Equinor announced on Wednesday that it will reduce its investments in renewable energy in an effort to increase shareholder returns and respond to an uneven energy transition. The Norwegian energy company becomes the latest European oil and gas firm to cut its spending on low-carbon energy projects.
The company plans to nearly halve its investments in renewables and low-carbon solutions, reducing them to approximately $5 billion after project financing for the 2025-2027 period. This move was revealed during a Capital Markets Update alongside its 2024 financial results.
Equinor, which rebranded itself seven years ago to emphasize its renewable energy business, acknowledged that the clean energy market has changed. The energy transition is now progressing at an unpredictable and uneven pace.
For several years, Equinor’s renewable energy division has faced losses. Despite this, CEO Anders Opedal stated, “We continue to invest in and develop profitable renewable and low-carbon businesses. Last year, we increased our renewable power generation by over 50%, and we plan to keep growing this.”
However, Opedal highlighted factors like inflation, high interest rates, supply chain problems, and regulatory uncertainty as key challenges slowing the energy transition.
To adapt, Equinor is adjusting its approach by carefully timing and prioritizing its renewable investments. As part of this shift, the company is lowering its renewable capacity target for 2030 to 10-12 gigawatts (GW), down from the previous goal of 12-16 GW. Additionally, it is setting a range for its carbon intensity targets.
While scaling back on renewables, Equinor will focus on boosting its hydrocarbon production by pursuing profitable oil and gas projects. “We expect over 10% growth in our oil and gas production from 2024 to 2027,” Opedal added.
This strategy update follows Equinor’s acquisition of a 10% stake in Ørsted, the world’s largest offshore wind farm developer, last month. As a result, Equinor has become Ørsted’s second-largest shareholder after the Danish government.
Equinor is not alone in its decision to reduce renewable energy investments. Other major European oil and gas companies are also scaling back their low-carbon energy commitments due to poor returns and growing losses, as they prioritize shareholder payouts.
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