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Shareholder returns are more important for Chevron than investing in wind and solar energy, chief executive Mike Wirth told CNBC in an interview.
"These [wind and solar] are technologies that are relatively mature. There is plenty of capital that's available. The returns in wind and solar are actually being bid down, and we've concluded that management in our company can't create value for shareholders by going into wind and solar."
Instead of directly investing in this mature field, then, Chevron would rather return cash to its shareholders, and they can then "plant trees, go invest in a wind and solar developer and have the right to do that with a growing dividend that comes out of our company."
Wirth's comments come days after the company made a $10-billion commitment to low-carbon energy over the next seven years, with the CEO saying that "Chevron intends to be a leader in advancing a lower carbon future. Our planned actions target sectors of the economy that are harder to abate and leverage our capabilities, assets, and customer relationships."
The announcement is the latest proof that emission-reduction activism is bearing fruit in the energy industry, especially combined with the news that Chevron is bracing for a proxy battle in the boardroom with activist hedge fund Engine 1, according to a Wall Street Journal report from last Friday. Engine 1 won three seats on the board of Exxon earlier this year, signaling that it was only the beginning of its crusade against the emission-heavy industry.
Chevron has said it was prepared for various contingencies, including activist shareholder activity. Apparently, it is also prepared to work for a lower-carbon future. Unlike most other oil majors, however, it would bet mostly on green hydrogen, carbon capture, and renewable fuels, including renewable natural gas.
By 2030, according to this plan, Chevron will be producing 40,000 mmBtu of renewable gas daily, along with 100,000 bpd of renewable fuels and 150,000 tons of hydrogen annually. The company also plans to capture and offset 25 million tons of carbon dioxide annually.
By Irina Slav for Oilprice.com
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