I'm grateful to have the opportunity to share Shell's experience in target setting and our views on the proposed oil and gas emissions cap, alongside the group of leading Canadian thinkers on energy whom you have gathered here today.
As a preface to my remarks, I would point out that Shell has set a target to be net zero by 2050 on emissions from our operations and emissions resulting from the use of all the energy products we sell. We've also set nearer-term targets for reducing our scope 1 and 2 emissions by half by 2030 and continuing to reduce scope 1, 2 and 3 emissions to net zero by 2050.
Given our corporate commitment to reduce emissions from oil and gas production and consumption, we humbly offer some views for consideration as Canada advances the emissions cap on the oil and gas sector.
First, let's talk about sectors. Shell believes that, in order for governments to deliver the reductions needed, net-zero targets must be supported by strategies and plans to accelerate decarbonization of each sector of the economy while actively managing the relationship and dependencies among the sectors. We are not alone in this view, given the role that energy and land-use change plays in driving greenhouse gas emissions within all sectors.
If we consider the power sector, which drives our scope 2 emissions, we are limited in how much we can reduce based on the access to renewable power and affordable cost, along with backup generation when the wind doesn't blow or the sun doesn't shine.
As we drive decarbonization in the transportation sector, we are limited by how much lower carbon energy we can produce by the speed in which the harder-to-abate and electrified sectors in each sector, such as heavy-duty trucking, aviation and marine, invest in their own lower-carbon energy technology and are willing to pay a green premium for lower-carbon fuels.
The oil and gas sector, unlike other sectors, is trade exposed and has its own unique decarbonization pathway informed by affordability and accessibility, the technology options in the domestic market, abatement costs and how these costs can be passed along. These are all important considerations as we contemplate emissions caps, their total target and their corresponding impact on investment and economic growth in the oil and gas sector and also on other sectors of the Canadian economy.
In short, policies targeting emissions reductions in the oil and gas sector, like an emissions cap, must not be developed in isolation. We should recognize that Canada has already made significant progress in establishing policies and regulations that encourage emissions reduction, like my colleagues have said.
Existing systems, such as the federal fuel charge, regulated methane emissions reductions target and the output-based pricing system, have supported greenhouse gas abatement initiatives across the country, and the soon-to-be implemented clean fuel regulation will drive further reductions in the industry while growing the availability of lower-carbon transportation options. Targets and related strategies for the oil and gas sector should take into account the incremental and integrated effect of existing policies and regulations at both the federal and provincial levels to ensure that they are working in harmony to deliver and even accelerate emissions reductions while also avoiding negative or unintended consequences.
Some of these climate policies have already inspired early action, which I will speak to next.
Just as sectors have different capacities, opportunities and challenges in achieving net zero, so do companies. Some companies are more advanced in our emissions reductions journey, having taken investment decisions earlier on, even when economic returns were neutral to negative and with considerable risk. Shell-operated Quest carbon capture and storage facility, which safely captures and stores more than one million tonnes of CO2 each year, for a total of approximately six million tonnes to date, is a useful example. Shell was incentivized to take early action to put systems in place under Alberta's heavy emitters regulation. Therefore, imposing an emissions cap at this stage should not penalize early actors. Further, I should add that different companies have different emissions profiles and abatement cost curves. As such, policy—as my friend Tristan suggests—should be technology neutral and flexible, providing companies with options to reduce emissions over a given time horizon.
Now let me turn to emissions reductions at home and the corresponding risk and opportunity for emissions reductions abroad. Canada can only be credible in advancing decarbonization in other countries if it has taken clear and measurable steps towards meeting its own climate commitments, but it's equally clear that meeting our own domestic commitments won't be enough to prevent the worst impacts of climate change. With growing populations and increasing demands for energy in other parts of the world, Canada must not ignore how domestic policy may drive emissions to other jurisdictions but equally the role it can play in helping to drive lower-carbon energy in the fastest-growing energy-consuming countries in the world.
Therefore, continued attention to the risk of carbon leakage and the opportunity presented by article 6 of the Paris Agreement should be considered part and parcel of an emissions cap. Similarly, carbon border adjustments need to be reviewed carefully as they could advantage some exports from Canada but also disadvantage some imports needed in the energy transition that are manufactured in carbon-intensive jurisdictions.
I often reflect on how Shell's net-zero journey reflects, to an extent, the country's journey. If we could flick a switch and achieve net zero tomorrow, wouldn't that be great. We know it doesn't work that way, and there is no quick fix given the relationships and interdependencies among sectors, producers and consumers. We have to walk this tightrope carefully. If we move too quickly, failing to produce the energy that consumers need today, prices will go up, creating real hardship, particularly for those with the lowest capacity to pay. If we move too slow or not at pace, we will miss the opportunity to grow revenues, gain market share and meet the demands of a lower-carbon energy customer base.
Amidst this uncertainty, I do, though, believe that the longer we wait to tackle emissions reductions across and between sectors, the more challenging and costly it will be to meet our climate targets. Therefore, we must work together to accelerate emissions reductions by scaling up and commercializing lower-carbon energy technologies while producing the energy consumers need today.
Let's also keep in mind the workers and communities that have depended on oil and gas for their livelihoods.
