious goals
of the Paris Agreement, change needs to happen faster. Shell is becoming
an energy business for the future, and it's playing its part
to help drive that change. Our scenarios help inform our thinking and show how the energy system
could transform quicker. The transition
of the world's energy system is happening
while global population is growing, potentially to 11 billion
by the end of the century. That's more people requiring more energy for a better quality of life. So the question is,
what could this energy system look like? For the global economy to achieve
net-zero carbon dioxide or CO₂ emissions, electricity, primarily from renewables, as well as hydrogen and biofuels are expected to be important
in the future energy system. Shell scenarios explore
a range of possible futures to help make better decisions today,
for tomorrow. Our newest scenarios,
Waves, Islands and Sky 1.5, are all on a path
towards net-zero CO₂ emissions, with energy systems
eventually dominated by renewables. But the choices society makes will determine how quickly the world moves
towards net-zero emissions. In the most ambitious scenario, Sky 1.5, the average global temperature rises above and is then limited to 1.5 degrees Celsius above pre-industrial levels
before the end of this century. This requires the entire world
to reach net-zero CO₂ emissions by sometime before 2060. Our scenarios show that leading economies,
sectors and companies must act faster
for the world to achieve this timeline. And we want to be
one of those leading companies, which is why Shell's target is to become
a net-zero emissions energy business by 2050 or sooner. The Sky 1.5 scenario requires energy efficiency improvements of around 50% across the global economy, but more energy will still be needed
to meet demand. So, the emerging system needs to address the economic sectors
that consume the most energy. To get from today's energy consumption to a net-zero emissions energy system, industry will need to shift
towards more electricity, primarily from renewables as well as hydrogen and bioenergy. Currently in transport, energy consumption
is mostly from oil-based fuels. But the use of hydrogen and biofuels
will need to grow, as will electricity,
mainly from renewables. Today, buildings mostly consume energy
from non-renewable sources. In the future,
they will require electricity mostly from renewables
with some bioenergy. Deep electrification of the global economy is needed to achieve net-zero emissions, which means more than tripling
electricity consumption. In power generation, electricity will increasingly come
from renewables, primarily wind and solar,
as well as some nuclear. Natural gas will continue to play
an important role supporting the transition from coal and compensating
for the intermittency of renewables. Commercial production of biofuels
from biomass must ramp up, alongside the production and distribution
of hydrogen at scale. To achieve Sky 1.5, unavoidable emissions are removed
from industrial processes or from the atmosphere
using both technology and nature. While the energy transition is inevitable, it will proceed at different paces
in different places and sectors and with different degrees of turbulence. Faster progress needs pioneering leaders in government and businesses to act. Government policy and greater alignment
will also be crucial, country by country and sector by sector, with each needing a different approach to unlock well-directed investment. We know that the energy transition
can only happen if governments and businesses incentivise
low and zero-carbon choices and if customers embrace these changes. There is no doubt
the transformation of the energy system must move faster to limit global warming. And this is a huge challenge
that affects everyone because the world needs energy
to improve lives. And for a healthy planet,
this must be cleaner energy. Put simply, it is going to take ambitious orchestration
of government policy, investment and sector cooperation. But we believe the world can achieve
net-zero CO₂ emissions to meet the goal of Paris if industry, government and society work together
to make the right choices now. The energy system must change faster, and change is opportunity. Shell is acting today
to be part of this future. So, the transition to a low-carbon world
is an opportunity. Grasping that opportunity
would radically transform the company's portfolio
in the next 30 years. Today, we have
a highly-competitive portfolio of assets, products and market positions. Today, we deliver superior value
from our integrated business model as we produce, buy, trade, transport
and sell our products around the world. But we cannot stand still. Pursuing the value in the future of energy
means changing our businesses across each of our three pillars
of Growth, Transition and Upstream. We will take new opportunities to grow and to become
even more competitive and even more resilient. And as we take those opportunities, we aim to be a compelling investment case
for our shareholders, and also a company
that brings value to society, a company that is at one with society
as it moves towards that net-zero future. Powering Progress serves four main goals,
all of which are critical to our future. And together, these goals integrate sustainability
with our business strategy. These goals are founded
upon our core values of honesty, integrity
and respect for people. And they are secured
through our determined focus on safety and our commitment
to doing business in a transparent way. And it's through the successful pursuit
of these four goals that we will build
the investment case in Shell. I will take you through each in turn now, starting with our goal
to generate shareholder value. Powering Progress drives the creation
of wealth for our shareholders in the short, the medium
and the long term. That means seeking
to grow dividends every year and further increasing
