Welcome to Royal Dutch Shell Strategy Day 2021 for investors live Q&A session. Today's session is recorded. People dialing in, if you have a question, please press star one. If you wish to be removed from the queue, please press star two. I would like to introduce Mr. Ben van Beurden and Miss Jessica Uhl. Please go ahead. Well, thank you very much, Anna, and thank you everyone for joining us today. I hope you had a chance to look through the materials that we made available earlier today. You're clearly here because you are hungry for more. We have given you our approach to managing cash with great discipline and our approach to carbon. These are solid foundations for our future. We start from a very strong position indeed. We have a unique platform to provide what our customers want and need. We already have a range and a scale that few others can hope to match. The ambitions of others are actually to get where we are today. We have a network of highly optimized energy assets that will allow us to achieve superior value. We have a strong upstream business delivering significant value for years to come, generating that cash for shareholder returns and also to accelerate our transition as a business. Everyone, again, thank you for being with us. Let's get started. Anna, who can I give the question to first? Thank you. The first question comes from Christyan Malek of JPMorgan. Please go ahead. First of all, congratulations on a historic day in your vision to decarbonize. I have two questions, please, Ben and Jessica. First of all, it feels somewhat in terms of your capital spend that you're holding the stick in the middle in terms of your CapEx outlook, and the timeline against how you plan or phase your CapEx. I understand that the pecking order is ultimately to deleverage. Can you be more specific around when exactly you plan to raise CapEx and by how much, beyond 2021? Also within that context, why $65 billion? I would've thought in energy transition that you'd want to deleverage much more aggressively down to $35 billion-$40 billion if there is a sort of magic number, in the context of being really an offense around driving good capital decisions into transition with a very strong balance sheet? That's my first question. My second question is around Scope 3. To what extent is there a tension between what you trade, the cash flow you generate through your trading and your Scope 3 emissions? As far as you clearly sell far more than you produce, there is a lot of arbitrage opportunity that you generate. With that kind of second order generation of cash flow, does that get affected as you decarbonize through your Scope 3? Can you just give us a bit of discussion or just explain the relationship between how you trade and Scope 3 and whether there will be a change, if that makes sense. Thank you. Makes perfect sense, Christyan. Thank you very much for the questions. I'll take the second one. Jessica takes the first one. Indeed, our total carbon footprint includes our Scope 3 emissions. In other words, the emissions made by our customers as they use our products. Indeed, you're also right that we sell a whole lot more than we produce ourselves, roughly three times as much. Christyan, you're also absolutely right that we have a very large volume of trading as well. The churn that we have in trading, say, having a ship on the water, selling it, selling it again, buying it back, et cetera, that of course, is not contributing to hydrocarbons that may end up by customers being burned. What we do is we take only that portion of our trading business that actually supplies markets and therefore, the total carbon footprint that we talk about, the 1.7 gigatons, is what ends up with customers indeed for consumption. It is absolutely true that we therefore have to also, for instance, in our aviation business or in our shipping business or in other businesses that are largely operated from a traded desk, that we have to be very clear about the carbon intensity and the carbon footprint of that business. That's exactly, precisely the point. We are going to use these very large market positions to decarbonize our customers, and we have to do it indeed in a way where we trade or exchange, I should say, our high carbon income for low carbon income. If you looked at the video, that's where we talk about carbon budgets for the different sector-facing marketing teams as well. I hope that also made sense. If it doesn't, make sure that you talk to our team, and we'll get follow up there as well. Jessica, over to the $65 billion and the additional CapEx. Great. Thanks, Ben, and thanks, Christyan. I heard about three questions in your first question. I'll try and hopefully address most of the points that you raised. First of all, we've tried to be very clear what our priorities are for our cash, starting with the third quarter and continuing with that clarity in our materials today. The first priority is to ensure we invest sufficiently to support the cash flow of the business today of some $19 billion- $22 billion CapEx, and along with that, to support our progressive dividend. That's our first priority. The second priority is to further strengthen the balance sheet, get to the $65 billion. Once we reach that point, to then look to increase shareholder distributions 20%-30% of our CFFO. Then at that moment in time, with discipline and in a measured way, step up our CapEx. That's the priority. Within the step-up of the CapEx, couple important points to make. We'll be looking to favor our growth pillar as we step up our CapEx. It's part of our energy transition and changing the profile of the company. In terms of the $65 billion specifically, that's the number we think makes sense in terms of getting it to the right level of strength before we take these next steps with shareholder distributions and stepping up capital. It's not the end of the road. We'll continue to look to strengthen the balance sheet for the reasons that you mentioned. We do think resiliency is important going through the energy transition, but also over time, it also becomes a place of capacity to respond to opportunity as well. Both of those reasons, we'll be looking to further de-leverage beyond the $65 billion. Okay. Thanks