Norway-based energy giant Equinor has announced a 50% reduction in its planned investments in renewable energy and low-carbon solutions for 2024-2027, citing challenging market conditions. The company is also retiring its target to allocate 50% of its gross capital expenditure (capex) to green energy projects by 2030.

Reasons Behind the Shift

Equinor's CEO, Anders Opedal, explained the decision during the release of the company’s FY 2024 results, highlighting factors such as inflation, rising interest rates, supply chain disruptions, and regulatory uncertainty. He noted that these challenges are slowing the energy transition in most markets, particularly in sectors like offshore wind and hydrogen development.

Opedal stated:

“Inflation, interest rates, supply chain issues, and regulatory uncertainty reduce the pace of the energy transition. We adapt to these realities, prioritizing investments to maximize returns.”

Impact on Transition Goals

Initially launched in 2021, Equinor’s energy transition strategy aimed to significantly shift its investments and capacity toward renewable energy. However, following the update:

Renewable energy installed capacity target for 2030 has been reduced from 12-16 GW to 10-12 GW.
The 50% gross capex allocation target has been retired.
The company maintained its goal of storing 30-50 million tonnes of CO2 annually by 2035, an increase from earlier targets.
The ambition to reduce net carbon intensity was revised to a range of 15-20% by 2030 (previously 20%) and 30-40% by 2035 (previously 40%).

Equinor remains committed to its Scope 1 and 2 CO2 emissions reduction goal of 50% by 2030.

A Balanced Transition

Opedal emphasized that the company’s approach to the energy transition will be rooted in value creation and financial sustainability, stating:

“To underline that value creation is at the core of our decision-making, we now retire the gross capex ambition. In our view, the energy transition must be balanced and financially sustainable.”

Equinor’s decision reflects the realities of an uneven energy transition, where navigating economic pressures and regulatory challenges is reshaping corporate strategies toward sustainable growth.