total shareholder distributions as we grow our cash flows. And by accessing
the enormous opportunities that the future of energy holds, we will create the conditions
for share price appreciation. The changing energy landscape means
that Shell must take a dynamic approach to our portfolio of assets and products. And our Upstream business will continue to generate
the cash and returns needed to fund shareholder distributions and also to accelerate our transition
into the future of energy. And, of course, we will keep
a disciplined approach to capital investment
and a strong balance sheet, so our company remains strong, resilient
and ready in this time of change. Next, becoming a net-zero
emissions business by 2050, in step with society. Our net-zero target supports the most ambitious goal
of the UN Paris Agreement: 1.5° Celsius. And this means
we have to transform our business, working with our customers and others in sectors that are difficult
to decarbonise. That includes aviation, shipping,
road freight and industry. Powering Progress also means
powering lives and livelihoods. Of course, you know us as a company
that provides vital energy for homes, businesses and transport. But the supply of affordable energy
is also crucial for addressing global challenges
like poverty and inequality. And that is why we have set an ambition, by 2030, to provide reliable electricity
to 100 million consumers in emerging markets
who do not have it today. And across everything we do, we focus on improving inclusion
and representation in four areas: disability, race and ethnicity,
LGBT+ and gender. Let's look at our goal to respect nature. We are stepping up
our environmental ambitions to protect and enhance biodiversity. We're also focusing on using water
and other resources more efficiently, and reusing as much of it as we can. We are reducing waste from operations
and increasing the recycling of plastics. Now, you will find more information
about our Powering Progress strategy on Shell.com and in April we will talk in greater depth
about the two goals of Respecting Nature and Powering Lives
at our annual ESG update. But today, our focus
will be on our two interlinked goals of generating value for shareholders
while achieving net-zero emissions. So, as I said right at the beginning, we expect to radically transform Shell
over the next 30 years. And we will do this by seeking out
and grasping the tremendous opportunities of the global shift
to a lower-carbon future. Now, 30 years is a long time away and it's not a timescale
for hard predictions, but I can share
my long-term vision for Shell. By 2050, I would envision all our cash flows
coming from serving customers with net-zero energy solutions
and sustainable materials. Our energy product mix would be dominated
by low and no-carbon energy, such as renewable power,
biofuels and hydrogen. A product mix that we would develop in partnership with sectors
that use the energy, from biofuels in aviation,
hydrogen for heavy-duty transport, renewable power for homes and businesses. Now, some of the products we sell
might still contain carbon, but the majority of our energy products
would come from renewable resources. And all the fossil-based carbon
that we would sell would either be captured and stored, balanced out through nature, or embedded in materials. So, I can imagine us capturing and storing maybe 50 million tonnes a year
of carbon dioxide. I can imagine us working with nature to lock away maybe 300 million tonnes
in forests, in wetlands and soils. And we could have established
the commercial business, storing away carbon dioxide emissions
as a service for our customers. And in this future, Shell would have become
an even more formidable partner for our customers, building out the supply chains
to meet their low-carbon energy needs. This is our great task
of the next 30 years. Our LNG, Chemicals and Products assets would be the platforms
for our future biofuel plants, the hydrogen and synfuel facilities. And together with our power assets, they would form a highly efficient
energy and product network that enables our transition. And just as today, our traders would optimise this
for maximum value. And in this future, Upstream would play a key role
for a long time to come, funding the bulk
of our shareholder distributions well into the 2030s, as well as the acceleration of our shift
into the future of energy. That, all of that, is just how I see things. Now, I cannot predict exactly how Shell would look
as a net-zero emissions business, but I believe the value of our business
would only increase as we make inroads
into the future of energy. Yes, our legacy assets
and resource positions may fade in the picture of our financial success, but they would be replaced
by the value generated from our strong market positions, built on our advanced products
and relationships with customers. So, how might we travel this journey? How might we evolve towards this future? I may only have been able to give you
a vision for the next 30 years, but we have already clear ideas
and expectations for the next decade. And that starts with a deliberate approach and a strong discipline
of managing capital and carbon. Let's start with capital. Delivering our strategy will require clear
and deliberate capital allocation choices. How we reward our shareholders,
manage risk and invest in our businesses will define the pace and quality
of our delivery. We approach capital allocation
at three levels: enterprise, portfolio and project. The enterprise level is about
how we make choices between increasing distributions
to our shareholders, investing in our business and/or strengthening our balance sheet. The portfolio level is about
how we allocate capital between our three business pillars: Growth, Transition and Upstream. The project level is about how we evaluate
and prioritise investment opportunities. At the enterprise level,
we look to achieve the right balance