very much, Christyan. Thanks, Jessica. Anna, can I have the next question, please? Thank you. The next question comes from Biraj Borkhataria of RBC. Please go ahead. Hi. Thanks for taking my questions. Two questions. The first one's around cost of capital. When you look at the low-carbon space, it's obviously very competitive. As more players get involved, you're seeing returns get compressed, at least for now. I wanted to ask about your capital structures. Some of your peers have issued hybrids either to help take pressure off the balance sheet or to directly help fund some of their low-carbon ambitions. In the past, I think you've said, you know, this type of funding is quite expensive, but actually you're seeing rates sub 2% now. I was wondering if you see this as an option going forward in order to help accelerate the net debt reduction there. The second question is on the Permian. I see you've listed it as one of your nine core areas. I'm just trying to understand where that fits into your plans, because a couple of years ago, you were obviously close to acquiring a substantial increase in position there. I think it was Management Day 2018 where your team said you can compete with the best in the space. Just thinking about how much capital is flowing to that asset going forward. Is there any details you can provide on that? Thank you. Thanks very much, Biraj. I'll take the second question. Jessica will talk about the first. Indeed, a lot of things have changed in that intervening period. Of course, the pandemic has been a big driver for it, the tightening of the capital budgets that we have, and indeed, also a deepening of our strategic convictions of where the company needs to go to. Whereas in the past, we very deliberately segmented our upstream business into shales and deep water and conventional oil and gas, we now actually optimize that entire portfolio as a single portfolio. If there was going to be a distinction, it is going to be between the assets where we believe we have running room and where we want to therefore invest predominantly for future growth and cash outcomes, and what we call a lean portfolio. The Permian indeed is part of that core position, simply because we do see the running room in there, and we do actually believe it is a high-quality position plus a high-quality operation that we have there. Therefore, we will continue to invest in it until indeed it doesn't make sense anymore. That then, of course, applies to all the other eight core positions as well. Not differentiated in that respect. It is just a good position to be in that we happen to operate actually very well. Jessica, over to you. Great. In terms of the cost of capital, Biraj, maybe a few points to raise. The first point is around the returns being pursued right now in certain parts of the renewable energy sector. For the lower risk parts of that sector, you're seeing returns being driven down to quite low rates. We fully acknowledge that, recognize that, and part of what we're disclosing today and talking about today is how we're looking at risk and return very actively and taking active choices in terms of how we price risk and the return expectations that we're going to set across our portfolio. I think those principles are very much alive in terms of the way we're thinking about our balance sheet and the way we're thinking about how we allocate capital. In terms of capital structures that may be attractive in this sector going forward, of course, we're already tapping into that to some extent. We're using project finance where that's available. We did that for Borssele. That was an important part of how we leveraged our own equity capital to bring that project to fruition, and I think those opportunities we'll continue to pursue. In general, up until this point in time, we've liked to stick with kind of the plain vanilla financing structure of our balance sheet, and think working with those fundamentals is a better way of doing things, generally speaking. Hybrids can typically be more expensive debt. What we're trying to do is get a very robust balance sheet going forward and strengthen our balance sheet. We're not looking for new ways of putting more pressure on that balance sheet. That all being said, the world's evolving. We'll continue to actively engage in terms of looking for new and more appropriate forms of capital for this business, and we'll explore different opportunities. It won't change. It's not that it'll never change, but at this moment in time, I think we've got the right view on our balance sheet and our right view in terms of where hybrids should or shouldn't play. Okay. Very good. Thanks, Biraj. Anna, who is next? Thank you. The next question comes from Thomas Adolff of Credit Suisse. Please go ahead. Good afternoon, Ben and Jessica. Two questions from me. The first one, just on your medium-term carbon intensity reduction target of 20% by 2030, then a step up to 45% in 2035. Doesn't give you a lot of flexibility and meets a certain oil price really to deliver on this portfolio shaping moves. What is the level of confidence to deliver on those targets should oil average $50 or less? The second question is related to the corporate structure, whether you think there are any significant trade-offs between the synergies and the integration between the businesses you have versus the cost of capital by keeping everything under one roof, and if there's a way to quantify the net benefit of keeping this structure intact? Thank you. Thank you very much, Thomas. I'll take the first one. Jessica will talk to the second one. Indeed, the two medium-term targets are very well noted, probably, Thomas, let me use the opportunity to also say a few more things about it. Indeed, by 2030, we expect to reduce the carbon intensity by 20% and then 45% five years later. You may ask yourself why the big step up, it is because the target that we have set for 2030 actually doesn't include the mitigation actions that one could expect from customers. The reason why we don't have that at this point in time is simply because there is not a follow the carbon methodology where we can actually see how much of our carbon ends up where and what our customers are doing with