Equinor Prioritizes Oil and Gas, Cuts Renewable Goals
February 8, 2025
ByAndrew Topf– Feb 08, 2025, 12:00 PM CST
- Equinor is reducing its renewable energy targets for 2030, citing challenges in the renewable energy sector.
- The company is increasing its focus on oil and gas production, aiming to grow output by 10 percent from 2024 to 2027.
- Norway’s energy market is experiencing turmoil due to increased energy exports to Germany and related political instability.
Norway’s Equinor has become the latest energy company to stem its green growth plans as the backlash against renewables continues.
The company said on Wednesday it is reducing its ambition for installed capacity by 20 percent at the low end and 33 percent at the high end, from 12-16 gigawatts by 2030 to 10-12 GW. The higher target range was set in 2021.
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Equinor noted its new target includes its 10 percent stake in the world’s largest offshore wind developer, Denmark’s Orsted, and its 16.2 percent ownership in solar company Scatec.
The addition of onshore power plants in Brazil and Poland during 2023, along with the start-up of the Mendubim solar projects in 2024, contributed to a 19 percent increase in renewables power generation in the fourth quarter and a 51 percent increase for the full year compared to the same periods in 2023.
The firm also said it is scrapping a previous 2030 target to allocate 50 percent of gross capital expenditures to renewables.
Reuters reported that the offshore wind industry has struggled with interest rate rises, cost inflation, supply bottlenecks, changing regulatory regimes, and unattractive margins.
Equinor said in its press release reporting Q4 and full-year 2024 results that it plans to increase oil and gas production by 10 percent from 2024 to 2027. The company expects USD$23 billion in free cash flow for 2025-27 by reducing capital expenditures and addressing costs.
Norway only produces about 2 percent of the world’s oil supply, but it is the largest oil producer and exporter in Western Europe. Equinor is Norway’s largest oil and gas company, outputting about 70 percent of its total production, or 2 million barrels of oil equivalent per day.
Equinor’s news follows similar announcements by peers BP and Shell, which have scaled back plans to expand in renewable energy, especially offshore wind.
In January BP (NASDAQ;BP) announced it is cutting 5 percent of its workforce or 4,700 jobs and 3,000 contractors.
The UK-based oil company said the reductions are part of a cost-cutting plan that began last October, when it identified $500 million of cost savings to be delivered in 2025 — 25 percent of the $2 billion target set for the end of 2026.
The company has pulled back from several renewable energy projects and abandoned a previous plan to cut oil and gas output by 40 percent by 2030, states AP.
Shell (NYSE:SHEL) recently said it would stop developing new offshore wind projects.
In an attempt to relieve Russian leverage on European energy markets while also making inroads toward meeting the European Union’s climate goals, EU countries have massively ramped up their renewable energy capacities, shattering records for solar and wind deployment. But it now seems that these markets have grown too much, too quickly, and European energy markets are now reeling from the fallout.
Relying on variable energies for the bulk of the bloc’s energy mix is great for the climate, but can be dangerous for grid stability if mismanaged. Today, “the German electricity grid is today more weather dependent than ever,” reads a recent op-ed for Bloomberg.
Germany shuttered its last three nuclear plants in April 2023.
“Without sufficient baseload generation running 24/7 and dispatchable plants, which can be activated on demand, Berlin relies on imports from neighboring countries to fill the gap during long stretches of winter when it’s dark and windless.”
This, in turn, has wreaked havoc on neighboring Norway’s energy markets. As more of Norway’s energy flows to German grids, Norwegian energy prices are climbing ever higher. Norway has cheap and abundant energy thanks to prodigious hydropower resources, and locals are none too happy about sacrificing their cheap energy prices to keep German lights on.
“Nordic countries increasingly feel they are paying the cost of a failed German energy policy — one they weren’t consulted on,” Javier Blas wrote for Bloomberg.
This discontent has led to serious fracturing in the Norwegian government. Norway, which is not part of the EU, recently saw its coalition government collapse under the weight of deciding how to respond to EU energy measures. Norway’s Eurosceptic Centre Party has pulled out of the coalition government entirely, leaving Norway’s prime minister Jonas Gahr Støre to lead a minority government.
By Andrew Topf for Oilprice.com
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