Equinor: Brazil needs to decide how to explore wind farms – 04/11/2024 – Market

Brazil is discussing a regulatory framework for offshore wind farms, seen with great enthusiasm by the government and Petrobras, but appears to have missed the first window of global investment in the sector.

At least this is what the adjustment of direction by the Norwegian Equinor indicates, which in 2021 launched an energy transition plan with the goal of becoming a leader in the segment, but changed its focus to onshore projects in the face of the escalating costs of maritime projects.

“The last two years have been very challenging, with high inflation, interest rates and costs increasing significantly,” he told Sheet Pål Eitrheim, executive vice-president of Renewables at the company, one of the largest investors in the Brazilian oil sector.

He emphasizes, however, that there has been no retreat in the goal of implementing between 12 and 16 GW (gigawatts) in renewable energy over the next five years and that Brazil will play an important role in this process.

“Few places have potential similar to that of the Brazilian Northeast,” he stated.

Equinor’s energy transition plan foresees US$23 billion in renewables over the next five years. How is Brazil positioned in this plan?
We will continue to develop oil and gas projects for many years to come. The demand will continue to exist and the transition will take some time. But at the same time, we will decarbonize as much as we can, reduce emissions from our operations around the world.

In 2023, around 20% of our investments will go to low-carbon projects, such as hydrogen, carbon capture and storage. In 2025, it will be 30% and, in 2030, around 50%. But we’re doing it in the oil and gas business.

Brazil is one of the most important countries [de nossa estratégia em renováveis]. But in many other countries, our focus has been on offshore wind. Here, we are focusing on onshore projects.

Solar and wind energy resources in Brazil are world class. Few places have potential similar to that of the Brazilian Northeast.

But Equinor signed an agreement to evaluate offshore wind farms with Petrobras. Will there be no investment in this segment?
The potential for offshore wind energy production in Brazil is very, very large.

We and other companies have signed agreements with Petrobras to evaluate this. But the first thing is that Brazil needs to decide what it wants to do with these resources, how and when to develop them.

The same happens with many markets. Many countries have many offshore wind resources, the first step is to implement a regulatory framework. And I know this is happening in Brazil. It is up to the country to decide how to develop this potential.

The company’s goal is to reduce emissions by half by 2030. Is it possible?
The biggest source of emissions at Equinor right now is our operations on the Norwegian continental shelf. The main source for reducing emissions is to electrify these oil and gas facilities with renewable energy from shore.

Instead of powering the platforms with gas, we will power them with renewable energy from land. Our last field has emissions below one kilogram of CO_two per barrel. And the global average is around 18 kilos. Therefore, it is a significant contribution to reducing these emissions.

We are using a mix of wind and hydropower. We also have a small project where we supply power from floating offshore wind near two platforms.

And this is replacing about a third of the gas consumption on the platform. Also significantly reducing emissions. But the main source of energy will be electrification with energy from the coast.

Is carbon capture part of the plans for Brazil?
It’s not part of our plans right now. But technically Brazil has the potential to capture and store CO_two like we are doing in Norway. We reinject CO_two in Norwegian reservoirs since 1996, we have long storage experience.

We had the first rounds of leasing storage areas on the Norwegian continental shelf. It is a fundamental part of our net zero strategy for 2050. It consists of storing and giving industrial customers in Europe the possibility to ship or transport CO_two and reinject it into the North Sea.

It’s a new type of business for oil companies. Not just to decarbonize your activities, but also to make money.

To take care of other people’s emissions. Especially for heavy industries, which don’t have many opportunities to get rid of their CO_two.

But it is a business that depends on pricing CO_two. Because, if you don’t have that, you are not encouraging this activity. The cost of CO_two in Europe it is now mid 60 euros per ton. But Norway has indicated that, by 2030, it will be around US$200 per ton.

So every measure you can implement that costs less than $200 per ton will obviously be profitable. A price for CO_two is a strong incentive for the development of this type of industry.

Developed countries hope that the evolution of the hydrogen industry will open up international trade in renewables produced in the Southern Hemisphere. How can we prevent this movement from making us just energy exporters, instead of developing our own industry?
We did not come to Brazil with the aim of exporting all the energy. Step number one is to develop the energy that Brazil will need in the coming years.

The country has more than 200 million inhabitants and consumption is comparable to that of Germany, with 80 million inhabitants. There is clearly significant potential for growth.

There is a huge push today to electrify economies. The world is going electric and in any scenario we see the need for electricity increasing significantly.

Therefore, our main objective is to develop Brazil’s renewable resources for the domestic market, and we believe there will be demand for this in the future.

And what kind of challenge does Mr. Do you see the development of this industry today?
There is a big difference between offshore and onshore. Over the last two decades, after almost two decades of massive growth in installed offshore wind capacity, the last two years have been very challenging, with high inflation, interest rates and costs rising significantly.

Onshore, particularly in solar energy, we have seen the cost of energy continue to decline. Therefore, we have invested more in onshore than we thought a few years ago, because we see that these resources are more competitive and more robust at this time.

Today we see many companies backtracking on their transition goals. Will Equinor back down?
Our plan has three pillars: continue to invest in oil and gas, but minimize emissions; develop low-carbon solutions; and increase renewable energy.

It’s a long-term plan. The strategy is firm, but obviously the execution varies.

There is more onshore in our plan now than we thought in 2021. But the goals are the same.

That’s where Rio Energy comes in. This acquisition was driven largely by our desire to grow onshore in Brazil, where we see some of the best opportunities in the world.

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X-ray | Pål Eitrheim, 53
Graduated in political science, he joined Equinor in 1998. Between 2014 and 2017, he was head of the company’s Oil Exploration and Production Operations in Brazil. In 2018, he assumed the vice-presidency of Renewables