it. I have no doubt that as this decade progresses, we get to the point that we have to be able to account for all the carbon wherever it ends up in society, and we will be able to see, therefore, what it is that our customers do and then take that into account in how we also set our Scope 3 outcomes. Now, does 20% reduction, does it constrain us significantly? I wouldn't say, and certainly not when you look at oil price outcomes. Because, again, you have to bear in mind, our approach is maybe perhaps somewhat different than what a lot of people think it's all about. What we are doing is we are measuring the footprint that our products have on this planet. We believe that's the only valid way to measure the impact of a company is the products that it sells, the carbon that it puts into society and into the economy. You have to bear in mind that the carbon that we put into the economy, only a small fraction of it is extracted from the ground by ourselves. Therefore, if we set ourselves targets to optimize our product mix so that the carbon footprint comes down, there is no direct correlation to what it is that we can produce. Now, at the same time, we want to upgrade and high grade also our upstream business. That's another matter. We believe it is important that we have a portfolio that is not only financially strong and resilient, but also one that is not stranded under any circumstance. I don't think that the constraints that we've set ourselves for dealing with our customers is going to limit ourselves by what it is that we can do, strictly speaking from an upstream perspective. Jessica, to you. Great. Thomas, speaking to your question around the benefits of integration, I think there's two lines of argument I would make. The first one is to look at the absolute level and quality of cash we've generated as a company over the last couple of years, we have been leading in our sector. If you look at last year alone, our Integrated Gas business, some $11 billion, our Upstream business, $9 billion, our Downstream business, $7 billion. The quality of those cash flows you see historically up and through the last year in a very dramatic macroeconomic environment. That speaks to the very real value we're achieving today through a variety of macroeconomic circumstances, generating substantial amounts of cash as a company through this diverse integrated model. If you look at it from a strategy perspective and a business model perspective, one of the key points hopefully coming through in all the materials is how we look at the Energy Transition, look at our company from the customer back, and we're looking for integrated solutions, integrated in a value chain perspective and integrated for our customers. Things like making hydrogen real, making green hydrogen real, will span most of Shell. It is going to require renewable energy. It's going to require our refinery in Pernis, and it's going to require our downstream business that knows the market. That plays out in biofuels as well. That plays out in CCS as well. We have assets that we can leverage for the future across all of our businesses, and we have capability that will, I think, be needed more now than ever in terms of trying to drive the energy transition. I fully believe this is the right model for the energy transition and the right strategy for us to deliver against it. Great. Thank you very much, Jessica. Thomas, thank you very much. Anna, who is next? Thank you. Next question is from Oswald Clint of Bernstein. Please go ahead. Thank you very much, Ben and Jessica. Can I ask around marketing? There's quite a bit today. We've spent a little bit of time digging into that recently, it looks like we're a little bit too high on the retail, but too low on lubricants and aviation, which are some of the parts you're calling out today. They look to be a lot more profitable than we thought. I wanted to ask about these, especially aviation, where I see an ambition to grow sustainable aviation fuels five-fold, five times by 2025. I wanted to see if you could talk around profitability trajectories for that and lubricants, especially versus jet fuel. I think, Ben, I remember you telling me things like your Lufthansa deal into LAX Airport were probably not that profitable. Is this around really pent up demand and scaling up, which will bring down costs, and this can be as profitable as kerosene and jet fuel? Secondly, please, I just wanted to ask around this plan and really contingency and downside risks that you're thinking about. Especially given what happened back in summer 2019 when the underlying execution was fine, but refining and chemicals and gas and LNG all kind of fell away from you and derailed the plan. How have you reflected those lessons learned in today's forward plan and ultimately the confidence you're suggesting around 4% dividend growth per year, please? Thank you. Yeah, great questions, Oswald. I think Jessica is probably best placed to talk to your second question. I'll take the first. First of all, I saw your report. I think it's a very good report, and it indeed comprehensively lays out the case of also customer back thinking, which is very much at the heart of our strategy. Indeed, we see these positions that we have as very good positions to start from because as I said earlier on in the video, we believe most of the value of the energy transition is going to originate from the customer end of things rather than from the asset part of things. That is simply because of the nature of the energy transition. Whereas you would win in a conventional business, and we are still winning, by the way, in a conventional business by having the advantaged asset. You're going to win in the energy transition by having the advantaged product. Our aviation business, take that as an example. We are one of the market leaders, probably the market leader at this point in time. It is a very competitive business. The margins are very thin. We make reasonable money in it, but it is a traded model. We work in 900 airports, and we indeed can make money in many different circumstances. If this market is going to transform, and if it's going to have sustainable aviation fuels in the mix, you will see a complete dislocation of