Shell plc

Scope 1 emissions are presented on a gross basis.

Scope 2 emissions

All significant sources were included in our Scope 2 inventory. Sources included comprise indirect emissions from purchased and consumed electricity, steam and heat. We did not identify any assets with imported cooling or compressed air used for energy purposes.

Scope 2 emissions are calculated using the market- and location-based methods separately as defined by the GHG Protocol Scope 2 Guidance. Scope 2 emissions are presented on a gross basis.

Carbon credits

Our target to halve total Scope 1 and 2 GHG emissions by 2030 has been set on a net basis, including emissions offset by carbon credits.

Baseline and restatement policy

We measure our total combined Scope 1 and 2 GHG emissions performance compared with a 2016 baseline, on a net basis. The 2016 baseline may be recalculated if an acquisition or a divestment has an impact of more than 10% on total Scope 1 and 2 emissions.

Scope 3 emissions

This report provides Scope 3 emissions associated with our energy product sales. Emissions were consolidated using the equity boundary approach. Under this approach, we reported the share of emissions from energy products sold by Shell, including those sourced from third parties.

Emissions from Scope 3, Categories 1, 3, 9 and 11, related to the sale of energy products, are the most significant categories for Shell. Emissions from the use of our energy products (Category 11) form the largest component of the indirect Scope 3 emissions we report. As we sell more products than we produce or refine ourselves, the emissions associated with the products we purchase from third parties are also material, as reported under Category 1 for hydrocarbon products, such as oil products, gas and LNG, and Category 3 for power. Although quantitatively less significant, emissions reported under Category 9 are significant to Shell for consistency with the boundaries of our NCI. Other Scope 3 categories have been assessed to be quantitatively and qualitatively insignificant.

The calculation of Scope 3, Category 11 emissions uses energy product sales volumes data, disclosed in this report where relevant. These sales volumes exclude certain contracts held for trading purposes and are reported net rather than gross. Business-specific methodologies have been applied to net volumes of oil products, pipeline gas and power. Paper trades that do not result in physical product delivery are excluded. Retail sales volumes from markets where Shell operates under trademark licensing agreements are not included in the sales volumes reported by Shell and are therefore excluded from Scope 3 emissions.

Scope 3, Category 1 – purchased goods and services

This category includes well-to-tank emissions from purchased third-party unfinished and finished energy products excluding electricity (which is reported separately under Category 3: fuel and energy-related activities and not included in Scope 1 or 2). Emissions from purchased non-energy products are not included.

Emissions in this category are estimated using well-to-tank emission factors for crude oil, natural gas, refined oil products (such as gasoline, and diesel), LNG and biofuels. Because the emission factors include transport, we do not estimate emissions from the transport of purchased third-party products separately.

Scope 3, Category 3 – fuel and energy-related activities (not included in Scope 1 and 2)

This category includes well-to-wire emissions from purchased third-party electricity sold by Shell, calculated using a market-based method. Emissions are not adjusted for any potential double-counting of sold natural gas that may have been used for generating this electricity.

This category does not include:

￮indirect emissions from the generation of imported energy (steam, heat or electricity consumed by our assets) – these emissions are reported separately as Scope 2 emissions; and

￮well-to-tank emissions from purchased electricity, steam and heat consumed by our assets (i.e. Scope 3 emissions from the extraction, refining and transport of primary fuels before their use in the generation of electricity or steam).

Scope 3, Category 9 – downstream transport and distribution

This category includes estimated emissions from the transport and distribution of energy products produced or refined by Shell. It does not include the emissions associated with transporting third-party products, which are included in Scope 3, Category 1. To avoid double-counting across emission scopes, emissions from transport activities which are already included in our Scope 1 and 2 equity emissions are excluded from this category.

Scope 3, Category 11 – use of sold products

This category includes estimated emissions from the use of sold energy products, such as LNG, GTL, pipeline gas, refined oil products and biofuels. These emissions relate to products manufactured and sold by Shell and third-party products sold by Shell.

This category does not include non-energy products that may have been combusted during use (e.g. lubricants).

Biogenic emissions

CO 2 emissions from biogenic sources related to the combustion of sold biofuels are estimated but, in line with GHG Protocol guidance and ISO 14064-1:2018, not included in Scope 3, Category 11. Methane and nitrous oxide emissions from biogenic sources are included in Scope 3, Category 11.

It is assumed that the presence of biogenic emissions associated with other Scope 3 categories is negligible.

Customer emissions from the use of our oil products

Our ambition to reduce customer emissions from the use of our oil products is a subset of Scope 3, Category 11 emissions, focusing on the use of refined oil products.

We measure these emission reductions compared with a 2021 baseline. The 2021 baseline may be recalculated in the event of a revision of our sales of oil products or in the event of other changes to emission factors subject to a 2% cumulative threshold.

Metrics and targets in respect of climate-related environmental risks

We monitor physical risk exposures, whether climate-related or not, water use, emissions to air and water, biodiversity and waste generated from our operations. Where relevant, we may manage our environmental performance by establishing specific targets.

See "Environment" on pages 135-137.

