US oil giant Chevron (NYSE:CVX) is planning to invest up to $10 billion through to 2028 to accelerate its lower carbon energy business.

The company has set growth targets for renewable fuels, hydrogen, and carbon capture through to 2030 including:

  • Grow renewable natural gas production to 40,000 MMBtu per day to supply a network of stations serving heavy duty transport customers;
  • Increase renewable fuels production capacity to 100,000 barrels per day to meet growing customer demand for renewable diesel and sustainable aviation fuel;
  • Grow hydrogen production to 150,000 tonnes per year to supply industrial, power and heavy-duty transport customers; and
  • Increase carbon capture and offsets to 25 million tonnes per year by developing regional hubs in partnership with others.

Targeting airlines, transport and industry

It’s an interesting move – instead of focusing on solar or wind the company is investing in sustainable fuels to greenify the transport sector.

The company said that renewable fuels, hydrogen and carbon capture services target customers such as airlines, transport companies and industrial producers — sectors which are not easily electrified.

“Customers are seeking lower carbon fuels and other solutions to reduce carbon emissions,” Chevron New Energies president Jeff Gustavson said.

Guidance has tripled but is it enough?

Chevron chairman and CEO Michael Wirth said the company intends to be a leader in advancing a lower carbon future.

“Our planned actions target sectors of the economy that are harder to abate and leverage our capabilities, assets, and customer relationships,” he said.

But it’s going to cost a lot of money to get there.

Of the $10 billion investment, Chevron says $2 billion will go towards lowering the carbon intensity of its operations.

That’s more than triple the company’s previous guidance of $3 billion.

But still just a drop in the ocean for the major player who’s cash flow from operations in the first six months of 2021 alone was $11.2 billion.

Combining old fashioned oil with lower-carbon business

But Chevron’s not giving up on its oil business just yet – even though the International Energy Agency says all new O&G development need to stop to reach 2050 net zero targets.

At a Brent oil price average of $60 per barrel, the company reaffirmed its expectation to earn double-digit return on capital employed by 2025 – and generate $25 billion of cash flow over the next five years.

Chevron also reaffirmed its 2028 upstream production greenhouse gas intensity targets of around a 35% reduction from 2016 levels.

“We believe a strategy that combines a high return, lower carbon traditional business with faster growing, profitable new energy ones positions us to deliver long-term value to our shareholders,” Wirth said.

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