where margin and where value comes from. That is the place where we believe we can win. It's not because we will have the most competitive biofuel plants. It is because we will have the most competitive market position to play with. We will have the ringside seat that helps design the market of the future, so to speak. That's where I think you will have to look. The same is true for hydrogen and heavy duty goods transport, or many other examples that we could give. Indeed, customer back thinking is key. On lubricants, I think we have a strong lubricants position. Lubricants, by the way, are going to stay with us for a long time to come as well. We actually set up a whole new range of lubricants and E-Fluids that are going to be fit for that energy system of the future. Believe it or not, electric cars have a lot of fluids in them as well. Quite often fluids with, again, very specific product properties that are uniquely fitting our capabilities, whether that's GTL or something else. We think we can grow that business substantially. We have been the market's leader in terms of quality and size for, I think now nine years in a row, and long may it last. Jessica, over to you for the other question. Great. Thank you, Oswald. In terms of what lessons have we learned over the last couple of years, and of course, hopefully we learn every quarter in terms of what's working well in our company, if not every day, frankly, in some parts of our business. What's working well, what's not working well, and how do we need to adjust? I think one of the most important things we've learned or we've taken on board over the last couple of years is the pace of change that's happening in the energy transition. That accelerated in a lot of respects in the last couple of years. What we see happening in the market with companies like Amazon and Microsoft putting pretty ambitious plans out there, that shows that a market is forming and creating greater opportunity at a pace faster than perhaps we expected even a couple of years ago. Of course, on the refining side, a lot has happened in the last couple of years. Importantly, all of that has been brought into the strategy that we set for ourselves over the course of 2020, announced to some extent in Q3, and again today, what we're bringing forward. I think we've learned a lot over the last couple of years, and a lot of that has been embedded in the strategic ambitions that we've just laid out for ourselves. The other piece I would say in terms of just confidence in the 4%, I have a lot of confidence in the 4% dividend growth. One, I think 2020 we learned a lot. Our company was stress tested. I think that was a pretty extraordinary set of circumstances that we had to run the company under. Again, generated some $34 billion of cash flow from operations in an extraordinarily challenging year. I think at some level that has also given us more confidence in the underlying capability of the company and what's possible, particularly when there's a recovery. Of course, the energy transition itself and how we're moving the company, we're going to be increasingly moving away from our cash flows being entirely dependent on commodity prices. That will also build more resiliency in our cash flows. I think we've got the right strategy. I think the resiliency was proved in 2020. I think we are driving a strategy that will translate into even more resilient cash flows going forward. I would end with a lot of confidence in the 4% progressive dividend. Thanks very much, Jessica. Let me correct myself. We were 14 years in a row, number one in lubricants. Anyway, thanks, Oswald. Can I have the next question, please, Anna? Next question is from Herrmann of Exane. Please go ahead. Ben, Jessica, thanks very much for the opportunity. Two questions, if I might. The first just goes back to the capital frame and CapEx. The CapEx range you've decided upon, 2023 to 20 27, as and when you move past this near-term period, how have you determined that? Is it top-down? Is it bottom-up? Is it really in essence around affordability and balancing cash? The second question is, Ben, how do I model what you're doing in renewables and energy solutions? I mean, the nice thing about counting gigawatts and it is counting gigawatts, is it's very easy to count the capital that goes in, and it's very easy to make an assumption what the return is. Is that the way I should be approaching things in the context of your business? Just thinking, what's the capital spend and what kind of return do I assume? What will you be able to provide us with over time to give us some indication on the progress that's actually being made, the returns that are being achieved, so on and so forth. Thanks very much, Ben. Thanks very much, Jessica. Thanks very much, Lucas, they're two really important questions. I will take the first one, then step at the second one. I'm sure that Jessica has a few points to add as well. The 2023 to 2027 is basically a combination of two factors that are driving it. First of all, we know how much opportunity we have in the funnel. We know that at this point in time, if we say it's 2019 to 2022, we are severely constraining the business, who has a lot more spending potential at this point in time than we give them to spend. Therefore, we have to take a measured view and say, "Okay, we think we can step up." As a matter of fact, we could step up a whole lot more if we wanted to, but we should be able to figure out what is a reasonable amount of spend to step up with in order to really accelerate the opportunity delivery that we have. At the same time, it's also an affordability question. We have to balance a number of things at the same time. We have to make sure that we pay out 20%-30% of CFFO, and I'm sure you would also ask, is it going to be 20% or 30%? The closer we are to the 30%, of course, the less of the opportunity for also spending it on ourselves. We have to get that balance right. At the same time, we also need to continue to delever the balance sheet. It's a combination of, on the one hand, looking at, do we have enough opportunity to spend money on? Secondly, what do we really think is a balanced approach where all three objectives are being served? That is a bit