Chevron President and CEO Mike Wirth told CNBC on Wednesday that the oil company’s investments with lower CO2 emissions focus on areas such as renewable natural gas and hydrogen because it sees significant potential for creating shareholder value.
“One of the things we have chosen not to go into is wind and sun,” Wirth said in an interview with “Mad Money.” “These are technologies that are relatively mature. There is a lot of capital available. The returns in wind and solar are actually being offered down, and we have concluded that the management of our company can not create value for shareholders by going into the wind and solar cells. ”
Instead of committing capital in these areas, Wirth told host Jim Cramer Chevron would rather have 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 dividends that come out of our business. ”
Wirth’s comments came a day after Chevron announced it was more than tripling its capital investments in its lower carbon energy businesses. The company now expects to invest over $ 10 billion in 2028, up from prior guidance of $ 3 billion. For reference, Chevron generated $ 4.49 billion in net revenue in the first six months of 2021, according to its latest financial report.
Chevron said the investment will help the company meet the goals of its new energy companies, including expanding renewable natural gas and renewable fuel production capacity. It also plans to increase hydrogen production for use by industrial, power and heavy transport customers as well as increase efforts for carbon capture and compensation.
“I believe green hydrogen is going to play a big role” in the energy transition, Wirth told Cramer.
Chevron and its peers in the oil industry are under pressure to reduce their carbon emissions and shift to more sustainable energy sources as concerns about climate change intensify across the globe.
“We have a strong cash-generating core business that allows us to invest in the future, even if we take care of shareholders today and take care of our traditional business,” Wirth said. “We have a track record of disciplined capital allocation in our traditional business, in mergers and acquisitions, and we also intend to use it in our new energy business,” he added.