Royal Dutch Shell Consortium To Receive $2.4B For Carbon Capture Project – Report


According to Dutch broadcaster NOS, the Dutch government will grant Royal Dutch Shell (RDS.A) and its group about $2.4 billion in subsidies for a climate change project.

In January, Shell, Exxon (XOM), Air Liquide, and Air Products sought the government’s support for their project to reduce the Netherlands’ carbon footprint. The project encompasses capturing and storing carbon dioxide from industrial operations in the Rotterdam port area instead of letting it go into the atmosphere. The government has granted their request.

The government money will compensate these companies for the extra costs they incur in the carbon capture project. Factories around the Rotterdam port pay to be allowed to release carbon dioxide from their operations. Shell and its group will capture the greenhouse gases and then store them in an empty gas field in the North Sea. Since the cost of storing the gas may rise faster than the fees the factories currently pay for the emissions, the government subsidy will make up the difference.

The captured carbon will be transported through the infrastructure provided by the Port of Rotterdam, to be stored in offshore empty gas fields.

The project is expected to begin operations in 2024 and will aim to capture and store 2.5 megatons of carbon gas every year. The project will contribute to the Netherlands’ commitment to curb climate change. According to a Reuters report, by 2030, the country aims to have cut its greenhouse gas emissions by 55% from the 1990 level. (See Royal Dutch Shell stock analysis on TipRanks)

This clears the most important hurdle for the project, which is set to become operational in 2024. It is expected to reduce emissions in the industrial cluster surrounding Europe’s largest seaport by around 10%.

Evercore ISI analyst Stephen Richardson reiterated a Hold rating on Shell stock. The analyst did not assign it a price target.

Consensus among analysts on Wall Street is a Moderate Buy based on 4 Buy and 2 Hold ratings. The average analyst price target of $48.38 implies 18.32% upside potential to current price levels.

RDS.A scores a 7 out of 10 on TipRanks’ Smart Score rating system, indicating that it is likely to align with market performance.

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