of an art, but there's a bit of science behind it as well. On your second question, how do you model us? Well, indeed, you could argue that it's somewhat easier, isn't it? If you just have gigawatts, you multiply it with whatever you make out of a gigawatt, and then all of a sudden you are there. The same would be true for barrels of sustainable aviation fuel. That's not the solution that we have chosen, basically also because we don't think that actually is how value gets created. Value gets created much more by, again, the product design, the inherent properties, the convenience, the uniqueness, et cetera. Which is just more than what it is that we produce. We aim to sell more than what we produce as well. Same story as we have for oil and gas. We sell more than we produce. I'm afraid you will have to start working back from the customer with us on that, Lucas, and we will have to help you with that. We have to equip you with new guidance, new metrics, new ways of looking at it, profit margins, et cetera. You can actually see what is a legitimate and a sensible way to model our profitability. The fundamental point is, and I hope you don't take this comment wrongly, we do not set the ambitions and the targets and our strategy for ease of modeling. We do it because we think it is the only sensible way to approach a value over volume strategy. Jessica, anything to add? Ben, I think you covered the points well. I would say that we've provided return expectations for each of our businesses, so that also gives insight in terms of what we're expecting to generate from the capital that we deploy. It's important to keep in mind that for marketing, we create value through our OpEx as well. To Ben's point, we're going to continue to need to work with you in the market to make sure we're providing meaningful disclosures so that we can get the full value from each of our businesses, our existing marketing business as well as the businesses of the future. Okay. Thanks very much, Lucas. Anna, who is next? The next question is from Alastair Syme of Citi. Please go ahead. Thank you. Ben, look, I really like the idea of the shareholder vote on the energy transition plan. Can I just get you to explain what exactly you will get shareholders to vote on? How specific it's going to be? Just to clarify, under the bylaws, what percent of shareholders we'll need for the vote to pass. Secondly, one of the big changes you looked at them today on the carbon intensity side, it was sort of pushing a lot on the nature-based solutions. I think in your speech, you referenced 300 million tons by 2050. I think I'm right before that you said 300 million tons is a sort of forest the size of Great Britain. Can you talk about the quality of projects you're seeing in this arena as you look to scale that business up? Thank you. Great questions, Alastair. The first one, what we will be doing this year is indeed bring out a report, which we will have to do before, of course, the voting season starts, that lays out our strategy. It will be very much based on what it is we are telling today, and then we will give an update in three years' time. We will ask for an advisory vote on that. We haven't changed the bylaws of the company. We're not going to. We just make the commitment to do this, and we will just see what our shareholders think. In the intervening years, we will give an update on how we are doing on that report, on what it is that we laid out, and again, ask for an advisory vote from shareholders. It is a more structural way of being in dialogue with our shareholders, which we want to do, and also to get a sense of whether they believe we're on the right track, whether we are doing the right things. Of course, at this point in time, we do get resolutions to vote on when it comes to climate change, but we believe that's not the resolution that sets our agenda out. In a way, it is taking back a little bit, the agenda for the AGM when we have a dialogue with shareholders, which we believe is meaningful. On your NBS question, indeed, we put numbers out there. I think probably it is better to look at the near term number, where we say, by the end of this decade, we are thinking of 120 million tons per annum of nature-based solution type offsets. Of course, they need to be the highest possible quality offsets. There is no doubt in our minds that the world is going to need offsets, and that's not because we like it or we think that that's the only way. That's also what the IPCC believes. Actually, the numbers that we have in there are quite in the middle of the range that the IPCC scenarios tell us is going to be needed if the world is going to get to 1.5 degrees. What we will do is, first of all, of course, focus on, can we eliminate carbon emissions? Secondly, can we reduce carbon emissions? Only if there are certain carbon emissions that cannot be eliminated or reduced, can we mop them up meaningfully with nature-based solutions. Predominantly, of course, for our customers, not for ourselves. We will take only the highest quality projects, and we will be in a continuous dialogue with people who are experts in this field to see what is the highest quality project and the highest quality offset therefore that we can originate. Thanks very much, Alastair. Anna, who is next? Next question comes from Jon Rigby of UBS. Please go ahead. Thank you. Hi, Ben. Hi, Jessica. Two questions. The first, I guess, goes a little bit back to what Lucas was asking you. I think as we've gone through, I think all of your audience is well used to these sort of transition-oriented strategy changes. I guess one of the pushbacks that are coming up a lot is there's a rate of return on the new asset portfolios around renewables. It seems to me that you have a different differentiated strategy. This sort of intermediation between the producer and the customer seems to be an elegant solution. I guess my question is how confident are you that you have a set of some competitive advantages that makes you better able to do this model than any of your peers? Put another way, do you have a sort of defensive moat, some kind of way of defending this as a competitive position? What gives you confidence that you can do it and replicate