between shareholder distributions today and investing for value-enhancing growth. Having a strong balance sheet provides
financial strength for resilience and allows us to pursue opportunities. That is why we have a clear approach
on shareholder distributions as well as debt and capex levels. As we said at Q3, while our net debt is above $65 billion, we plan to invest $19-22 billion a year, which will be allocated
across our portfolio. This will sustain our core businesses
while funding moderate growth. We will do this while continuing to grow
the dividend per share annually, subject to Board approval. This will provide a strong, steady return
for our shareholders while offering the potential
for both increased distributions and share price appreciation. In this context, we announced last week our intention to increase
the dividend per share for Q1 by 4%. We will also strengthen the balance sheet,
reducing net debt to $65 billion. Once we have reached this milestone, we will look to further increase
total shareholder distributions. Through our progressive dividend
and share buybacks, we target total distributions
to shareholders of 20-30%
of our cash flow from operations. At this time, we will also seek
measured increases in investments to grow value and further strengthen
our balance sheet. At the portfolio level, our strategy determines which businesses
we will sustain or grow, transitioning our portfolio
towards the future of energy. We will allocate our capital spending
between our business pillars to achieve three key objectives: maintaining our assets, sustaining cash flows
from our strong, existing businesses, and building new cash flows by finding and creating value
in the future of energy. Importantly, these businesses have
different capital profiles. Upstream and Transition require
a large proportion of their capital to maintain their assets
and sustain cash flows, while most capital spending
in our Growth pillar is aimed at increasing
cash flow and value. A key principle for our strategy
is our focus on the customer. This will shape the portfolios
of each of our businesses, reinforcing our value over volume approach
for Upstream, repurposing our refining assets
for biofuels and hydrogen production, as well as developing
renewable energy infrastructure and our customer portfolios. Shell has traditionally focused
on securing and developing assets, a business model that linked us
to commodity prices and project-based returns. The Shell we are building
will create value from advanced products that provide low or no-carbon energy, risk management and related services. As I already mentioned,
we will keep capital spending between $19-22 billion in the near term. In addition, we expect operating costs
to be no higher than $35 billion and to deliver a divestment programme totalling around $4 billion a year
in this period. Only when we reach net debt of $65 billion
will we increase capital spending. This increase will be moderate and balanced
with additional shareholder distributions. To accelerate our strategy
to make the future of energy, the Growth pillar will have priority, attracting around half
of this additional capital spending. Over time, the balance of capital spending
will shift away from Upstream towards the businesses
in our Growth pillar. At the project level, our approach seeks
to maximise value while managing risks. We evaluate our projects
across a spectrum of criteria that align
with our Powering Progress goals: carbon, nature, people
and shareholder value. We also look to achieve
a stable cash flow profile, while considering capital efficiency, payback periods and overall return levels. We have a common approach
to assessing investments in projects. Nevertheless, we use different criteria to reflect the project risk and return
characteristics of each business. Importantly, we assess
the risk profile of each project to ensure we are achieving returns
above the cost of capital, and we have an expected level of project
returns for each of our businesses. For instance, take integrated power. Lower-risk generation assets
with secure revenue streams can bear lower returns. Whereas assets
with technology or market risks may need higher returns. Overall, we expect
this integrated power business to deliver an internal rate of return
above 10%. Additionally,
with renewable generation assets, once the asset is built,
our equity investment can be reduced, while we still control the electrons. In the Growth pillar, marketing is
a lower capital intensity business where opex is also a key driver of growth. In Retail, a relatively low-risk activity
with fast payback, returns can reach more than 25%. In the Transition pillar,
returns are slightly lower and the payback periods are longer, with our Integrated Gas business
providing steady cash flow streams. Importantly, these Transition businesses
give us the infrastructure to enhance value
through integration and optimisation. Upstream assets are typically
the most capital intensive throughout their life cycle. They also require up-front development
and commodity price risk-taking. Therefore, these projects must deliver
higher returns. In addition, we are looking to build
projects with shorter payback periods that are resilient to lower prices. For the last 3 years,
we have generated more cash than any of our peers
in a range of economic conditions. Ultimately, as Shell progresses
towards being a net-zero energy business and our capital investment shifts
towards the Growth pillar, so will our cash flows. With this, our cash flows will become
less exposed to oil and gas prices. They will have a stronger link
to broader economic growth. We expect cash flow to grow
in the medium term as the global economy recovers. This will allow us to strengthen
the balance sheet, invest in our businesses and grow cash distributions
to shareholders. This increase in cash flow comes
from growing our marketing platform, assets under construction coming online, and reducing our opex. We also expect increasing contributions from our renewables
