Shell might shrink by 12% if Dutch ruling is upheld

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Royal Dutch Shell’s (LON:RDSB) shock defeat in a Dutch court over its carbon emissions might lead to a reduction of 12% in its energy output, analysts have estimated.

The oil major’s own plans to become a net-zero carbon emissions company by 2050 were ruled as being too slow in a ruling in a case brought by environmental activists.

Shell will appeal the decision but if it loses will have to reduce its emissions by 45% between 2019 and 2030 compared to its own plans for a 20% reduction.

To hit a target of a 45% reduction would mean a 45% drop in oil sales, a decline in natural gas sales and a much larger increase in carbon offsets such as spending on reforestation said analysts at Credit Suisse

This would shrink the size of Shell’s business by 12% to around 18.8 exajoules (ej) of energy output, whereas Shell’s own plan would see energy output rise to 25.8ej by 2020, the broker estimates

Shell’s plan will see its oil output decline by 1% to 2% per year after peaking in 2019.

Royal Bank of Canada calculated that a 45% cut in absolute emissions would lead to a 30% drop in oil products sales from last year and a 3% drop in oil and gas production.

Shares in Shell have dropped by 2% since Wednesday and today were trading at 1,289p.

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