it and then maintain it over the future? It does look different to what a lot of your peers are doing. The second, just a comment. I think you've talked historically about a world-class investment case and a compelling investment case. Can you just talk a little more, particularly, I think now as the oil companies are all sort of slightly dispersing in terms of strategy, maybe they're not the best comp for you. How you think about what qualifies as any one of those two descriptions? Thanks. Thanks very much, Jon. I'll take the first. Jessica, would you mind taking the second? I think you, in a way, you describe it well, Jon. You describe it in a slightly different way than we, of course, put it. You talk about intermediary. We like to think of ourselves as truly sort of working with the customer on their solutions. Indeed, we will play a role working from a customer back to what it is that we need to own in order to enable and facilitate that particular value chain. It doesn't mean, by the way, that we won't be owning assets. As a matter of fact, we will be owning assets. Even more so, we will be causing assets to happen. I can see ourselves, of course, when we transact with very large players like Amazon or others in this space who like to buy renewable power, for instance, from us, that would like to see us also creating new renewable capacity. Otherwise, of course, it is an issue for them. It could be construed as taking away renewable power from, say, other economies. We need to cause assets to happen, but we don't necessarily always need to continue to own these assets. That is the way we differentiate perhaps from others who probably see, in a more convenient way, perhaps for modelers, the energy transition as just another resource play where you basically create an advantage asset to produce a commodity that you sell into merchant market. We believe there is just not enough return in it, and it doesn't necessarily play to what I believe is a towering strength of this company, which is working with customers, not just in a single energy solution, but a whole range of energy solutions. Not just providing the energy itself, but providing everything around it, the risk management, the price exposure, the uninterruptibility, et cetera. Is that a model that can be attacked by others? Of course. I would trust there to be plenty of competition. Who is best placed at this point in time? I think we're probably right there at the top, Jon, and that is why we have chosen this approach. Jessica, to you. Great. Thanks, Ben. I'm tempted to add on that, but I want to be sensitive to time, but it's an area that I have a lot of energy around. No pun intended. Turning to the compelling investment case and what qualifies and the world-class investment case. What we started the presentation off with today is that our investment case is founded on the strength of our strategy. At the core of that we're speaking to today, is how we're going to drive a lower carbon energy system and create value for our shareholders. That is complemented and integral also with how we impact the environment and people's lives. What we're trying to achieve as a company and how we're trying to play our role in society as a company is the basis of our investment case. Now, turning it more into directly the shareholder perspective on that, what we offer today from an investment case is a progressive dividend. We are going to provide solid cash returns to our shareholders through the energy transition, and I think that's a respectable level of growth that we're targeting over the near to medium term. Importantly, we're also transitioning the company to ensure that we have the cash flows through the medium term as well as the long term, which will ultimately translate into our ability to increase shareholder distributions further, either through increased dividends or share buybacks, and importantly, to increase the share price so that our shareholders can enjoy a total shareholder return that's driven not only by the cash that we provide back to our shareholders, but by the growth of the value of the company. We've got the right strategy, we've got the right assets, we've got the right people, and we're going to be able to create differentiated returns, going back to Ben's point. I think there's few companies that can offer the nature of solutions that we're offering to a company like Amazon to be able to manage the complexity of the power system on behalf of our customers, while also helping them with sustainable aviation fuel or renewable natural gas to power their trucks from delivery perspective, or companies that are able to do things like HKN, and the connection to hydrogen in Pernis and creating the hydrogen economy in Europe. Our ability to span that spectrum, I think is differentiated and few will be able to replicate. Great. Thank you, Jessica. Thanks very much, Jon. Anna, can I have the next question, please? Next question is from Lydia Rainforth of Barclays. Please go ahead. Thanks, good afternoon. Two questions again from me. Firstly, Ben, on the idea of the customer and being the central part of it, can you just talk about the willingness of the customer to pay for carbon? Obviously that sort of makes a difference if you're saying we don't want to deal with customers that don't embrace low carbon, that willingness to pay for carbon really matters. Just any thoughts on that? Secondly, just on the $35 billion OpEx number, you said you want to keep that just below that level while debt is where it is. How should we think about that going forward in terms of good OpEx be it on the marketing side or on the digitalization side? Obviously there will be some good costs and bad costs as to how we should think about that longer term. Thanks. Thank you, Lydia. Two very good questions. I'll take the second one. Sorry, the first one. Jessica takes the second. I think, of course, you're absolutely right. Everything in this world can only be paid for by consumers and taxpayers. Therefore, we have to make sure that the conditions are being created for them to do so. Now, we believe some of it will be driven by incentives, some of it will be driven by mandates, but a lot of it will also be driven by our