Royal Dutch Shell Plc is set to lead a newly emerging industry of “carbon management”, that’s according to analysts at Barclays.
Recognising a new business model which it described as ‘energy as a service’, the investment banking arm of Barclays today hiked its price target for Shell to GBP30.00, suggesting a massive 83% upside to the current market price of around GBP16.40.
“As the world transitions to net zero, the energy needs of countries and companies are set to become more complex,” Barclays said.
“Our research points to the emergence of carbon management as a business, or essentially energy as a service.
“We see Shell as a leader here.”
Shell and its oil supermajor peers are seeing exceptionally strong cash flows amidst higher oil prices as demand recovered in the wake of the pandemic, at the same time, management teams across the industry have moved to re-imagine their businesses.
Broadly, so called ‘Big Oil’ has pledged to transition their businesses towards ‘net zero’ – put in simple terms the idea is to invest in renewable energy projects and/or alternative fuels over the coming years to balance out their existing hydrocarbon-centred operations.
The likes of Shell and BP have already begun investing in new green opportunities, though they’re not being welcomed by entirely open arms.
In Australia earlier today, for example, Shell’s proposed acquisition of renewable energy company Powershop Australia is being met with protest.
Customers of Powershop Australia – which manages residential and commercial customers onto solar and wind power – are reportedly threatening to switch providers because they don’t want to be customers of a fossil fuel company.
One group, called Environment Victoria, ended a partnership with Powershop Australia as they believed it was no longer tenable.
“You can’t slap a bit of green paint on a multi-billion dollar pollution machine and expect us to ignore it,” Environment Victoria Chief Executive Jonathan La Nauze was quoted in a Reuters report.
In Australia, Shell responded by highlighting its energy transition promise to halve its absolute emissions by 2030 and reach ‘net zero’ by 2050.