Shell and the transition from oil to hydrogen: How the declining oil business can be replaced by hydrogen

$SHEL (-0.74%) Shell is facing a fundamental change: the oil and gas market, which has long accounted for the majority of its business, is showing signs of decline. But instead of simply waiting and seeing, the company is focusing on hydrogen as a central pillar of its future strategy. How can $SHEL (-0.74%) offset the loss from the declining oil business with hydrogen technologies? 🌍💧

Why the transition is necessary

$SHEL (-0.74%) still generates around 80 % of the operating profit from oil and gas. But the pressure to reduce CO₂ emissions is growing worldwide and many governments are committed to phasing out fossil fuels. The oil business is becoming less important in the long term, forcing Shell to look for alternatives in order to remain competitive and generate sustainable earnings.

How hydrogen can help

1) Hydrogen as a clean energy carrier:

Hydrogen is considered one of the most promising energy sources of the future. It can be used as green hydrogen (produced from renewable energy sources) in the industrial, transportation and power generation sectors. Shell is investing heavily in green hydrogen technologyto increase production capacity.

2) Diversification of the portfolio:

The transition from oil to hydrogen helps $SHEL (-0.74%) to move away from fossil fuels and broaden its portfolio. The Group is building hydrogen infrastructure, both for industry and for electromobility. The development of hydrogen filling stations and cooperation with major car manufacturers to promote hydrogen vehicles are decisive steps.

3) Long-term growth opportunities through hydrogen:

The market for hydrogen could explode in the coming decades. According to estimates, the hydrogen market will be worth several trillion dollars by 2050. $SHEL (-0.74%) aims to produce 5 to 10 million tons of hydrogen per year per year by 2030, which could make the company one of the leading players in this sector.

4) Combination of oil business and hydrogen

$SHEL (-0.74%) can not only sell hydrogen in new markets such as mobility and industry, but also continue to use its existing infrastructure. The use of natural gas in hydrogen plants for the production of hydrogen (blue hydrogen) could accelerate the transition, as Shell already has experience in this technology and can continue to use the existing infrastructure.

How Shell can replace the oil business

• Reduction of the oil shareAs demand for oil decreases, Shell can increase the share of hydrogen, renewables and other technologies in parallel.
• Hydrogen as a growth marketHydrogen offers huge potential for growth, especially when you look at developments in heavy industry, transportation and power generation.
• Infrastructure development: By developing hydrogen infrastructure such as refueling stations and production facilities, Shell can make the transition from oil to hydrogen a smooth one.

What do you think?

Can $SHEL (-0.74%) offset the decline in the oil business with hydrogen and become a leader in renewable energy?