Chevron plans to invest in hydrogen

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Hydrogen will be a very important factor in global efforts to reduce greenhouse gas emissions. It is a clean-burning fuel that could easily replace natural gas or coal in heavy industrial processes. In the United States, President Joe Biden has included funding for four hydrogen centers in his administration’s plan. The jump in Chevron’s stock price may have something to do with this. 

Biden is pushing U.S. oil refineries to improve their capacity. In recent times, the need for more renewable energy sources has increased due to rising gasoline prices and record inflation figures. That’s why Chevron Corporation unveiled plans to invest $2.5 billion in low-carbon hydrogen. One of its top executives, Vice President of Chevron’s New Energies unit, Austin Knight, announced that the hydrogen investment plan will be carried out during this decade.

Knight said Thursday that Chevron will focus on developing blue hydrogen through a process using methane, natural gas, and green hydrogen from renewable energy. He said the company wants to pursue “a shift to broader energy solutions with hydrogen and moving more toward clean hydrogen.” Efforts to improve hydrogen capabilities align with Chevron’s initiatives to improve its low-carbon technologies. “We should set the rules very clearly around what low carbon really means, and then let the markets work to deliver true carbon reduction,” Knight said.

In addition, Chevron is growing its renewable energy portfolio. It successfully completed a $3.15 billion acquisition of biodiesel producer Renewable Energy Group Inc. on June 13. This company serves the demand for cleaner energy sources in the transportation and energy industries. Production capacity and feedstock resources are speculated to be advantageous to Chevron, plus a likely increase in earnings per share.

Although the Chevron stock was down 5.4% on Thursday, and another 5.6% today, analysts remain optimistic about what the future holds for Chevron. The 2.5 billion investment, and the acquisition of Renewable Energy Group have a strong influence on opinions. It should be noted that Chevron stock has risen 25% so far this year. According to figures from Wall Street specialists, the current rating is ‘Moderate Buy’.

Chevron’s average stock price is $179.72 and has an upside potential of 22.4% from current levels. The steps towards improving renewable energy sources through this multi-billion dollar investment will likely propel the company to a competitive advantage.

Do you think hydrogen will ever replace fuel? Does this seem like a good time to invest in Chevron stock?

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