Equinor is reducing its investments in renewables to boost returns for shareholders and adapt to an uneven energy transition, the Norwegian energy major said on Wednesday, becoming the latest European oil and gas firm to scale back capital allocation to low-carbon energy solutions.
Equinor will nearly halve its investments in renewables and low carbon solutions to around $5 billion in total after project financing for 2025-2027, it said today in a Capital Markets Update accompanying the 2024 financial results.
The Norwegian major, which dropped ‘oil’ from its name and rebranded to Equinor seven years ago with more renewables business in mind, acknowledged that market conditions in the clean energy sector have changed and the energy transition is going forward with an uncertain and uneven pace.
For years, Equinor’s renewables division has posted losses.
“We continue to invest and develop profitable businesses in renewables and low carbon solutions. Last year we increased our renewables power generation by over 50%, and we expect to continue increasing this,” CEO Anders Opedal said.
“However, inflation, interest rates, supply chain issues, and regulatory uncertainty are reducing the pace of the energy transition,” the executive added.
“We are adjusting to this situation by phasing and prioritising our investments in renewables and low carbon solutions, and as a consequence, lowering our renewables installed capacity ambition for 2030 and are introducing a range for our net carbon intensity ambitions.”
Equinor is now also lowering its capacity target in renewables to 10-12 gigawatts (GW) by 2030, down from a previous target of 12 to 16 GW.
At the same time, the group will boost hydrocarbon production by developing profitable projects.
“We expect more than 10% growth in our oil and gas production from 2024 to 2027,” Opedal said.
The strategy update comes a month after Equinor completed the acquisition of a 10% stake in Orsted, the world’s biggest offshore wind farm developer. Equinor is now Ørsted’s second-largest shareholder after the Danish government.
Equinor is not the only European oil and gas major to pause and scale back renewables investments amid poor returns and mounting losses while the companies look to attract shareholders with handsome payouts.
By Tsvetana Paraskova for Oilprice.com
