Back to top

Image: Bigstock

Shell (RDS.A) Plans to Generate 2M Tons of SAF Within 2025

Read MoreHide Full Article

Per the reports published, Royal Dutch Shell plc plans to generate about 2 million tons of sustainable aviation fuel (SAF) within 2025. By 2030, it wants SAF to account for at least 10% of its worldwide aviation fuel sales.

Shell does not yet produce its own SAF. Instead, it obtains it from other parties, such as the Neste refinery in Finland. This currently Zacks Rank #2 (Buy) Shell claims that SAF, which is made from waste cooking oil, plants and animal fats, may reduce aircraft emissions by up to 80%. Currently, SAF accounts for less than 0.1% of aviation fuel demand. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The SAF production target is consistent with Shell's goal of being a zero-emissions energy company by 2050. The ambition comes a week after the company made a final investment decision to construct an 820,000-tonne-per-year biofuels facility at the Shell Energy and Chemicals Park Rotterdam in the Netherlands. When completed, the plant will be one of the largest producers of SAF and renewable diesel from trash in Europe.

The majority of oil and gas supermajors including BP plc (BP - Free Report) and TotalEnergies SE (TTE - Free Report) , promised to become net-zero energy firms by 2050 and heavily invest in renewable and low-carbon energy alternatives, such as SAF.

The development of SAF is a strategic path pursued by most companies to achieve carbon neutrality as biojet fuels help reduce emissions from air transportation.

Earlier this year, TotalEnergies announced that it started producing SAF at the La Mèdebio refinery in southern France and the Oudalle facility near Le Havre. SAF, which is made from used cooking oil, animal fat and other waste will be supplied to France’s airports from April 2021 and aid the company in curbing toxic emissions from air transportation.

Recently, another oil biggie Chevron Corporation (CVX - Free Report) along with renewable energy firm Gevo, Inc. signed a letter of intent to jointly invest in the construction and operation of one or more new facilities to turn inedible corn into SAF, thereby lowering the lifecycle carbon intensity of aviation fuels.

Shell’s SAF Initiatives

This July, Shell signed a memorandum of understanding (MoU) with Rolls-Royce Holdings Plc as part of its efforts to decarbonize the aviation industry and reach net-zero emissions.

Per the terms of the agreement, Shell and the engineering company Rolls-Royce will explore opportunities to bring 100% SAF to certification. Both companies plan to enhance their cooperation on SAF and fully certify its use in planes as it produces 70% less carbon than conventional fuel.

In December 2020, Shell’s Shell Aviation entered into an agreement with the global logistics services provider DHL Express to supply the latter with SAF at the Schiphol Airport in Amsterdam.

The deal sets an excellent example of how the aviation industry will expedite its shift toward net-zero emissions as the fuel industry aims to increase the supply of SAF. As the commercial airlines are operating with lower capacity, Shell considers this deal an opportunity for the cargo sector to increase the uptake of SAF in the aviation industry. Further, the oil and gas major believes that cargo operators can play an important role to prompt the demand signals to boost investment and the use of SAF.

Shell has seen its shares surge 62.7% in a year’s time compared with the  industry's growth of 57.4%.

Zacks Investment Research
Image Source: Zacks Investment Research


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


BP p.l.c. (BP) - free report >>

Chevron Corporation (CVX) - free report >>

TotalEnergies SE Sponsored ADR (TTE) - free report >>

Published in