Oil Giants Double Down on Low-Carbon Efforts
Chevron is Spending $10 Billion on Green Energy
Chevron (CVX) and BP (BP) are among the oil giants expanding their efforts in green energy amid calls from investors to move beyond fossil fuels. The oil industry is also facing tighter regulations, which are prompting companies to find cheaper, greener alternatives.
Chevron is tripling the amount it spends on green energy, recently announcing it has earmarked $10 billion to invest in the space through 2028. That is a big leap from its previous green energy budget. The money will be invested in biofuels, hydrogen production, carbon capture, and other green initiatives. The unit is projected to have over $1 billion in operating cash flow by 2030.
Chevron Still All in With Oil
The $10 billion for green energy is still a small fraction of what Chevron spends on oil and gas. That spending is projected to be between $14 billion and $16 billion through 2025. Chevron said the plan enables it to continue to invest in its legacy business and at the same time chase new low-carbon opportunities. Much of the investments will go to produce biofuels and hydrogen and to capture or offset 25 million metric tons of carbon emission per year.
Chevron is not investing in solar or wind power generation as it pursues a greener future. Both are mature industries which Chevron sees as having less potential for profits.
BP Taps Wind Executive to Lead Green Efforts
Oil giant BP is also doubling down on its green energy push, hiring the former CEO of RWE Renewables (RWEOY), the world’s biggest wind-power developer, to run its low-carbon business. BP also inked a deal with Equinor (EQNR) to develop wind projects off the coast of the US last year, and won two leases to develop wind farms in the Irish Sea off the coast of the UK.
Oil companies see the writing on the wall and are making moves to embrace a greener future. They are pouring billions of dollars into the efforts and overhauling their structures to pursue new opportunities.
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