and energy solutions businesses. Certain segments have little exposure
to commodity prices and are expected to deliver
growing cash flow. These include Marketing,
Renewables and Energy Solutions, and Chemicals and Products. And, as one of the largest
commodity traders in the world, we expect additional opportunities
to enhance cash delivery through integration and optimisation. As I said at the beginning,
our approach to capital allocation will define the pace and quality
of our delivery. We will make our choices
in line with our strategy, pursuing leading shareholder returns
and balance sheet strength, built upon a portfolio of high-quality,
highly cash-generative assets. With that, let me hand over to Ben to take you through our thinking
on managing carbon. Shell's target is to be a net-zero
emissions energy business by 2050, in step with society. This means net-zero emissions
from our operations - our Scope 1 and 2 emissions - and also net zero from the end use
of all the energy products we sell, our Scope 3 emissions. Three things are crucial to note on that. One, our target includes Scope 3. That is critical because emissions
from the end use of our energy products, Scope 3 emissions, account for over 90%
of our total emissions. Two, our target includes the emissions not
only from the energy we produce ourselves, but also from the oil and gas
that others produce and we sell as products to our customers. Altogether, we sell around
three times more oil and gas products than the oil and gas we extract ourselves. So, to account for Shell's full effect, we have to include everything we sell
in our targets, not just what we extract. And, finally, it is critical to note that achieving this target would mean
absolute net-zero emissions. We believe our target is already aligned
with the science behind Paris. And we are working with organisations
like the Science-Based Target Initiative, working to develop a standard approach to emissions accounting
that is fit for the oil and gas industry. And once that science-based target
accounting method is established, we intend to use it. Now, our first responsibility, of course, is to deal with the emissions
from our own operations, our Scope 1 and 2 emissions. They make up less than 10%
of our total emissions. And we will drive them down,
all the way down to net zero by 2050, initially by making all our assets
top quartile on emissions intensity. We will end routine flaring by 2030 and we will keep our methane emissions
below 0.2%. As I said at our Q3 results, our total oil production peaked in 2019. And we expect our oil production to
gradually decline by around 1-2% a year, including divestments, by 2030, while the percentage
of total gas production in our portfolio is expected to gradually rise
to around 55% or more. And moreover, we do not anticipate any new frontier exploration entries
after 2025. But even so, to make real progress, Shell must change what we sell. We must sell a lower-carbon energy mix. Only this will reduce
our carbon intensity over time. And we will track our progress through
the carbon intensity of our business measured by the metric we call
our Net Carbon Footprint. This metric tracks
the total amount of carbon dioxide associated with each megajoule
of energy consumed. And just to be clear,
achieving net zero on carbon intensity is exactly the same as achieving
net zero on absolute emissions. Getting to net zero by 2050 means cutting our carbon intensity by 100% and achieving 45% by 2035. These targets also include
all carbon mitigation action, including action taken by our customers. And we include this because,
over this timeframe, we believe society will be working
towards net zero. And in such a society, our customers will act to address
their own Scope 1 and 2 emissions, and these are the same
as Shell's Scope 3 emissions. And we will help our customers
with this challenge where we can. But by 2050,
we will no longer serve customers who emit unmitigated carbon. Change is already underway. We believe our absolute emissions reached a high point in 2018
at 1.7 gigatonnes, and now we will have to work
to bring them down. And we must act now. So, we have also set short-term targets to reduce our carbon intensity
by 6-8% by 2023, that's compared to 2016, and this is tied
to our staff incentive structure. We also announce a medium-term target
of 20% reduction by 2030. Our short and medium-term targets
include action to mitigate emissions taken by Shell, but in this timeframe we do not take account
of any action taken by our customers. And speaking of mitigation actions, climate scientists are clear that nature,
which can absorb and store carbon, has an important role to play, and we agree. We also agree with them on something else, that mitigation through nature
is necessary on top of the transition
of the energy system. So, we support the responsible use
of high-quality nature-based offsets. And to be clear,
the order of priority is this: first, avoid emissions, second, reduce emissions, and only then turn to mitigation. In line with that philosophy, we aim to offset around 120 million tonnes of our annual Scope 3 emissions by 2030. We also believe the world needs to use
technology to mitigate emissions. So, we want to have built
an additional 25 million tonnes a year of carbon capture and storage by 2035, the same as 25 Quest facilities in Canada. But it's not enough
for Shell to take action on our own. We can only meet a net-zero target as part of a world
that is also heading to net zero. Now, I accept that means reducing
the supply of carbon-based energy, but that will only happen by reforming
the demand for carbon-based energy. So we, as a supplier, must work together with customers
on a sector-by-sector basis. Together we have to develop
the right recipes to wean that sector
off carbon-based energy and to provide
low-carbon solutions instead. And that includes the technologies,
