A year ago royal dutch shell had a convincing strategy to thrive through the energy transition.

The first energy major to outline emissions-cutting targets, it planned to slowly increase spending on low-carbon technologies while sustaining its legacy oil and gas businesses as it promised $125bn in investor payouts in coming years.

Since then the anglo-dutch group has been forced into previously unthinkable moves, suspending share buybacks, slashing spending and cutting its dividend for the first time since the second world war as the pandemic hit earnings. its shares have more than halved and rivals have caught up on climate messaging.

All shell is thinking about is how do we maintain our position as a market leader in every sense from climate action to staying competitive in the oil and gas space, one company insider said. the fear is that we go from being a leader to a laggard.

Shell, which is pursuing a net-zero emissions goal as pressure to tackle climate change and scrutiny of its capital allocation plans mount, is scrambling to come up with an updated plan. in the meantime, it is cutting costs and streamlining.

On wednesday it offered a glimpse into project reshape, its organisational restructuring in which up to 9,000 jobs will be cut from its 83,000-strong workforce to save $2.5bn a year.

Our traditional business will be more focused, said ben van beurden, chief executive. we have to be a simpler, more streamlined, more competitive organisation that is more nimble.

Shell has said greater efficiencies and simpler methods of working have enabled it to cut expenses in its us shale business by 40 per cent this year. it is now seeking to replicate this across other parts of the company.

While oil will remain a crucial cash generator and the company plans to expand its gas business, shell will use this cash to make bigger moves in chemicals and lower-carbon areas. it is involved in power trading, biofuels and solar development, and is a leader in the emerging hydrogen sector.

It is not enough, though. it all needs to accelerate, said mr van beurden. our low-carbon investments will increase significantly over time.

Shell also said it would put at least five out of its 15 refineries up for sale.

Everyone knows that if youre in the upstream [oil exploration and production] business, thats where the cuts are going to come, another shell insider said. its only the new energies guys that are seeing cash going their way. investors have demanded greater clarity. after the two-thirds cut to shells dividend in april, executives were unable to explain how capital allocation plans would change and what this meant for its energy transition plans. it faced similar criticism after its announcement in july of lower longer-term energy price assumptions and nearly $17bn in impairments.

European oil executives say that if their renewable investments are low compared with their fossil fuel operations they will not get the recognition from environmentalists and ethical investors they believe they deserve. slumps in their companies share prices make it clear they will not be rewarded for intention alone.

But if they invest heavily, they will suffer financially as it will take years to scale up these businesses.

Energy analysts have said bps move to reduce its oil and gas production by 40 per cent by 2030 would put greater pressure on shell to follow suit, something mr van beurden is loath to do. his single biggest regret, he told the ft last year, would be abandoning the oil business prematurely.

Two-thirds of shells free cash flow has traditionally been tied to its oil business and mr van beurden on thursday said oil and gas would still be among the products shell sells in 2050.

Until now shell has tried to have its cake and eat it too. they tried to implement emissions targets but grow fossil fuel production, said andrew grant at carbon tracker. with a new net-zero announcement, how is this possible?

Shell executives have signalled that declining production is inevitable if the paris climate goals are to be met. but they say a firm target is meaningless if sales of fossil fuel products including those made with third-party crude grow.

The climate doesnt care where in the value chain, and from whose point of sale, those emissions came, de la rey venter, head of integrated gas ventures, told the fts commodities global summit this week. we need to go on ajourney with customers to help them decarbonise.

Privately, shell executives have questioned whether committing ever larger sums to lower-margin businesses is a responsible use of funds. but they also wonder if they can justify pouring more cash into legacy businesses, with opposition to fossil fuels only rising.

The economics of the energy business has changed, said ben caldecott, director of the oxford sustainable finance programme. on top of this, there is more and more pressure from governments, shareholders and civil society.

Observers say clarity on the investor proposition needs to be a priority, particularly in the absence of buybacks and a lower dividend.

Shell has a hugely profitable core business from lng to deepwater oil...it took decades to build that, said biraj borkhataria at rbc capital markets. what you dont want as an investor is for shell to turn its back on decades of work for a less-proven business model.

The company needs to find the right balance, he added.