Mike Wirth, chairman and CEO of Chevron, told CNBC on Wednesday that the oil company’s lower-carbon investment is focused on areas such as renewable natural gas and hydrogen, because it sees significant potential to create shareholder value. .
“One of the things we’ve chosen not to get into is the wind and the lot,” Wirth said in an interview with “Mad Money.” “They are relatively mature technologies. There is a lot of capital available. Wind and solar energy yields are declining, and we have concluded that the management of our company cannot create value for shareholders by entering wind and solar “.
Instead of committing capital to these areas, Wirth told host Jim Cramer Chevron that the money “go back to our shareholders and let them plant trees, invest in a wind and solar developer, and have the right to do so with a growing dividend coming out of our company “.
Wirth’s comments came a day after Chevron announced it was tripling more than capital investment in its lower-carbon energy businesses. The company now plans to invest more than $ 10 billion in 2028, above previous $ 3 billion guidelines. As a benchmark, Chevron generated $ 4.49 million in net revenue during the first six months of 2021, according to its latest financial report.
Chevron said the investments will help the company achieve the goals of its new energy business, including expanding the capacity to produce renewable natural gas and renewable fuels. It also plans to increase hydrogen production for use by industrial, electrical and heavy-duty customers, as well as increase efforts in carbon capture and offset.
“I think green hydrogen will play a big role” in the energy transition, Wirth told Cramer.
Chevron and its oil industry partners are under pressure to reduce their carbon emissions and switch to more sustainable energy sources as concern about climate change intensifies around the world.
“We have a strong cash-generating core business that allows us to invest in the future, even though today we take care of shareholders and take care of our traditional business,” Wirth said. “We have a history of disciplined capital allocation in our traditional business, in mergers and acquisitions, and we intend to apply it in our new energy business as well,” he added.