the fuel solutions and the government policies
and regulations to get there. Let me give you just one example. Shell's membership
of the Mission Possible Partnership includes Clean Skies for Tomorrow. And this is a coalition
of leading airlines, airports, aircraft and engine manufacturers,
and also fuel providers. And this coalition has a view
on the recipe the aviation sector needs. Sustainable aviation fuels. And they recently published a report
on the steps needed to get there, the ingredients and the method. And so, as part of reshaping the company, we will restructure our marketing business on a sectorial basis. This will allow us to make progress
in this area as quickly and as efficiently as possible. But our customers
can speak for themselves. Let's hear from them. Aviation is vital to our connected world, but, as an industry,
we must reduce its net carbon emissions. The question is, how do we do it? There's no single solution. Electric aircraft and hybrid technology undoubtedly have a part to play,
as does hydrogen. But these technologies aren't suited
to long-haul flights. We believe SAF, sustainable aviation fuel, is crucial to powering
today's aviation fleets while reducing carbon emissions
compared with conventional jet fuel, but we don't have
anywhere near enough of it. SAF currently represents less than 1%
of the total aviation fuel supply. For me, it is all about showing the way, showing the industry what can be done
and what is possible. Shell is helping to grow demand for SAF by working with our industry partners
and stakeholders, supporting companies
like Amazon Air and DHL Express that want to become part of the solution. We are enabling SAF supplies
through investment in production, supply, technology and policy development, and we are collaborating with all parties
in the aviation ecosystem. Rolls Royce and Shell have collaborated
for over 100 years, pioneering technology,
fuels and infrastructure that have shaped commercial aviation. And that pioneering spirit continues. We're currently testing our engines to show they run
on 100% sustainable aviation fuel supplied by Shell. Collaboration like that
between Shell and Rolls Royce is vital to enable aviation's pathway
to net-zero emissions. If all parties work together, we can decarbonise aviation and continue to enjoy
the immense benefits of flying. At MSC, we are passionate
about building a path to sustainable and decarbonised shipping. The biggest challenge
that we face right now is that we do not have available the required alternative fuels
and technologies that are necessary to do this
at the scale that we need them. There are between
60,000 and 100,000 ships out there of various shapes and sizes
that need to decarbonise over time. There's no one single solution that's going to work
for that entire spectrum of needs. At MSC, we have pioneered the use
of responsibly-sourced biofuels at scale within our existing fleet. We also see LNG as an incremental option,
for our cruise ships in particular. We need to work side by side
because no one entity can do this alone. What we look for in a fuel partner is reliability, scale and trust. Shell brings us all three of those, and that's why we so highly value
this relationship. So, how is shell helping its customers
lower emissions today? By developing
a world-leading LNG refuelling network, improving efficiency through advanced
data analytics and marine lubricants, and offering our customers biofuels
as part of their existing fuel mix. And in the longer term,
we're exploring how zero-emission fuels, such as hydrogen
and fuel cell technologies, work in the marine environment. No single technology holds
all the answers. And for the industry to achieve
net-zero emissions by 2050, it will require global collaboration. To help get there sooner, we're partnering with industry groups
such as the Global Maritime Forum. And in our report Decarbonising Shipping:
Setting Shell's Course, we share our industry perspective. Like our customers, we're passionate about achieving
low-carbon future for shipping. This isn't something to be thinking about
and talking about. This is something that we have to do
and do today. So, we will change. We have clear targets for change. And we are working hard
to speed up that change. To give you an idea
of the scale of the change by 2030, we could be delivering the equivalent
of 50 million households with renewable electricity, operating two and a half million
charge points for electric vehicles, and increasing the amount
of low-carbon transport fuels like hydrogen and biofuels
from 3% to about 10%. Now, to be clear,
this is not a business plan. This is just an indication of the scale
of change to come in the next nine years. And, ultimately, the changes will depend
on where we can find business value as our customers move towards net zero. To ensure
the individual business decisions contribute to our
overall emissions targets, we are substantially changing how we work. So, I mentioned a moment ago
that we are restructuring so that we have marketing teams
facing individual sectors. But we are going further than that. We are developing carbon budgets
for those teams to motivate them to find value growth by substituting high-carbon income
for low-carbon income. Moreover, we today announced
that we are doubling the weighting
of the energy transition condition in our long-term incentive share awards, affecting more than 16,500 employees. And for the most senior leaders, this means an increase in weighting
from 10% to 20%. Something that will be more visible to
people looking at Shell from the outside is our relationship
with trade associations. Two years ago, we became
the first company in our industry to conduct a review on the associations to see if they were aligned
with our climate policies. And, in April, we will issue
a third report on this and take action where necessary, as we have done in the past. We were also the first company
