Repsol’s strategy of becoming a net zero emissions company by 2050 will see it develop around 400 to 500MW of new renewables projects per year, the Spanish giant said.
Under its plans to transition to a lower carbon business, the Madrid-headquartered company lowered the long-term value of its oil and gas projects and booked a nearly €4.85bn ($5.17bn) impairment on production assets, which it said was “consistent with the Paris Agreement’s climate goals”.
Repsol posted a loss of €3.82bn for the full year compared to a profit of €2.34bn for 2018.
After putting a price tag on its environmental ambitions, Repsol said that in order to reach its goal, using 2016 as the baseline, it is targeting a 10% reduction by 2025, 20% by 2030 and 40% by 2040.
“In the local carbon business, we expect to approve between 400MW to 500MW per year of additional renewable generation capacity…We will pursue international opportunities, leveraging our position in Iberia,” Repsol chief executive Josu Jon Imaz said.
The year will see Repsol spend €700m on its low carbon business and decarbonisation plans, part of a €1.9bn capital expenditure budget set for its downstream business.
“When we talk about decarbonisation, we are not taking only about renewables, but all areas of our business which can have a positive impact,” Imaz said.
“We are exploration new decarbonisation paths, including waste-to-gas and waste to fuel, as well as integrating renewables into refining operations producing green hydrogen and using renewable power to fuel industrial processes,” he added.
However, while Repsol’s strategy to fight against climate change is in line with the targets of the Paris Summit and the Sustainable Development Goals of the United Nations, it said its investments in developing oil and gas assets will also continue.
“There has been an increase in demand from our shareholders for a clear identification of the risks associated with climate change and its impact on the future demand on our productions. This has made us reviews our assumptions on the price of oil and gas,” Imaz said.
“Yet, carbon demand scenarios indicate that by 2040, almost half of global energy consumption will come from oil and gas, so we have to balance in our mix the role that oil will play, and the role that natural gas will pay as a transition fuel.
“In the upstream business we will prioritise value creation over production increase, but it will continue to be a sustainable cash contributor to the group that will finance growth in other areas,” Imaz said.
For the full year, Repsol’s upstream capex is expected to be €1.8bn.
This article was published first in Recharge's sister publication Upstream