Investing.com -- Equinor on Wednesday revised its renewable energy targets downwards, citing industry headwinds as the primary reason, sending its shares down.
In its fourth-quarter 2024 report, the Norwegian energy giant said that it would reduce its ambition for installed renewable energy capacity by 2030, now targeting between 10 and 12 gigawatts.
This marks a shift from previous forecasts, driven by the need to align with market conditions and enhance value creation for shareholders.
In order to remain competitive and profitable, the company has renewed its focus on cost control and portfolio quality management.
The downward adjustment comes amid challenges facing the renewable energy sector, which have affected not only project timelines but also investment returns.
Despite this, Equinor reaffirmed its leading position in carbon capture and storage and underscored the potential of its established projects in renewables.
However, the company has acknowledged that to secure stronger shareholder value, it must scale back its ambitions in the face of these external pressures.
"We expect to deliver industry-leading return on average capital employed, above 15% all the way to 2030," said Anders Opedal, chief executive at Equinor ASA (NYSE:EQNR) in a statement.
Equinor’s revised target for renewable capacity is now aligned with the company’s ongoing strategy to prioritize profitable, low-carbon projects and reduce early-phase investments.
The company has also scaled back its planned spending on renewables and low-carbon initiatives, which will now account for a smaller portion of its capital expenditures.
In total, Equinor aims for an organic capital expenditure of USD 13 billion in 2025, a reduction from previous projections, with a corresponding impact on its overall renewables investment plans.
These changes come at a time when the global energy market is navigating volatile conditions, with the oil and gas sector still holding significant weight in the company’s portfolio.
Equinor continues to pursue growth in traditional energy sectors while balancing its transition into renewables and low-carbon solutions.
The decision to revise its renewable energy targets follows a broader industry trend where several companies are adjusting their green energy ambitions, influenced by economic and geopolitical factors.
While Equinor has scaled back its renewable energy target, it remains committed to reducing its carbon intensity and making progress towards its broader climate goals.
The company still expects to store between 30 to 50 million tonnes of CO2 per annum by 2035 through its CCS projects.
At the same time, Equinor aims to reduce its scope 1 and 2 emissions by 50% by 2030, staying on track with its long-term net-zero emissions target for 2050.
RBC (TSX:RY) Capital Markets, in a note, said that Equinor appears to be slowing its organic offshore wind development after the Orsted (CSE:ORSTED) acquisition.
They also noted that 2025 guidance and potential distributions fell short of expectations, while 2026+ buyback hopes were also likely too high.
Equinor’s Empire Wind project and Johan Sverdrup field performance are key discussion points, as per the brokerage.