in our sector to support a Task Force
for Climate-Related Financial Disclosures. And our support remains firm and we will continue to refine
our reporting to be in harmony
with the Task Force principles. And finally, starting this year, we will publish an energy transition plan for shareholders
to examine and to vote on, and we will update that plan
every three years. And annually, we will ask our shareholders
to vote on our progress mate. That is our approach on carbon. Now, we will move on to explore
how that approach combines with our approach to capital
in our businesses. Shell has three pillars to its business, pillars that give us strength. Through our Growth pillar,
we work with our customers on our joint transition to net zero. We will build our future
based on customer needs. Through our Transition pillar,
we are flexible and will deliver
a sustainable flow of cash. And through our Upstream pillar,
we deliver value to shareholders, provide vital energy supplies to society and fund the transformation
of our portfolio. I will take you through all three. But there is a lot to say,
so I will keep it short here. And for those who want to go deeper,
there is more on our website. A whole lot more. Looking first at our Growth pillar, our home for Marketing
and Renewables & Energy Solutions. Our marketing business is our
single largest customer-facing business. It has high, resilient returns
and is primed for future growth. With earnings growth of more than 7%
year-on-year since 2013, we already have an enviable position
and we will extend our lead. In 2020, Marketing delivered
more than $4.5 billion in net earnings and by 2025 we expect to generate
more than $6 billion. Today more than half our gross margin
in retail and lubricants comes from differentiated offerings, like premium fuels and premium lubricants,
fleet solutions and convenience retail. So, we start from a good place,
and we push on for more. Today, one in nine machines and engines
in the world uses Shell lubricants and by 2025 we will make it one in eight. Today, we serve
30 million retail customers every day across 46,000 sites, and by 2025 it will be 40 million
at 55,000 sites. And on charging points
for electric vehicles, we are expanding ReCharge
on our retail sites, we are growing NewMotion and Greenlots, and we recently bought Ubitricity. Together we will go
from more than 60,000 points today to more than half a million by 2025. With our retail sites, we will not only
expand in electric charging but also in hydrogen, LNG
and renewable natural gas. There will be more convenience retail
and services like parcel collection. And we will expand this business
in markets like India, Indonesia, Mexico, Russia and, of course, China. We will partner with our customers
around the world sector by sector. We will help chart
their decarbonisation journey and offer low-carbon fuels and solutions. And again, we start from a good place. In 2019, Shell sold more than
10 billion litres of low-carbon fuels for use in sectors like aviation,
shipping and road transport. In 2020, we signed two agreements for the supply of renewable natural gas
to Los Angeles, supported by investments in two renewable
natural gas facilities in the US. And if our Raizen Joint Venture
was a country, it would be the fifth largest producer
of sugarcane ethanol globally. And to move up further in that league, Raizen just announced
the acquisition of Biosev, adding another 50% of production
in low-carbon fuels. So, we look at our marketing business
as a key to unlock new markets and provide new solutions to drive decarbonisation
throughout the economy. And for our end consumers, we will also use
our digital loyalty platforms to link our mobility and energy offerings to create cross-selling opportunities. With a strong customer-focus, we will help our customers
at home and on-the-move with the most iconic brand
in the industry. Which brings me to
Renewables & Energy Solutions. This is a new name
for our low-carbon businesses and includes our activities
in Integrated Power, Hydrogen, Nature Based Solutions and CCS. But let's start with Power. To decarbonise, many of our customers, whether they are households or businesses, must switch to low-carbon electricity, so they are looking for reliable
and simple-to-use services. We believe Shell can become
a leading provider of clean power. A provider of Power-as-a-Service. We can make net zero a simple
and practical choice for the customer. We can do so by managing
the complexity for them and taking the opportunities
of an economy turning to electricity. This is where Shell
has competitive advantage. Unlike others, we are already present
in all areas of the future energy system, from electric vehicle charging
to hydrogen, from offsets to carbon capture, from clean power to low-carbon fuels. And, as I said before, we operate over 60,000 vehicle charging points
in 14 countries, and we'll grow the number of points
to half a million by 2025. We are building a material business
for Shell through digital platforms that will serve more than
15 million customers worldwide by 2030. By then, we aim to sell
560 terawatt hours a year, twice as much electricity as today. Through these digitally-enabled platforms, we are providing services to simplify
and to accelerate our customers' decarbonisation journey, offering a truly flexible solution
with real customer value. An example of that is Sonnen, where we help 60,000 households
with batteries to meet about 75% of their energy needs. And we do this by digitally managing the
clean energy they generate themselves. For larger customers, our digital platform
matches supply and demand. For instance, our fully-owned subsidiary
ERM in Australia supplies more than a fifth
of the country's electricity to commercial and industrial customers, while achieving the nation's
highest customer satisfaction rating in nine years in a row. We also manage complexity
