Shell Reaches a Renewable Power Deal with Amazon, Marking its Major Shift from Fossil Fuel

Shell Reaches a Renewable Power Deal with Amazon, Marking its Major Shift from Fossil Fuel

Shell Energy Europe BV (Shell) signed an agreement with Amazon on Monday to provide renewable power from a subsidy-free offshore wind farm being constructed off the coast of The Netherlands. The deal comes amidst intense calls for transition to clean energy.

Statement released by the company said the Amazon-Shell HKN Offshore Wind Project will enable Amazon to power more of its business with clean energy. It will move the company closer to its pledge to become net-zero carbon across its business by 2040 and continue its path to power its operations with 100% renewable energy by 2025 – five years ahead of its 2030 target.

Shell’s ambition is to be a net-zero emissions energy business by 2050 or sooner, in step with society.1

The wind farm will be operated by The CrossWind consortium, a joint venture between Shell and Eneco. Starting in 2024, Amazon will offtake 250 megawatts (MW) from Shell and 130 MW from Eneco, for a total of 380 MW.

FILE PHOTO: A Shell logo is seen at a gas station in Buenos Aires, Argentina, March 12, 2018. REUTERS/Marcos Brindicci

“Supplying Amazon with electricity from this offshore wind farm contributes to their net-zero pledge while progressing our own ambition to be a net-zero emissions business by 2050 or sooner,” said Elisabeth Brinton, Executive Vice President of New Energies at Shell.

“We are delighted to continue strengthening our strategic relationship with Amazon Web Services (AWS) across Shell New Energies. Our collaboration is enabling us to continue pushing the boundaries of innovation,” she added.

COVID-19 pandemic, which plummeted oil-based economies and saw oil companies revenues slumped significantly, spurred a cleaner energy revolution among oil firms. Shell, BP, Eni, Saudi Aramco etc. are now working to transit from fossil fuel to cleaner energy.

The shift, which also has been influenced by Climate Change activism, is propelling oil companies to seek exit deals with other pro-clean energy companies like Amazon.

The newly sworn-in US administration is pro green and is backed by Congress with a majority of clean energy supporters. And they are all leaning toward a legislative backing of the push to phase out fossil fuel, starting with a shift to electric cars and solar off-grid electricity.

Last month, President Joe Biden vowed to replace the US government’s fleet of about 650,000 vehicles with environmental friendly electric models, a significant shift in the federal government’s approach to net-zero emission goals. As part of his climate action, Biden said he would build 550,000 EV charging stations and spend more in clean energy research. He also supports new consumer rebates to replace old, less-efficient vehicles with newer electric vehicles and incentives for manufacturers to build or retool factories to assemble EVs and parts.

The move means that solar energy and electric vehicle companies will get preferential treatment from Biden’s administration. It also signals that fossil fuel companies will face a future where they will play the underdogs in the energy industry, as cleaner energy wins more support and acceptance.

Against this backdrop, Shell, Eni, BP, Saudi Aramco etc. are preparing not only to embrace the horror, but also for a future without fossil fuel. Their preparation covers existing sectors of oil energy, including gas-powered electricity.

Shell is exploring ways to reduce spending on oil and gas production by 30% to 40% for its upstream sector, its largest division. For the downstream sector, the company is cutting 45,000 service stations, the biggest in the world, from its network.

BP and Eni had already taken similar steps, cutting jobs and shutting down operations to build new low-carbon businesses in the next decade in preparation for the era of cleaner energy.

Aramco is also focusing on pumping cleaner fuel. Sources said the company is working on cutting greenhouse gas emissions to give a better chance to compete as environmental concerns push governments to tighten carbon regulations.

The Amazon power deal thus underscores Shell’s major step in the transition from fossil fuel to cleaner energy.

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