Shell cuts oil and gas production as the market shifts towards renewables

Shell Energy has announced that it will be making sweeping cuts to its oil and gas production business to free up cash to spend on renewable energy. By cutting day-to-day operating costs and reining in spending on new projects, the energy supplier hopes to slash costs by as much as 40 per cent.

As part of this operational shift, Shell will now focus much of its oil and gas production on a few key hubs, such as Nigeria, the Gulf of Mexico and the North Sea. The company will also trim costs at its 45,000 petrol stations. 

The company’s restructuring has two purposes. Firstly, it will help the provider survive the Covid-19 crisis, which has hugely reduced the demand for oil. Many analysts now believe that demand for fuel will never again reach 2019 levels, as the Covid-19 pandemic has grounded planes, taken cars off the road and disrupted industry. Secondly, the shift to renewables will also help the company prepare for the upcoming green ‘energy transition’. For this reason, the shift to renewables is not just a structural shift, but a cultural one that will set the company up for the future.

• Reduce your energy bills: switch to a green energy provider

Energy market shifts towards renewables

Shell’s green ‘energy transition’ is a wider consideration for all energy suppliers. In recent months, energy firms have come under huge pressure to invest in renewables and move away from fossil fuels to help the UK reach its ‘net zero’ carbon emissions target by 2050.

In addition to this, the government is looking to incentivise suppliers to go green by placing a new levy on gas suppliers. The Green Gas Levy - which was initially proposed in the March 2020 budget - aims to prevent as much as 21.6 million tonnes of carbon emissions from entering the atmosphere. 

This is the equivalent of planting 71 million trees. The levy will also support the injection of renewable biomethane into the gas grid through the new Green Gas Support Scheme.

Switching to a green supplier

The government expects that the Green Gas Levy will have a ‘relatively minor’ effect on energy bills, and the impact of the scheme is expected to peak at £6.90 on the average annual gas bill. However, there are simple ways that you can go green and save on your home’s energy bills.

For example, by switching to a green energy provider you could potentially save hundreds of pounds a year. If you’ve been with your current provider for a number of years, you’re likely to be on their standard default variable tariff, which means you’re paying far more for your energy than if you were on a fixed-term deal. 

Octopus Energy, for instance, claims that customers switching to them save £222 on average when compared with the average Big Six variable tariff.

The exact amount you’ll save by switching to a green energy provider depends on where you live and your home’s energy consumption. You can easily find this out by running an online energy comparison. All you need to do is input a few basic details about your household and your energy use. 

You can also filter your results so you only see tariffs from green providers. The process takes a couple of minutes. You’ll receive a list of the best energy deals in your area and a detailed breakdown of how much money you could save by switching to each.

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