through our global scale in trading and risk management
and asset optimisation, and through our expertise
in power product design. In North America alone, we are the third-largest
wholesale power trader. Our scale and global reach make us
the perfect partner for large corporations that want to decarbonise their worldwide
operations reliably and competitively. In the near term, we will invest
on average $2-3 billion each year in this part of the business, with that level rising through the decade. We target an unlevered IRR
of more than 10%, a rate made possible
by our integrated business model with the customer at its heart. And we will make our investments
go further by partnering with others as we grow a material position
in renewable generating capacity. Our emphasis is on owning
and managing green electrons from these assets for our customers. We believe that this is what it takes
to succeed. A customer-first approach,
digital capabilities and a global reach, alongside strategic investments
in clean power assets such as solar and wind farms. Let's bring this to life
with our Rotterdam energy hub concept. At its core is our HKN
offshore wind farm joint venture. We will supply part of the power output
to an anchor customer, Amazon, in support
of their decarbonisation objectives. With the remaining power, we can supply other customers
through our trading business or we can choose to use
the electricity ourselves, or use it to make green hydrogen
at a 200 megawatt electrolyser that we want to build in Rotterdam. It is this integrated clean energy system that enables the higher returns
that we are targeting. And speaking of hydrogen, the growth potential is huge. And also here, we are ahead
with years of experience. We are a leading hydrogen retailer with
over 50 sites in Germany and California. We have also announced
a number of green hydrogen projects, with a combined production capacity
of over 4 gigawatts, to come on stream this decade. There are strategic keys to our success. Our existing customer relationships
and global retail network mean that we are well-placed
to supply hydrogen to our customers in industry
and in heavy-duty transport. We can use our own demand
to launch new supply projects. So, for example, the anchor customer for
our 10 megawatt electrolyser in Germany, starting up later this year,
will be our Rhineland refinery. But, over time, we aim to serve a growing transport market
with this hydrogen. In this way, we can start local
and go regional. With LNG, we built
an integrated global business. And we believe we can do the same
with hydrogen, but faster. And, ultimately, aim to replicate
even the scale, flexibility and the success
of our LNG market position. We aim to capture a double-digit market
share of global clean hydrogen sales. So, Integrated Power
and Integrated Hydrogen will be major contributors to both our compelling investment case
and to our net zero target. And finally,
our Nature Based Solutions business. Many customers,
from individuals to companies, today have no alternative
to using carbon-based energy, but they still want to be net zero. We can mitigate their emissions
as an integral part of the energy solution that we sell them. And we are the leading player
in this area. We mitigate their emissions by creating
and protecting forests, wetlands and other environments which store
carbon away from the atmosphere. And we connect our customers
to these investments in nature through carbon markets. We expect to invest
around $100 million a year in high-quality, independently-verified
projects on the ground, to build a significant
and a profitable business. So, that was our Growth pillar. Now, let's take a look
at our Transition pillar, starting with Integrated Gas. Over the coming decades, the world
will have to say goodbye to coal. Renewables will replace much of that and natural gas will have its role too, both in power generation and in industry. And so, LNG demand is expected to grow by up to 4% a year until 2040. With 70 million tonnes sold last year, we are the world leader in LNG, and we are also the leading producer
of Gas-to-Liquids, or GTL, products. Altogether this business made
$11 billion cash in tough market conditions last year. And from this position of strength,
we will grow. We will grow volumes and markets. We will grow our volumes by sourcing
long-term LNG supply from third parties. But we have also included
selective investments in our capital plan to expand our own portfolio of LNG plants and to grow natural gas supply
to keep our plants full. Our future projects have
an average internal rate of return of between 14 to 18%. And all our opportunities
are cost-competitive. We have already reduced the unit
technical cost of our project portfolio by around 40% since 2015. They are also carbon competitive. In Canada, we are building the lowest
CO₂-intensity LNG plant in the world. By the end of next year, we expect to have reduced
operating expenses by around 20% compared to 2019. A new market is shipping, where LNG is the cleanest fuel
readily available today. Our aim is to supply
at least 20% of global demand. And more generally,
we continue to innovate, by offering carbon-neutral LNG, and by using our LNG trading
and marketing capabilities to win new customers
with advanced solutions. And in GTL, while we have no plans
for greenfield plants, we still see opportunity
to further develop premium markets and to expand margins. Integrated Gas is a business
in which we excel and we will continue to excel
for decades to come. Staying with the Transition pillar,
let's move on to Chemicals and Products. In Q3, we announced
we are transforming 14 refining sites to six high-value
Energy and Chemicals Parks. We will be done by 2030, if not sooner. And some of this transition
is already well underway with the divestment and closure
of non-core refining positions. These six energy and chemical parks
will be highly integrated with our trading
