Chevron plans to spend $10 billion over the next 7 years to improve its renewable energy generation and reduce carbon emissions as pressure increases on US oil companies to clean up the operations. The renewable energy spending pledge is over three times what the US government had previously committed. Still, it comes to less than 10% of the planned capital spending of around $15 billion per year between now and the year 2025.
CEO Mike Wirth stated, “Chevron aspires to be a leader in driving a lower carbon future.” “We intend to use our talents, assets, and client relationships to target sections of the economy which are more difficult to mitigate.” Chevron’s move comes as buyers and protesters put more pressure on the oil producers to help combat global warming. In May, Chevron shareholders bucked the company’s management. They voted for a resolution requiring the company to set goals for so-dubbed scope 3 emissions or air pollution caused by the hydrocarbon items it sells.
On the same day, shareholders of ExxonMobil dealt a stunning loss to the company’s management, choosing new board members proposed by an activist hedge fund. The supermajor’s aim on fossil fuels, according to Engine No 1, was jeopardizing the company’s future. In recent weeks, Engine No. 1 has also communicated with Chevron’s board of directors. Chevron announced that by 2030, it plans to increase production of the hydrogen, pure renewable gasoline made from natural materials, and renewable liquid fuels for transportation, capturing or offsetting 25 million tonnes of CO2. Chevron’s operations emitted 54 million tonnes of the carbon dioxide equivalent last year.
In recent weeks, the company has announced a number of small-scale, low-carbon-focused deals, as well as agreements to offer aviation biofuels to the Delta Air Lines. It has also partnered with Caterpillar on hydrogen-based heavy business efforts, including a brand-new hydrogen-powered train. Local weather change collides with business, markets, and politics.
The announcement did not include any new internet zero goals or a new devotion to reduce its scope 3 emissions, which totaled more than 580 million tonnes of the CO2 corresponding last year. While European supermajors like BP and TotalEnergies in France have laid out plans to build big photovoltaic and wind divisions, Exxon and Chevron have resisted requests to follow suit.
According to Wirth, Chevron’s “base business” is expected to generate strong profitability in the next years, which will help the company pay the additional spending needed to clean up its operations. “We believe that combining a high-return, low-carbon legacy industry with faster-growing, profitable new energy businesses would enable us to provide long-term value to the shareholders.”