customers wanting and needing to meet their own net zero emission targets over the next 30 years as well. There is no way, I believe, that a modern airline will be able to say, "Well, this doesn't apply to us," or a trucking company, or a shipping company, or a steel-making company. Indeed, people are looking for these solutions. It's easy enough to make a pledge, but then the day thereafter, you have to start figuring out how you're going to get there. Quite often, indeed, that is a matter of, well, adopting new technologies that may be more expensive, but may also come down in price. Maybe it's then also a matter of making sure that the new attribute, the low carbon attribute, is either being valued by the end consumer or it is being mandated by regulation and governments, or is being encouraged by them. Therefore, the challenge on a sector-by-sector basis is going to be slightly different. We therefore have to work together with all the participants around such a sector. Indeed, the provider of the service, the maker of whatever the appliance is that the sector uses, a plane or a truck or whatever else, but also the energy providers to figure out what is the recipe that is going to get there. It won't happen automatically, Lydia. If you were sort of going after that aspect, absolutely, it won't happen automatically. It needs to be orchestrated. It needs to be designed. Society asks all of us to get there. Nobody wants to live in a planet that has two or three degrees temperature change. Therefore, one way or other, we will figure it out. We believe, again, that most of the value in that type of figuring out is going to be located with our customers than with the assets that will produce that new green commodity. Jessica. Lydia, the way you framed the OpEx question, I think is absolutely right. To manage OpEx effectively and for the right outcomes, we do need to be nuanced. There's an important piece of our OpEx portfolio that needs to be managed for efficiency purposes, where you really try and drive down the cost safely and appropriately to get the right unit operating costs in our upstream business or our integrated gas business. As you pointed out, there's important parts of our growth story that's tied to investing in new markets, and that shows up in the form of OpEx rather than in CapEx, particularly in our marketing business. We're highly attuned to these realities, and we try and ensure we've got the right conversations happening, and aren't being too quick to assume that the efficiency conversation that applies in upstream applies appropriately in marketing. Also we have to have the right level of pressure. You can't just have one part of your business having a free ride, so to speak, on the OpEx side. We're trying to bring a lot of discipline to OpEx management across the portfolio. As you said, there's certain parts of our company where growing OpEx will be necessary. That's included in the $35 billion. The underlying OpEx reduction is actually more significant than what that $35 billion suggests, because there's actually increases, as you would expect, in our marketing business, and as you rightly pointed out, also in terms of supporting our digitalization efforts across the group, where we are investing in people and in technology to ensure we really drive our digital agenda. I think you covered it appropriately. We're managing it in a nuanced way, and the $35 billion includes both of those elements. Okay. Thank you very much, Lydia. Anna, who is next? Next question is from Michele Della Vigna of Goldman Sachs. Please go ahead. Ben and Jessica, it's Michele. Thank you for taking my questions. Two, if I may, one on oil and gas and one on decarbonization. Oil and gas, if I compare your current budget with the one that you announced a couple of years ago, it's about a 30%-40% reduction for integrated gas and E&P. I was wondering if perhaps you could give us some more details as to how much do you think that reduction is activity, and how much is actually increased capital efficiency and cost deflation. On decarbonization, Ben, you highlight very importantly how the consumer will play a key role here. The reality is the consumer today doesn't know the exact carbon footprint of the goods and of the services that they buy. How quickly do you think we can get into a world where actually the consumer can know the exact carbon footprint of what they acquire, and therefore can drive a differentiated strategy of going to the companies that can offer differentiated lower carbon goods? Thank you. Yeah, two very valid questions, Michele. Let me try and take them both. You're absolutely right in that we have indeed significantly reduced the capital allocation to the combination of upstream and integrated gas. Now, the good news is, a lot of it comes actually from further efficiency improvements. If you go through the materials that we put on the web, you will see some really impressive reductions in unit development costs in upstream, or what we call unit technical costs in LNG. They are really significant, and we think there is actually more to come still. We are still not back to the point where we believe we can be, and where we have been, for that matter, in the past. We get more bang for the buck, for starters. Secondly, it is also very important to note that, yes, indeed, we are going to make choices. That does mean that we are not going to necessarily spend any more in upstream at the level that will sustain or even grow this business volumetrically. It is all about making sure that we make choices, hence the core and the lean model, and that we really allocate our capital where we believe there is running room and there's a lot of value to be harvested. In Integrated Gas for that matter, we believe we can still continue to grow this business a little bit, because that is also what the world needs, and we can participate in a profitable growth. Now, on your question of the end consumer carbon footprint, I think this will take a long time. It is, of course, been talked about for such a long period of time, that if you could only make carbon footprints known to end consumers, they could make their choices accordingly. The carbon price embedded in it, et