Proactive Investors - Shell PLC’s US$1.9bn buyout of Denmark’s Nature Energy will make it Europe’s largest producer of renewable natural gas (RNG), marking a large step in the oil giant’s transition away from fossil fuels.
Operating 14 plants and with a development pipeline of around 30 more, Nature Energy Biogas, is a leader in biomethane and renewable energy production from organic waste and is the largest in Europe, according to Shell, which is set to acquire 100% of the company.
RNG is chemically the same as natural gas – ie methane – but is produced from decomposing organic waste so it can be classed as a renewable fuel and used as an alternative for powering existing infrastructure.
A recent study from Imperial College London found that emissions from the biogas supply chain are much greater than previously estimated, however.
While greener than its fossil-based counterpart and creating a way to make use of waste, RNG has its criticisms, including that it poses the same risks in terms of pollution and emissions.
Shell said the sustainability benefits “are amplified by the processing and use of methane that could otherwise be released to the atmosphere from the decomposition of organic by‑products and waste,” in its press release.
Shell currently operates an RNG site in North America and has four more under construction.
Its takeover of Nature Energy reaffirms its use of the fuel to drive its transition to its 2050 net-zero target.
Commenting on the deal, Shell downstream director Huibert Vigeveno said: “We will use this acquisition to build an integrated RNG value chain at global scale, at a time when energy transition policies and customer preferences are signalling strong growth in demand in the years ahead.”
Shell’s share price was up by 1.4% to 2,394p on Tuesday.
Victoria Scholar, head of investment at Interactive Investor noted that with BP PLC (LON:BP.) making a similar purchase recently, biogas and other energy transition investments are “a major growth avenue for oil and gas giants like Shell and BP particularly given the lack of long-term investment in fossil fuel projects.
Shed added: "They can also help with energy security, reducing the West’s dependence on Russia for natural gas.”