(FOR) Shell has taken another axe to its once lofty decarbonization plans, as the U.K. oil giant’s pivot back to fossil fuels picks up steam.
The group plans to cut at least 15% of staff working in its low-carbon solutions division while scaling back its hydrogen business, Reuters first reported Wednesday.
The move will see 200 jobs go in 2024, with another 130 placed under review by the company, according to a statement from Shell.
The division specializes in solutions to decarbonize the transport and industry sector, but is separate from its renewables business. The focus of the cuts is its hydrogen light mobility unit, which develops technologies for passenger vehicles. The unit’s ambitions have been clipped as customers opt for EVs.
“We are transforming our Low Carbon Solutions (LCS) business to strengthen its delivery on our core low carbon business areas such as transport and industry,” a representative for Shell told Fortune.
“We remain committed to investing in viable low carbon business models and focusing on our strengths as we play our part in decarbonisation of the global energy system.”
There are 1,300 people working in the LCS division, Reuters reported, but the company has said that isn’t a full reflection of the people contributing to the unit.
It’s the latest move from CEO Wael Sawan, who joined in January, that pivots Shell back to fossil fuels.
Fossil Fuels are back
Across the globe, oil giants have been doubling down on their commitment to fossil fuels in the face of global plans to shift to sustainable energy.
Earlier this week Chevron, the second biggest oil company in the U.S., bought rival Hess Corp. in a $53 billion deal. The acquisition, its biggest ever, gives the group a significant foothold in the growing oil exploration market of Guyana.
That purchase followed Exxon Mobil’s $59 billion deal to buy the fracking giant Pioneer Natural. The group expanded its presence in the Permian region straddling Texas and New Mexico with the deal, and left the world in little doubt about its commitment to fossil fuels.
The fresh arms race to secure oil resources comes despite the International Energy Agency (IEA), the world’s leading energy agency, reaffirming its prediction that demand for coal, oil, and natural gas would peak in 2030.
Still, oil groups have been emboldened by rising prices in recent years tied to supply chain logjams following COVID-19 and Russia’s invasion of Ukraine, which has left the commodity in short supply and helped companies like Shell to eye-watering profits.
The fresh war between Israel and Hamas has been the latest kick to prices, which alongside falling production in Saudi Arabia and Russia sent crude oil to $96 last week, up from $85 earlier in October.
Shell boss under pressure
Shell CEO Sawan has faced inevitable pressure from outside the company following several tweaks to its decarbonization strategy. The group plans to produce net-zero emissions by 2050.
As part of a major strategy shift announced In June, Sawan promised the company would steady its oil output into 2030, walking back a previous pledge to scale it back. It came as the company’s share price lagged competitors under investor perception that it was missing out on gains from historically high energy prices.
In August, Bloomberg reported that the group had quietly shelved plans to spend $100 million a year on a carbon credit pipeline, a controversial carbon offsetting plan.
The group’s share price has risen more than 18% since the company began its pivot back to oil in June.
Shell was sued by California in September alongside other oil companies including Exxon Mobil, as the state accused them of downplaying the risks posed by fossil fuels.
Sawan is also fighting pushback from concerned employees.
In a rare open letter, two employees wrote to Sawan urging him not to pare back the company’s investments in renewable energy, Reuters reported.
Earlier this month, Sawan told London’s Energy Intelligence Forum the company’s plan of net-zero emissions by 2050 was still very much in tact.
“For avoidance of doubt, what hasn’t changed is the destination that we have set for ourselves,” Reuters reported Sawan as saying.
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