cetera. We cannot wait for that. I think in the end, we will have to work with our counterparties, who quite often have to work with other counterparties who will get to the end consumer. We have to make up together with these customers our mind, what is sensible, what is needed. I also don't think, for that matter, that we have to make total transparency for customers to start reacting differently. Let me just give you one little anecdote. We talk about carbon price and say, well, if customers would only know what the carbon price was, they would change their behavior. You know what? The country where I live, we have a carbon price in petrol, that's what we call, of course, tax, which is about $350 per ton. As a result of that, do people change their driving behaviors? I don't think so. Many of these things are not as elastic as you think. We have to work together with our counterparties to find out what is a sensible way to drive these carbon emissions and the carbon intensities of the value chains down, because everybody knows the pressure is on. Whether you are indeed an airline, a trucking company, or whether you produce materials that are energy intensive, everybody understands that the pressure is on to reduce the carbon intensity. Therefore, there is enough for us to work with to make progress. Thanks, Michele. Can I have the next question, please? Next question is from Adam Matthews of England and Pensions Board. Please go ahead. England, I think that's the Church of England Pensions Board. Anyway, thanks very much, and thank you, Ben, very much for today's presentation and the announcement. Just on behalf of Climate Action 100, Sylvia van Waveren from Robeco and I are the representatives to Shell, really just to note we welcome the steps that you've outlined today. In particular, the complete clarity around the 2050 net zero target. I think you've removed any question about whether it's comprehensive enough. You've really put the detail in that's needed on that, and it is comprehensive and industry-leading. Also really welcome the commitment to put a transition plan to develop at the AGM. This is really leading and again, this I think is an important step. In that context, just in terms of developing that transition plan, I think it's really important that investors, and particularly through CA100+, that we're able to differentiate companies that are developing different plans, and that we really need a common lens to be able to assess those plans against the targets that are being set, and really to encourage you and your team to work with investors in defining a net zero standard for oil and gas sector. That's something that I think is going to be critical to ensuring that the transition plans that are put to votes are really judged in an appropriate way that can enable companies such as Shell to pursue a strategy that may be different from peers that have been pursued. My question really then just turns to two aspects of the transition plan, carbon capture and storage and use, and also the nature-based solutions. What do you anticipate is the major challenge in delivering against the need of those two steps in the strategy you've outlined? Really, where are the new partnerships and the major obstacles to realizing the role that they're going to need to play in what you're setting out here? Great. Thank you very much, Adam, first of all for your endorsement, also thank you very much for the very constructive relationship that we've had for such a long period of time now. Let me reassure you, we will continue to work with Climate Action 100+, also as we put our plans together, also as we figure out what is the right standard for doing this, also as we figure out how do we continue to report as a sector, an oil and gas sector, an energy sector, in a way that is meaningful. I think we can both benefit from it, and I do not believe there is actually any competitive dissonance in providing a common approach to it. On your question on CCS and nature-based solutions, I think, first of all, as I said, they are both tools that we need to have. I think everybody who is knowledgeable about that field will agree with us. I think it's fair to say also that certainly on CCS, it has taken a time before it starts to take off. I do believe we are at that moment now. I do believe we are at an inflection point. Of course, rising carbon prices will help, but also the realization by many governments that we need CCS if we want to sustain our industry in this country. There is no way that you're just going to equip industry with renewable power, and then they will be fine. In some cases, you will have to go to other solutions. I think also, governments and industries are realizing that very diffuse emissions and emissions that cannot be immediately changed with technology, like for instance, whether it's cars or aviation, need something like nature-based solutions. I think we have taken a major hurdle, in my mind, in the last few quarters, years. Challenges remain. I think we have to continue to convince ourselves, but also the outside world that we do the right thing when we invest in nature, and that it's verifiable, that it's real, et cetera. We need carbon markets to make it even more efficient. Article 6 of the Paris Agreement is an important improvement step that we have to take. When it comes to CCS, well, of course, either mandates or a higher price on carbon, and then with it probably border adjustment mechanisms are going to be needed to make that happen as well. I do determine, I do discern at this point in time a much higher aptitude and aptitude to make it happen. I think that actually brings us to the end of our session this afternoon. Can I again thank you very much for all these questions and for joining the call. I'm really excited as I hopefully feel you can tell about our strategy, about the opportunities that we see in the route to the net zero. Myself and the leadership team of Shell look forward to continuing the conversation with you over the coming days, weeks, and months. Can I also please remind you again, look at our website, shell.com. You will find a host of additional information there. With that, I'd like to close this Q&A session. Thank you.