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Chevron triples low-carbon investment, pledges $10 billion through 2028

© Reuters. FILE PHOTO: A Chevron gas station sign is seen in Del Mar, California, April 25, 2013. REUTERS/Mike Blake/File Photo

By Sabrina Valle and Arunima Kumar

(Reuters) -U.S. oil producer Chevron Corp (NYSE:) on Tuesday pledged to triple to $10 billion its investments in low-carbon fuel and projects through 2028.

Oil producers globally, under mounting pressure to join the fight against climate change, have stepped up plans to transition to less carbon-intensive production. Shareholders and governments are insisting they plot a path to sharply cut greenhouse gas emissions by 2050.

Chevron said half of its spending will go to curb emissions from fossil fuel projects, with $3 billion for carbon capture and offsets, $2 billion for greenhouse gas reductions, $3 billion for renewable fuels and $2 billion for hydrogen energy.

It reaffirmed a goal of paring greenhouse gas intensity by 35% through 2028, compared to 2016 levels from its oil and gas output. However, it did not commit to 2050 net-zero emission reduction targets as some rivals have.

European oil producers have ambitious plans to shift away from fossil fuels with large investments in renewables and mid-century net-zero emission targets. Chevron, Exxon Mobil Corp (NYSE:) and Occidental (NYSE:) Petroleum sought to reduce carbon emissions per unit of output while backing carbon capture and storage.

“We are trying not to be in a position in which we lay out ambitions that we don’t believe are realistic and deliverable,” Chief Executive Michael Wirth told investors on Tuesday.

BP (LON:) Plc has said it will invest $3-4 billion a year in low-carbon projects by 2025 and shrink oil and gas production by 40% in the next decade. Royal Dutch Shell (LON:) Plc in February set annual investments of $2-3 billion in clean energy.

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Chevron said it would expand renewable production to 40 billion British thermal units (BTUs) per day and increase renewable fuels production capacity to 100,000 barrels a day to meet customer demand for renewable diesel and sustainable aviation fuel.

“We expect to grow our dividend, buy back shares and invest in lower-carbon businesses,” Wirth said.

Chevron, the second-largest U.S. oil producer, aims to increase hydrogen production to 150,000 tonnes a year to supply industrial, power and heavy duty transport customers and raise carbon capture and offsets to 25 million tonnes a year by co-developing regional hubs.

Environmentalists said Chevron’s focus is on offsetting emissions from oil and gas output, not reducing oil output.

“Chevron’s new announcement does not represent a particularly large strategic shift,” said Axel Dalman, an associate analyst with climate change researcher Carbon Tracker. “The main item is that they plan to spend more on ‘lower-carbon’ business lines.”

This year, Chevron announced creation of a new unit to manage low-carbon investments, with an initial focus on alternative energy sources such as hydrogen and technologies including carbon capture.

Chevron on Tuesday reaffirmed its expectation to generate $25 billion in cash flow, above its dividend and capital spending, over the next five years.

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