Targets used by Shell to manage climate-related risks and opportunities and performance against targets

Our response to the energy transition risk focuses on decarbonising our value chain. This section sets out our climate targets, which are focused on reducing our NCI and our absolute emissions, as presented on pages 113-114. Shell's material climate-related risks and opportunities are set out in the "Climate-related risks and opportunities identified by Shell over the short, medium and long term" section on pages 92-96.

We have set intensity targets and absolute targets and an ambition over the short, medium and long term to track our performance over time (as summarised below). The targets are forward-looking targets based on management's current expectations and certain material assumptions and, accordingly, involve risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied herein.

We believe that the total net absolute emissions included in our NCI peaked in 2018 at 1.7 gigatonnes of carbon dioxide equivalent (GtCO 2 e).

We are seeking to reduce emissions from our own operations, including the production of oil and gas. More than 90% of the total emissions we include within our NCI boundary are indirect emissions associated with the purchase of third-party products and with the end-use emissions of energy products we sell, so we are also working with our customers to support them in transitioning to low-carbon products and services.

In October 2021, we set targets to:

￮reduce Scope 1 and 2 absolute emissions from assets and activities under our operational control (including divestments) by 50% by 2030 compared with the 2016 baseline, on a net basis;

￮maintain methane emissions intensity for operated oil and gas assets below 0.2% and achieve near-zero methane emissions intensity by 2030; and

￮eliminate routine flaring from our upstream-operated assets by 2025. In March 2024, we clarified that this target was subject to the completion of the sale of SPDC.

In March 2024, we set revised targets to reduce the NCI of the energy products we sell by 9-13% by 2025, 15-20% by 2030 and 100% by 2050, compared with a 2016 baseline.

The NCI metric measures the pace of transition by tracking our progress in reducing the overall carbon intensity of the energy products sold by Shell. NCI measures emissions associated with each unit of energy we sell, compared with a 2016 baseline. It reflects changes in sales of oil and gas products, and changes in sales of low-carbon products, such as biofuels and renewable electricity. Unlike Scope 1 and 2 emissions, reducing the NCI of the products we sell requires action by both Shell and our customers, with the support

of governments and policymakers to create the right conditions

for change.

In March 2024, we set an ambition to reduce customer emissions from the use of our oil products (Scope 3, Category 11) by 15-20% by 2030 compared with 2021 [A]. This level of ambition is in line with the EU's climate goals in the transport sector, which are among the most progressive in the world. Achieving this ambition means reducing sales of oil products compared with our 2021 baseline, as we support customers to move to electric mobility and low-carbon fuels, such as biofuels.

[A]Customer emissions from the use of our oil products (Scope 3, Category 11) were 517 million tonnes CO 2 e in 2023 and 569 million tonnes CO 2 e in 2021.

In the short and medium term, we have set climate targets for emissions that we are able to control, namely our Scope 1 and 2 emissions, methane emissions and flaring. We have also set climate-related targets and an ambition for emissions that are outside our control. These include our ambition to reduce the Scope 3, Category 11 customer emissions from the use of our oil products, and our target to reduce the NCI of the energy products we sell.

Setting targets for NCI

Shell's target is to become a net-zero emissions energy business by 2050. We also have short-, medium- and long-term targets to reduce the carbon intensity of the energy products we sell, measured using our NCI metric. We believe these targets are aligned with the more ambitious goal of the Paris Agreement, which is to limit the rise in global average temperature this century to 1.5°C above pre-industrial levels. There is no established standard for aligning an energy supplier's decarbonisation targets within this goal. For this reason, we have defined our NCI target using 1.5°C scenarios developed for the IPCC's AR6.

We start with the complete set of 1.5°C scenarios and then exclude scenarios which are too reliant on carbon removals or the use of bioenergy before removing outliers. We then calculate an emissions intensity for each scenario which is comparable to our own NCI. Finally, we produce a 1.5°C pathway based on the reductions in emissions intensity over time. We have chosen to use a range instead of any individual scenario to better reflect the uncertainty of the energy transition.

We believe that using this pathway to set our targets demonstrates that they are aligned with the more ambitious 1.5°C goal of the Paris Agreement. This is illustrated in the chart below. We also believe that the pace of change will vary around the world by region and by sector, taking into consideration the time needed for energy users to invest in large-scale equipment and the energy infrastructure changes needed for Shell to deliver more low- and zero-carbon energy.

Shell's NCI targets

Progress towards our Scope 1 and 2 target

The chart below shows our progress since 2016 in reducing our Scope 1 and 2 emissions and gives an indication of how we expect to achieve our target in 2030. The actions we take to achieve our target will depend on the evolution of our asset portfolio and the continued development of technologies which reduce carbon emissions. We expect that, on a net portfolio basis, reductions predominantly from abatement projects, including CCS and electrification, may outweigh increases in our Scope 1 and 2 emissions from new investments between 2025 and 2030. Our investments in producing low-carbon energy will increase our Scope 1 and 2 emissions, while reducing the NCI of the products we sell. Subsequent reductions in our emissions are reflected in the mechanisms outlined below and reflect an expected path to meeting our target by 2030.

To decarbonise our operations, we are focusing on: