U.S. oil producer Chevron Corp on Tuesday pledged to triple to $10 billion its investments in low-carbon fuel and projects through 2028.
Oil producers globally, under mounting pressure to join the fight against climate change, have stepped up plans to transition to less carbon-intensive production. Shareholders and governments are insisting they plot a path to sharply cut greenhouse gas emissions by 2050.
Chevron said half of its spending will go to curb emissions from fossil fuel projects, with $3 billion for carbon capture and offsets, $2 billion for greenhouse gas reductions, $3 billion for renewable fuels and $2 billion for hydrogen energy.
It reaffirmed a goal of paring greenhouse gas intensity by 35% through 2028, compared to 2016 levels from its oil and gas output. However, it did not commit to 2050 net-zero emission reduction targets as some rivals have.
European oil producers have ambitious plans to shift away from fossil fuels with large investments in renewables and mid-century net-zero emission targets. Chevron, Exxon Mobil Corp and Occidental Petroleum sought to reduce carbon emissions per unit of output while backing carbon capture and storage.
"We are trying not to be in a position in which we lay out ambitions that we don't believe are realistic and deliverable," Chief Executive Michael Wirth told investors on Tuesday.
BP Plc has said it will invest $3-4 billion a year in low-carbon projects by 2025 and shrink oil and gas production by 40% in the next decade. Royal Dutch Shell Plc in February set annual investments of $2-3 billion in clean energy.
Chevron said it would expand renewable natural gas production to 40 billion British thermal units (BTUs) per day and increase renewable fuels production capacity to 100,000 barrels a day to meet customer demand for renewable diesel and sustainable aviation fuel.
"We expect to grow our dividend, buy back shares and invest in lower-carbon businesses," Wirth said.
Chevron, the second-largest U.S. oil producer, aims to increase hydrogen production to 150,000 tonnes a year to supply industrial, power and heavy duty transport customers and raise carbon capture and offsets to 25 million tonnes a year by co-developing regional hubs.
Environmentalists said Chevron's focus is on offsetting emissions from oil and gas output, not reducing oil output.
"Chevron's new announcement does not represent a particularly large strategic shift," said Axel Dalman, an associate analyst with climate change researcher Carbon Tracker. "The main item is that they plan to spend more on 'lower-carbon' business lines."
This year, Chevron announced creation of a new unit to manage low-carbon investments, with an initial focus on alternative energy sources such as hydrogen and technologies including carbon capture.
Chevron on Tuesday reaffirmed its expectation to generate $25 billion in cash flow, above its dividend and capital spending, over the next five years.
(Reporting by Sabrina Valle in Houston, Arunima Kumar in Bengaluru; additional reporting by Laura Sanicola in New York. Editing by Arun Koyyur, Will Dunham and David Gregorio)
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