and optimisation business, along with our standalone chemical sites,
of course. And together, they will work in real time to ensure we always produce
the most valuable products for the market, using the flexibility of our assets
to maximum effect. Our shift to energy and chemical parks means we will reduce our production
of traditional fuels by 55% by 2030. And at the same time, we will produce more low-carbon fuels
and performance chemicals. Of course, all these parks
will have their own ways to transform and deliver value. So, Bukom with be different to Pernis,
and Pernis will be different to Scotford. We see chemical demand
continuing to grow, outpacing GDP, because chemicals are found
in all aspects of modern life. They are in detergents, cosmetics, paints, textiles, household goods, and they are the building blocks
of the future energy system. So, we will continue to grow
our chemicals business with a focus on intermediates
and performance chemicals. These are the areas where we have
competitive advantages in technology, scale and market access. We are currently building
or studying projects in Pennsylvania and Louisiana in the USA and at Nanhai in China. We will also produce virgin chemicals
from recycled waste, known as circular chemicals. By 2025, we are aiming to process 1 million tonnes a year
of plastic waste in this way. This move to sustainable
and performance chemicals brings us closer to the end customer. It will help us evolve our portfolio,
from commodity chemicals to products that are priced on the value
they bring to end consumers. And in this way, we start to delink our
business results from the commodity cycle, reducing our exposure
by around 70% by 2030. Between our opportunities
to increase margins and the options that we have
to invest for growth, we will increase
our chemicals cash generation by $1-2 billion a year by 2030. Moving on to our Upstream pillar. Even as the world decarbonises, it will still need oil and gas
for decades to come. Our Upstream business will provide
that essential energy. And the cash we generate will fund
our distributions to shareholders and help pay
for the transformation of Shell. But our Upstream pillar
will become more focused, more resilient and more competitive. And it will continue to provide
material cash flows into the 2030s. We will focus on the nine core positions that generate more than 80%
of the Upstream cash flow. And they will attract around 80%
of the Upstream capital spending. So, these are positions
where we have superior capabilities, the potential for growth, and access to strong integration
with Integrated Gas and Trading. The rest of our positions
are run as a lean portfolio. They are tasked
with either maximising cash generation or developing to the point
that they may become core positions. And, in some cases,
such as onshore Egypt and the Philippines, we will simply divest. We will continue to high-grade
our exploration activities, reducing annual spending
from around $2.2 billion in 2015 to around $1.5 billion
between 2021 and 2025. We have attractive opportunities which we plan to take
in the first half of this decade. But, after 2025, we do not anticipate entries
into new frontier exploration positions. I am proud of the way our Upstream team
delivers the energy the world needs today. And, at the same time, we aspire
to continuously improve our operations. One example of this is how we have significantly improved
our upstream availability. We have already improved that availability
from 85% in 2015 to around 90% in 2020. Moreover, we aim to further reduce
our cost structure by up to 30% by 2025 compared with 2019. An example of what we can do is our recent transformation
of the Shales business. So, here we removed 30% of costs
compared to 2019 and around 40% of manpower. Across Upstream, we have reduced
our unit development costs by over 50% since 2015. Our current portfolio of projects has
an average internal rate of return of around 20-25%
at the final investment decision, and an average breakeven price
of around $30 per barrel, and an average expected payback period
of 7 years. We will also review positions
that continue to be challenged from an environmental perspective, and a particular point of attention
is onshore oil in Nigeria. In the last decade, we have reduced
the total number of licenses by half. But, unfortunately,
our remaining onshore oil position continues to be subject
to sabotage and theft, despite our efforts to reduce
and respond to this illegal activity. So, in this context, we are reviewing material
portfolio options for onshore oil. But despite this, Nigeria as a whole
remains a heartland. And you can see this from our decision
to expand Nigeria LNG and our drive to further develop
our deep-water assets. Overall, Upstream is making
a significant shift. A shift towards a portfolio
that will be more focused, more resilient and more competitive. Indeed, I could say the same thing
about the whole of Shell. The whole of Shell is changing
to be more focused, more resilient and more competitive. And not just
for the energy system of today, but for the energy system of the future. The world is changing,
so we will change too. And that is
what Powering Progress is about. Change to deliver on four goals: delivering shareholder value,
powering lives, respecting nature,
achieving net-zero emissions. Our role. Our goal. Our mission. You have heard my vision
for the future of Shell. You have heard
about our approach on carbon. And you have heard from Jessica
how this approach on carbon interlocks with our approach on capital. All of that will drive change in Shell
through each of our three pillars: Growth, Transition and Upstream. These are the three pillars of Shell. Designed to deliver value. Value today, value tomorrow. Value for decades to come. To shareholders and to wider society. As part of a society
heading towards net-zero emissions. That is our future. That is Powering Progress. That is Shell.
