Equinor (NYSE:EQNR) energy transition is expected to boost the stock as the company is expanding the development of carbon-neutral projects. The company is saying it wants to be a leader in carbon efficiency but what stands it apart from the other companies with net zero claims is that it has actually taken major steps to meet them. That is why we think it is a great buying opportunity. We think the stock will rise both in the long and short term as the company is ideally positioned to profit from the growing clean energy economy.
The oil and gas cash cow is drying up. Even though fossil fuels are now the primary energy source in the world, many oil giants are moving towards the renewable energy sector, hydrogen, nuclear fusion and other zero carbon energy technologies. They are on the path to become the primary energy source in the long-term future.
That is set to happen by 2050 and certainly the world will aim to be carbon free beyond mid century. Countries are also pledging to be net zero by 2050 and allocating investments into the technologies with the highest decarbonization metrics. The sooner oil and gas companies decide to participate in the development of proper deep decarbonization technologies, the more government projects and investments they are likely to get. Equinor is one of the companies with the longest track record of clean energy developments and possesses the knowledge and experience in leading the global energy transition movement.
Equinor Is A Pioneer Of Some Clean Energy Technologies
The oil giant is well-positioned to lead in the change towards a net zero economy. The company has built and currently operates the Sleipner CCS facility. That is the longest ongoing carbon capture and storage facility in the world, commissioned in 1996. The company is even sharing its know-how with other developers of CCS as its 25 years of experience has allowed it to gain valuable insights. It is now participating in joint ventures for a variety of innovative projects.
Equinor is currently part of more than 40 carbon capture and storage projects. Because of its decades of experience in developing them, it successfully matured the technology from the R&D to the operations stage. Since the company pioneered the first CCS project for underground storage, it is in a position to commercially scale the technology. Exxon has predicted that the carbon capture market will be a $2 trillion opportunity by 2040 so CCS is likely to be an important contributor to the net zero energy mix of the future.
Governments around the world are also investing to clean up electricity from fossil fuels, so carbon capture companies are getting billions of dollars of funding. In the US there is a policy called 45Q tax credit that offers $50 a metric ton for carbon captured and sequestered. Other countries like the UK, Norway and Australia have collectively dedicated billions of dollars for the development of CCS hubs and facilities. Companies with distinct advantages like experience and know-how in building and operating such projects like Equinor are attracting massive investments and creating new revenue streams.
Equinor Energy Transition Projects
Northern Lights – part of the Norwegian government initiative “Longship” is an example of a major CCS project the company takes part in. Northern Lights CCS is the first in the world to provide open-source CO2 transport and storage services to any company that wants to reduce its emissions. The initial capacity of the storage is 1.5 million tons of CO2 a year. That is a new business opportunity as the companies are in a need of CO2 capture and storage services.
Equinor is involved in a low carbon project producing energy from natural gas, fitted with CCS technology called Keadby 3 plant. Another facility called H2H Saltend produces hydrogen from natural gas and also captures and stores the CO2 associated with the process. The low carbon hydrogen produced there is planned to be supplied to the Keadby hydrogen power plant. Equinor has recently announced a second natural gas plant with CCS in the pineline in partnership with SSE Plc.
The company is working together with British utility SSE Plc to build the world’s first hydrogen power plant. It is called Keadby Hydrogen and will be located in the UK. Hydrogen produced from renewables is an alternative clean energy technology that has the potential to replace natural gas in the power sector. The Keadby Hydrogen plant is partly funded by the British government. The UK has set ambitious net zero targets and its carbon capture investment is growing exponentially.
Expanding Renewable Energy
Equinor is attracting government investments into low carbon energy initiatives. That makes us really excited about the potential of future opportunities in front of the company. It is also developing its renewable energy portfolio, winning awards from the New York State for offshore wind generation. It was chosen by the State to provide wind energy for the area of additional 2.5 GW from Empire Wind 2 and Beacon Wind 1 offshore wind farms. That is an extension to the current agreement for 816 MW of renewable energy from Empire Wind 1.
“The successful bids for Empire Wind 2 and Beacon Wind 1 represent a game-changer for our offshore wind business in the U.S. and underline Equinor’s commitment to be a leading company in the energy transition,” said Anders Opedal, CEO of Equinor.
It has also announced plans to increase its share of renewable energy to 4 – 6 GW by 2026 and to 12 – 16 GW by 2035. That represents a 15 times increase of the capacity compared to current levels. It aims to achieve a 50% reduction of the carbon intensity per unit of energy product by 2050 accounting for scope 1, 2, and 3 GHG emissions.
The company’s plan is to increase the share of renewables, change the composition of its gas and oil portfolio, and invest in CCS and hydrogen. The remaining emissions would be offset by high quality offset mechanisms.
Equinor is a company that plays a vital role in developing technologies addressing the fundamental challenge of society. It aims to be a leader in the transition to a net zero future and it is certainly taking some major steps. The company still has a lot to accomplish in order to lay off oil and gas but it seems to be aware of the urgency of cutting down CO2 emissions. It is a great opportunity for investors looking for carbon capture stocks or new alternative energy developers.