Royal Dutch Shell said its oil production and total carbon emissions related to its business had peaked as it outlined more ambitious climate targets in a bid to become a net-zero company by 2050.

Oil output will fall by up to 2 per cent a year, with petrol and diesel production set to be 55 per cent lower by 2030, the energy major said in a strategy update published on Thursday.

The company plans to continue generating cash from its legacy oil business but plough more “over time” into gas, chemicals, renewables and selling power.

It said its net emissions intensity — a measurement of carbon per megajoule of energy sold — would fall 6-8 per cent from 2016 levels by 2023, 20 per cent by 2030, 45 per cent by 2035 and 100 per cent by 2050.

Setting Shell apart from its peers, the target included not just the carbon dioxide emissions released from its operations and use of its products but also those from the oil and gas that others produce and Shell sells through its marketing arm.

The company’s previous aim was to cut net emissions intensity by at least 3 per cent by 2022, 30 per cent by 2035 and 65 per cent by 2050 versus 2016 levels.

Shell’s announcement, analysts say, is not as radical as the transformation plan presented by rival BP last year, aiming to cut oil production by 40 per cent and increase renewable power generation 20-fold by 2030.

Giacomo Romeo, analyst at Jefferies, said that while Shell’s strategy update “does not introduce significant changes in its energy transition strategy”, the “most material change is on the carbon emission side, with the introduction of one of the most stringent carbon reduction plans in the sector”.

But he questioned how Shell would achieve these goals, saying it was unclear based on the “limited low-carbon growth targets provided”.

Rivals are focusing on ramping up renewable power generation but Shell will prioritise doubling the electricity it sells by 2030 through more customer-focused businesses.

It wants to increase its number of electric vehicle charging points from 60,000 to about 500,000 by 2025. It is also putting an emphasis on hydrogen, biofuels, new carbon capture and storage targets and offsets.

“Our upstream [oil exploration and production] business will continue to generate the cash and returns needed to fund shareholder distributions, and also to accelerate our transition into the future of energy,” said chief executive Ben van Beurden.

Shell said its net zero target for 2050 would be on an intensity as well as absolute emissions basis.

Climate activists argue that what matters is absolute volumes, as these can rise even when intensity falls if companies increase production. But some investors favour the intensity metric because it does not absolve a company of its responsibility to decarbonise. A company’s emissions can fall as a result of divestments only for another company to take these emissions on, or in a recession as they produce fewer products.

Van Beurden added that a long-term volumetric target for reducing production would do little to help the environment if the company continued to sell the same quantity, or more, of third-party crude and oil products through its marketing and trading arms. “It would do no service to the planet,” he said.

Even as van Beurden said it was up to Shell to help customers avoid some of these products, activists such as Greenpeace said the company’s strategy was a “grotesque” attempt to blame consumers for climate change.

There has been an internal split at the company in recent months over how far the company should go, with some executives calling for a faster shift towards renewables. But senior management has been concerned about diluting lucrative legacy businesses while not being able to bank on similar levels of returns from lower-carbon divisions. They pushed to change “in step” with society rather than move quicker than they needed to.

After cutting its dividend by two-thirds last year as the pandemic hit its finances, Shell has raised it twice since October. The company on Thursday sought to reassure shareholders it would prioritise the payout, pledging an annual increase of 4 per cent and the resumption of buybacks once it reached its net debt target of $65bn.

It plans to invest $19bn-$22bn each year, with $8bn in oil production, $4bn in gas, up to $5bn in chemicals, up to $3bn in renewables and “energy solutions” and about $3bn in marketing.

As the company seeks to cut costs, Shell said operating expenses would be no higher than $35bn a year. It will also divest assets hoping to yield proceeds of $4bn a year.

Shell’s energy transition plan will be put to a shareholder vote at the group’s annual meeting in May, the first such move among its peers.