Shell Energy teams up with Hydro to decarbonise UK operations

Roger Ablett, Country Managing Director, Hydro Extrusion UK; Greg Kavanagh, Head of Industrial & Commercial Sales; and Ian Bould, HSEQ and Sustainability Director, Hydro Extrusion UK, outside the Hydro Extrusions facility in Tibshelf

London, 6 September, 2023 - Shell Energy UK Limited (“Shell”) has signed an agreement with Norsk Hydro ASA (“Hydro”), a global leader in aluminium and renewable energy, to help decarbonise its UK operations. The three-year agreement will cover the annual supply of 144 gigawatt hours of natural gas and 56 gigawatt hours of renewable electricity to the company’s UK sites.

As part of the deal, Shell Energy will supply electricity backed by Renewable Energy Guarantees of Origin (REGO) certificates* generated from the Rhyl Flats Windfarm.1 Situated 8km off the coast of Llandudno, the 25-turbine site has 90MW of installed capacity. The ability to provide 100% renewable electricity demonstrates Shell Energy’s ability to help its customers decarbonise their operations and accelerate their transition towards net-zero emissions.

Hydro is headquartered in Norway, with operations around the world in a broad range of markets including aluminium production, energy, metal recycling, renewables and battery manufacturing. In the UK, its primary activities include extrusion, fabrication, recycling, die manufacturing, surface treatment and thermal break.

Hydro is intent on leading the way towards a more sustainable future and creating more viable societies by turning natural resources into products and solutions in innovative and efficient ways. Its product portfolio continues to evolve, with sustainable offerings that are significantly less carbon intensive (per kg) to produce than the primary global average of virgin aluminium,2 while the company is also working hard to accelerate its transition to net-zero emissions.

Lars Lysbakken, Energy Portfolio Manager at Hydro, commented: “While extensive research and development is helping to significantly lower the carbon intensity of our products, looking for new and innovative solutions to help decarbonise our wider operations is considered a board-level priority.

“When it came to finding the perfect energy partner, we wanted to identify a long-term collaborator that could support our transition to net-zero. Shell Energy demonstrated extensive understanding of our business, our sector, and our ambitious decarbonisation roadmap.

“The ability to provide REGO certificates from the Rhyl Flats Offshore Wind Farm was another important part of the agreement. While we’re committed to using less energy, it’s positive to know that our operations will now be powered entirely by asset-specific renewable electricity.”

In 2022 alone, Shell invested $4.3 billion in low-carbon energy solutions,3 and has already reduced its own Scope 1 and 2 absolute emissions by 30%.4 To help to transform the energy system, the company is focused on driving a shift towards renewable electricity;5 developing low and zero-carbon alternatives to traditional fuels (including biofuels, hydrogen, and other low- and zero-carbon gases); working with its customers to decarbonise their use of energy; and addressing any remaining emissions from conventional fuels with solutions such as carbon capture and storage and carbon credits.6

Greg Kavanagh, Head of Industrial and Commercial Sales at Shell Energy added: “Rather than a transactional agreement, we see our contracts as long-term strategic collaborations that provide Shell Energy with the opportunity to accelerate customer progress in reaching net-zero emissions.

“In the case of Hydro, we were able to offer a solution that perfectly aligned to its sustainability ambitions. We’re looking forward to working closely with the company to offer our knowledge, guidance and support over the longer term.”

*The purchase of REGO certificates can demonstrate a business’ appetite to invest in renewable energy. It is important to note, that when renewable energy is distributed through the grid, it is mixed with energy from non-renewable sources.

1 Main site for the first 12 months of the contract. More information can be found here: https://coflein.gov.uk/en/site/240657/

2https://www.hydro.com/en-GB/aluminium/products/low-carbon-and-recycled-aluminium/

3https://reports.shell.com/energy-transition-progress-report/2022/financial-framework/investing-in-net-zero.html

4https://reports.shell.com/energy-transition-progress-report/2022/our-performance/absolute-emissions-progress.html#:~:text=In%202022%2C%20our%20total%20combined,with%202016%2C%20the%20reference%20year

5https://reports.shell.com/energy-transition-progress-report/2022/decarbonising-our-portfolio/transforming-the-energy-system.html#:~:text=provide%20more%20electricity%20to%20customers,their%20use%20of%20energy%3B%20

6https://reports.shell.com/energy-transition-progress-report/2022/decarbonising-our-portfolio/transforming-the-energy-system.html

Enquiries

UK / International Media Relations: +44 20 7934 5550

Cautionary note

The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this announcement, “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

Forward-Looking Statements

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, “milestones”, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December 31, 2022 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, 5 September. Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

Shell’s net carbon intensity

Also, in this announcement we may refer to Shell’s “Net Carbon Intensity”, 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 Intensity” is for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries.

Shell’s net-Zero Emissions Target

Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year. They reflect the current economic environment and what we can reasonably expect to see over the next ten years. Accordingly, they reflect our Scope 1, Scope 2 and Net Carbon Intensity (NCI) targets over the next ten years. However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI target, as these targets are currently outside our planning period. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans to reflect this movement. However, if society is not net zero in 2050, as of today, there would be significant risk that Shell may not meet this target.

Forward Looking Non-GAAP measures

This announcement may contain certain forward-looking non-GAAP measures such as cash capital expenditure and divestments. We are unable to provide a reconciliation of these forward-looking Non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those Non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements.The contents of websites referred to in this announcement do not form part of this announcement.We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov.