Chevron CEO Mike Wirth discusses clean energy transition at Aspen Ideas Festival — 6/26/2023

foreign [Music] thank you for joining us today the program is about to begin please make your way to your seats and silence your cell phones yeah [Music] please take your seats the program will begin momentarily foreign [Music] thank you so much for being here it is a privilege for me to be here I'm Andrew Ross Sorkin here with Mike worth of Chevron uh we have so much to talk about uh when it comes to the world of energy when it comes to the world of fossil fuels when it comes to the idea of transition when it comes to ESG and wokism and anti-wokism and all sorts of other things technology nuclear and more and that's what we're going to do over the next 50 minutes and we want this conversation to be as interactive as possible we're even going to get into a little bit I think of what's taking place in Russia over the weekend but here's what I want to start with you if you'd indulge me um there was just an interview that my colleague Rebecca blumenstein of NBC News president did with Mary Barra CEO of General Motors and in that interview Mary Barra said come 2035 GM will not be making light vehicles with combustion engines at all zero and so I'm so curious when you hear that as somebody who's in the fossil fuel business in the combustion engine business if you will whether you believe that whether you say that's not going to happen really uh and if you believe it what you think you need to do about it all right well hey thanks Andrew it's great it's great to be here and sounds like a simple set of questions we've got coming um look let me start let me start with that I actually popped in to listen to a little bit of Mary's comments Mary's a good friend in fact earlier this year I took a ride in the new e Hummer and we went off-road in it and Mary had set this thing up for a group of us and uh they're doing amazing things with uh with their electric vehicle line uh their strategy which she referred to today is to get completely converted on their light duty platforms to Electric Drive trains by 2035. and I think Mary would tell you she didn't go too deep into it now but it's a huge undertaking it's massive retooling and massive new Supply chains that the Jim's working on building from not just the batteries but going Upstream of the batteries to the critical minerals and things like that which have their own set of challenges but I have no doubt that GM's committed to that strategy I think they'll make it and Mary's absolutely committed to it so you think going to make it and do you think that every but and that may be GM do you think everybody's going to make it or when you sit in your boardroom with your other Executives and you say that's the number that's the date that we got to Mark our calendar you say actually that's no nobody really hits the date there's always a delay this or that and we should prepare for it this way well so I'm going to get to the impact on us in a second but you're putting your finger on a really important Point Tesla's had great success uh byd and some of the Chinese electric vehicle manufacturers have made tremendous progress uh rivian is working on you can just go down the list of companies what you can do when you're when you're manufacturing a few tens of thousands or hundreds of thousands of vehicles gets infinitely harder as you and everybody else Endeavor to build millions and millions and millions of these every single year and so I think one of the challenges that that looms out ahead is in fact uh these new Supply chains uh which which or you know originate in uh West Africa in Latin America uh for Cobalt manganese uh lithium uh nickel uh and they predominantly run through China for the processing of these Minerals today uh so the the amount of minerals that are going to need to be extracted and processed are going to increase exponentially over the next decade or two and it likely needs to go on new Supply chains if the issues with China that you didn't mention in your opening set of things we could talk about um remain an issue in the global economy so scaling this gets to one of the real challenges in the energy system which is things that work at small scale how do we how do we scale them up and that's one of the big challenges let me get to the impact on our business which you asked about so uh just a couple of quick facts to ground things transportation is only the fourth largest category of greenhouse gas emissions globally number one is power generation number two is agricultural forestry and Land Management both about 25 percent each of the global greenhouse gas emissions inventory about 20 percent is industrial emissions and about 15 percent is transportation so and transportation includes Aviation off-roads Transportation Marine Transportation light duty Transportation so EVS are working in a part of the transportation Market which is a part of the greenhouse gas emissions inventory if you look at our business today the world used about 100 million barrels of oil a day about 25 percent of that goes into light duty Transportation so even if all of light duty Transportation not just GM but everybody was electrified immediately uh you would have 75 percent of oil demand Untouched by it because that goes into ships it goes into off-road uh mining agriculture um Long Haul Trucking Aviation petrochemicals a whole series of things that cannot be electrified today and so the demand uh for our products is likely to continue to grow even as we see great progress on EVS even as we see great progress on on Renewables because the population of the planet grows the number of people living a middle-class lifestyle continues to grow and all of that is driving energy demand higher can I ask you a personal question sure and I don't know if it's a moral question or I don't know what the question is but it's there are a lot of people in this room and around around the world who are desperate I think for the right reasons um to want to really end um fossil fuels or at least move us in in the right in the right direction I think actually want to think that actually you know oil is the equivalent of cigarettes it's it's a terrible thing for the world and I'm so curious just on a very personal level how you balance these ideas around I think and I think you're you're on the same Mission too to some degree but at the same time I think it would be impossible for you not to want your business to grow and how you reconcile that well first of all um cigarettes are not necessary for the quality of life that people enjoy on the planet today energy is and uh energy if you go back to the pre-industrial area and you look at any measure of Health life expectancy how people spent their time our society has been transformed in the developed World by the availability of reliable and affordable energy it has it has taken people from spending most of their time every day to just working on subsistence in food and warmth to having mechanized Agriculture and transportation and fertilizer and the things that have changed our lives and so the products that our industry provides have enabled the quality of life that people enjoy today in the developed world billions and billions and billions of people on this planet don't live that way and for them a propane burner there are there are between two and three billion people on the planet today that use um biomass animal dung or uh or or wood for indoor cooking and heating and the indoor air quality impact of that is is terrific and so a propane burner is a huge step forward in terms of quality of life right and and health and so uh our products uh enable human progress now look every every product has um consequences the use of it does and we're trying to mitigate those and so the emissions from our products we're trying to reduce we're trying to invest in new technologies that won't rely on fossil fuels it can provide energy with different uh you know attributes so I view it as important for humankind that we continue to develop affordable reliable and ever cleaner sources of energy what do you make of climate activists we might even have some in the audience I don't know usually do when I'm speaking somewhere what's your view look I think there I I understand their concerns we're all concerned about nobody wants to leave a climate to our our children in the Next Generation that is uh that is an unlivable climate so I understand uh their challenges look I'm an engineer I'm a chemical engineer I live in the world of um physics and thermodynamics and economics where we try to solve problems and uh what I try to do is have discussions with people about uh what are the challenges I mentioned earlier um you know the scaling issues on EVS for for the energy transition to be successful and uh and we've seen in Europe you know when there's the risk that that their energy prices are going to go so higher there might not be supplies it changes the discussion so for an orderly and successful energy transition uh we need every solution and so discussions that rule Solutions out narrow they narrow the solution set those I don't think are are productive or helpful second we're going to need solutions that can scale because we've got eight million people on the planet today 10 billion people by the the middle of this Century in a bigger middle class so we need things that can solve problems at scale and um and then that will determine the speed everybody wants this to go fast but we've got to have all the Solutions in we're going to scale these things and that will then set how fast we can go and so to me that's the interesting discussion is how do we how do we harness Technology Innovation markets in order to deliver these Solutions and I want to talk about some of those Technologies but let me ask you this um a number of your competitors specifically I'm thinking BP and shell have recently transitioned their strategies they were very focused uh both internally and I think actually and and definitely externally around being fossil fuel companies that were transitioning Transit transitioning to other Technologies that's what they want it to be and now you're seeing a reversal of that almost a backlash as if the industry went too fast that that might have actually caused higher prices how do you how do you think about that do you think that's true what do you think of of those new strategies well you know I think they'd be good questions for the CEOs of those companies because I can't explain their strategies on their behalf but what I would observe as somebody who competes in this industry uh both of them had set out look we've got a transition strategy there's their transition strategies were different than ours but you don't seem to be rolling back your strategy no we're not because we didn't we said look we're going to continue to produce the products that power the world today and we're going to invest in new technologies that we think are going to be part of powering the world tomorrow uh they had actually both indicated they were going to shrink their oil and gas business pretty aggressively which generates the cash that they invest in these new businesses today uh their shareholders you know didn't respond to that very positively and I think what we've seen is that um the world still needs the energy we produce today right the situation in Ukraine has really brought that to the fore particularly for Europe and I think what's happened is uh both of these companies have recognized you know sometimes I talk about we people would like to go to system B right which is the zero greenhouse gas emitting economy um and today we we have the system that runs 80 of what keeps the lights on the trains running the food cooking everybody arriving here in Aspen on time runs on fossil fuels uh so to go from that to a system that is completely emission free is is you know the the idea this new system is about one percent built and if you start turning off the system that that enables everything that we have today prematurely we run the risk of creating really bad uh unintended consequences and I think this is this is what companies are starting to realize is we have to we have to be able to do both of these things at the same time it's hard it's not easy but I think that they have um acknowledged this pace question and how quickly they can transform their businesses and I think in part driven by again their shareholder response to their strategies that's your related question um water Fink was here yesterday uh from BlackRock uh and he was sitting here with David Ruben on he is somebody who really pioneered as you know the idea of ESG investing investing around environmental uh sustainable government and governance and he said yesterday I don't use the word ESG anymore because it's been entirely weaponized he says it's been entirely weaponized by the far left and weaponized by the far right and I think for the past several years really since the Business Roundtable wrote their letter saying profits are not the only thing we do anymore we we serve all sorts of different constituents that there has been this remarkable backlash that we have seen to the scene to this