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Chevron chief executive officer Mike Wirth told CNBC on Wednesday that the oil company’s low-carbon investments are focused on areas such as renewable natural gas and hydrogen because it sees significant potential. creating value for shareholders.
“One of the things that we have chosen not to go into is wind and solar,” Wirth said in an interview with “Mad Money”. “These are technologies that are relatively mature. There is a lot of capital available. The yields from wind and solar are actually declining, and we have concluded that the management of our company cannot create value for it. shareholders by turning to wind and solar power. ”
Instead of committing capital to these areas, Wirth told host Jim Cramer Chevron that the money “would go back to our shareholders and let them plant trees, invest in a wind and solar developer, and have the right to it. do with a growing dividend coming out of our business. ”
Wirth’s comments came a day after Chevron announced it had more than tripled its capital investment in its low-carbon energy business. The company now plans to invest more than $ 10 billion by 2028, up from $ 3 billion previously. For reference, Chevron generated a net profit of $ 4.49 billion in the first six months of 2021, according to its latest financial report.
Chevron said the investments will help the company meet targets for its new energy business, including increasing capacity to produce renewable natural gas and renewable fuels. It also plans to increase the production of hydrogen for use by industrial, power and heavy transport customers, as well as increase efforts on carbon capture and offsetting.
“I am convinced that green hydrogen is going to have a big role to play” in the energy transition, Wirth told Cramer.
Chevron and its peers in the oil industry are under pressure to reduce their carbon emissions and switch to more sustainable sources of energy as concerns about climate change escalate across the world.
“We have a core cash-generating business that allows us to invest in the future, while taking care of shareholders today and our traditional business,” said Wirth. “We have a history of disciplined capital allocation in our traditional businesses, in mergers and acquisitions, and we intend to apply this to our new energy businesses as well,” he added.
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