“Shell’s annual carbon cost exposure is expected to increase over the next decade because of evolving carbon regulations,” the oil major said in its 2022 annual report, released this week.
The compliance cost estimates are based on Shell’s forecast equity share of emissions from operated and non-operated assets, including joint ventures and associates. The projections also rely on Shell’s internal carbon cost forecasts. In Europe, its operating plan assumes an EU emissions trading system allowance cost range of $71–121/t of CO in 2023–29, with federal prices in the US at $0–22/t and prices in Australia at $25–35/t.
Shell says, it spent $493million on compliance with the EU ETS in 2022. EU ETS allowance prices recently surged to record highs of more than €100/t but have since eased back towards €90/t. Beyond 2030, where carbon policies and regulation are tougher to predict, Shell’s cost estimates are based on the expected costs of abatement technologies.