Chevron backs off renewables to free cash for more oil and gas.

Bloomberg: “For the past eight years, Chevron has promoted “profitable renewable energy” as a core component of its business plan. The company’s slogan, “Finding newer, cleaner ways to power the world,” is splashed across its website. And ads launchedin 2010 as part of Chevron’s “We Agree” campaign declare, “It’s time oil companies get behind the development of renewable energy.” Yet Chevron recently has retreated from key efforts to produce clean energy.”
“This includes the renewable power group, which invested in or built utility-scale solar and geothermal projectswith margins of 15 percent to 20 percent or more, according to a dozen people who worked on the projects.
The group’s after-tax profit for 2013 was $27 million, nearly double its internal target of $15 million, according to congratulatory plaques handed out to team members in January. That’s a rounding error for Chevron’s $21.4 billion in profits last year, but the group’s proposal to expand into profitable geothermal projects in Europe was rejected last summer by top Chevron executives, who said the money was needed for oil and gas projects, say five people briefed on the discussions.
….The company declined to comment on specific internal profit targets or spending figures. Chevron is “pursuing technologies that leverage our strengths and can be deployed with competitive economic returns,” according to a company spokesman in a written statement. “These include geothermal energy, solar, and energy-efficiency technologies.”
A pullback from renewables doesn’t surprise some analysts, who say returns of even 20 percent can be bested by oil and gas projects that can generate profits of 25 percent to 35 percent. “Renewables for oil companies are sort of like the coffee shop inside Bloomingdale’s,” says Oppenheimer analyst Fadel Gheit. “On their list of priorities, it will always be at the bottom.”