OPINION: Equinor’s investor day event last week served as an occasion to tell investors about its latest plans for reducing carbon emissions while developing a profitable new line of business.

The oil sector has become familiar with ambitious emissions targets from operators, and Equinor aims to become the major with the lowest emissions of all.

Pledges include reducing emissions from production to net zero by 2030 and halving the carbon intensity of overall production in the same time.

This will mean putting end-user consumption — so-called Scope 3 emissions — into the equation for the first time.

Pal Eitrheim, Equinor's new energy boss, tried to show the earnings potential of the company’s growing renewables business arm.

Equinor expects to have close to 16 gigawatts of wind power capacity by 2035, but also plans to leverage core offshore competences in order to industrialise floating wind.

Predicting four times more power-generating capacity than bottom-founded turbines, with a 45% reduction in per-kilowatt generation costs, Equinor believes it can make a go of this sector.

Analysts were left wondering how much activities such as wind power, carbon capture and storage (CCS) or carbon capture, utilisation and storage (CCUS), hydrogen production and offset are purely about meeting targets. Equinor promised real returns of 6% to 10% but fell short of details.

It was tempting to wonder about other rewards on offer to those oil companies willing to take a stand on decarbonisation.

This was also a week when Norway’s sovereign wealth fund decided that UK energy company Drax had moved far enough away from coal to remove a bar on investments.

For the time being, stock markets are driven by an uncertain outlook for oil prices and oil companies tend to focus on traditional priorities, such as finding and developing high-value hydrocarbon resources, some of which may come from increased recovery or tying into existing infrastructure.

Equinor says its Johan Sverdrup field off Norway, ramping up ahead of schedule and below cost, will produce for many years and will deliver more than $20 billion in cash flow for the period 2020 to 2023.

Banking on technology, Equinor tries not to see any inconsistency in aiming to make its offshore Norway assets the most carbon-efficient oil and gas operation in the world, earmarking more than $2.1 billion for this purpose.

Targets here include reducing greenhouse gas emissions by 40% by 2030, hitting 70% by 2040, with the aim of reaching zero emissions by 2050.

Equinor also highlights decades of potential production in Brazil, where the company recently concluded the contracting process for a first production system on the renamed Bacalhau (formerly Carcara) field.

Equinor has not pinned itself to any similar zero emissions commitment in Brazil, which raises the question about whether European companies are exporting their pollution.

Societies in developing countries tend to be very focused on the need for affordable energy and Norway’s regulatory framework — which includes a price for carbon, a renewables-rich grid and exposure to the EU emissions trading system — has more powerful levers than anything in Brazil.

Equinor has taken some steps to reduce emissions in Brazil, but if the economics are not there for renewables-driven CCS and CCUS, or even replacing offshore gas turbines, then companies may struggle to convince consumers back home about their green credentials.

Developing countries also have their own role to play in improving their own regulatory framework to provide real incentives for renewables-driven de-carbonisation.

It is no use either side settling for second best.

(This is an Upstream opinion article.)