Shell's chief executive Wael Sawan came under fire today from the head of the UN's climate change body for comments made about fossil fuel production.
UN Framework Convention on Climate Change (UNFCCC) executive secretary Simon Stiell, speaking at the Opec seminar in Vienna, said: "We've just heard, I think on the morning news, an oil major said that cutting production would be a dangerous thing — that is neither true but it is also an irresponsible statement at this time."
"The Paris Agreement lays out clearly what community responsibilities we all have in terms of admitting that temperature rise targets — that critical target of 1.5°C — and we know that we are far off track," Stiell said.
Sawan earlier told the BBC that cutting oil and gas output would be "dangerous and irresponsible", and said small shifts in the market for fossil fuels can have a "magnified effect" on volatility. Environmental pressure group Greenpeace called Sawan's comments disingenuous and disgraceful.
The UN Intergovernmental Panel on Climate Change (IPCC) found in March that projected CO2 emissions "over the lifetime of existing and planned fossil fuel infrastructure, if historical operating patterns are maintained and without additional abatement" are equal to the remaining carbon budget for 2°C of warming.
Net zero will call for "a substantial reduction in overall fossil fuel use, minimal use of unabated fossil fuels, and use of carbon capture and storage in the remaining fossil fuel systems", the IPCC said.
But Sawan's position received some support from his BP peer, Bernard Looney, who was speaking alongside Stiell.
"We must invest in the energy system of today, which unpopular as it may be still counts," Looney said. "Oil and gas represents 55pc of today's energy mix and if we don't invest in that we will have a mismatch of supply and demand."
Sawan told the BBC he had a "fiduciary duty of care to our shareholders to steward their capital in the best way possible."
"That continues to mean a portion will go to oil and gas — a significant portion," he said, adding $8bn of spending is required "just to keep our liquids production flat". He said the $4bn Shell has planned for investment in "low-carbon value chains" is "what the market can currently tolerate to give us a return to show to our shareholders — if that market grows we will invest more."
Shell plans to increase investment on its upstream and integrated gas operations while tightening its overall budget. At its capital markets day the firm said it plans around $13bn/yr of capital expenditure (capex) for upstream and integrated natural gas in 2023-30, compared with $12bn last year. Total cash capex is being lowered to $22bn-25bn/yr from $23bn-27bn/yr.
