Shell Bullish on US Energy Transition Investment

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The investment outlook for energy transition projects in the US is brighter since the passage of the Inflation Reduction Act (IRA), although more policy changes are needed, Shell’s US head said last week.

Shell USA President Gretchen Watkins called the landmark legislation, which provides funding and incentives for the buildout of low-carbon energy projects, “a big step forward” for investment in renewables and low-carbon fuels.

“We now see a much longer investment horizon that allows, I think, disciplined capital investment to happen over time,” she said Thursday at an event in Houston hosted by the Federal Reserve Banks of Dallas and Kansas City. “So I believe that we're going to see this country is going to have more opportunities to have, frankly, more energy at its disposal and, over time move, toward a lower and low-carbon future.”

The London-based supermajor has extensive operations in the US Gulf of Mexico and a petrochemical complex in Pennsylvania that is due to be operational by the end of the year. But it is also developing wind energy off the US East Coast and has invested in a number of renewable natural gas projects around the country as well.

While the IRA provides incentives for operators to produce low or zero-carbon energy, Watkins said it is also lacking in several areas, including permitting.

“We need to have permit reform right now,” she said. “We can't get permits for wind installations on the East Coast of the United States, we can't get permits for wells we want to drill in the Gulf of Mexico.”

The IRA also lacks incentives for customers to buy low or zero-carbon fuels, she added. That means Shell is working closely with customers in various sectors, including aviation, marine transport and heavy transport to provide fuel today and in the future.

“What we're doing is looking to create our own demand,” she said.

Corporate Strategy , Majors, ESG, CO2 Emissions
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