mostly by Republican politicians over the past year or two that has changed the dynamic not true in Europe but very true in the United States so I talked to Larry on Friday about this very issue interestingly enough and I talked to Larry a lot uh because you know in his letter he writes each year he's been very um specific about some of his beliefs on these things um I still do use the term ESG um and I I keep a book on my desk uh from 1923 so it was published 100 years ago it's called the Standard Oil Spirit our company was standard all the California at the time and it's uh it's a hardback book that talks about the the values and beliefs system for the company a hundred years ago and it talks about protecting the environment at Great length it talks about our obligations to society uh to our Workforce it talks about building uh sanitariums because at the time smallpox was a was a real issue within our Workforce so it talks about our commitment to communities to neighbors to our employees and it talks about good governance and so what I tell people is but you know our company was actually involved in ESG before there was any term ESPN I think good companies have always cared about customers about Supply chains about communities about the impact uh that they have and and how they can be a force for good so signing the brt letter was not a hard thing for me because it essentially uh codified on the behalf of the brt thinks that that our company had been trying to do for for a long time I do think that the uh the issue has become weaponized um by by extreme voices on both sides right and I think you're seeing you you referred to kind of a pushback from the right I think the the left had probably been more vocal on this for a number of years and I do think you're seeing this this kind of pendulum swing back we saw it this year in our annual meeting where we had a number of shareholder proposals that in the past had garnered a lot more support than they did this year so investors I think are calibrating a little bit on this so you know it's a discussion that's evolving it's not going away what's the political piece of this you you've been public and you've said that you wish you had more open dialogue with this Administration around energy policy there are a number of folks that are now planning to enter the 2024 race uh president Trump I should say or former president Trump told Brett Baer recently he said when he first one of the first things he would do if he was the president he said I'd start drilling again when you hear that you say right on do you say that's terrible what do you say well we haven't stopped drilling um you know so so look the us is going to produce more oil and gas this year than it ever has in its history including when former president Trump was was in office so uh where I my last year about this time uh prices were high the Russian invasion of Ukraine had begun and markets were uh concerned that that was going to cut off energy supplies and so you know the prices responded to that and uh the president and others in the administration engaged in some uh I would call it um uh some rhetoric that you know our companies were not in companies aren't interested are not behaving appropriately and he didn't have his facts uh this was about pricing right it's about prices right and um and so um I had a number of different interactions with people in the administration and felt like uh the messages weren't getting through and we really weren't hearing one another and so he wrote a very public letter to me and some other people and I wrote a letter back and um you know we've uh we've moved beyond that but I still think actually the quality of dialogue with this Administration on this issue has improved from the beginning of its uh time in office but it could still be better you've mentioned uh Ukraine and Russia several times I'm so curious what you thought about this weekend as we were getting headlines about what seemed like a a almost Insurrection but who knew what was happening what kind of real-time information were you getting and and what do you think this all portends yeah so uh we don't have any businesses in Russia or Ukraine we've got a partial ownership and a pipeline that comes from a neighboring country through a portion of Russia so it's an area that the world that we pay a lot of attention to um we have um you know we work in a lot of places around the world and so we have to have our own intelligence sources and have a really good organization of people that have access to information and relationships that allow us in real time to understand as best we can what's going on I'm not sure anybody really knows what exactly transpired um you know what were you doing Saturday morning um Saturday morning I was getting ready to go play a round of golf and and I was also in communication with some of my board members who had unique insights I was receiving briefings from our uh our security organization and intelligence information I was watching a number of different news feeds but and but the folks that you have on uh on speed dial we're telling you what that uh this was a serious move that the rastavon Don where they had taken over the military headquarters is only about 200 miles from the terminal I reference that is at the end of this pipeline which flows over a million barrels a day of oil into Europe critically important to European energy markets and one that the White House and our team are in constant contact about because if that were to be choked off that would be a very bad thing for markets so I was getting updates on which direction the activity was moving was it moving south towards where we are was it moving North and uh and then you know as the apparent resolution to this thing was negotiated I was getting updates on the cessation of things uh there are you know both parties here all parties and multiple parties involved are skilled and information operations which sometimes means you fog things up and you don't put out accurate information and so I'm not sure we really have the full picture of what happened I'm not has there been any is there any meeting that you've had to have as a result of this about any decisions that you would need to make no it settled down markets have settled down the um you know the apparent instability seem to have settled down and so no we've not had to take activate any uh exceptional uh actions of this what is your longer term thought though about just the situation with Ukraine and Russia what that portends for the price of of oil the fact frankly to tile these dots together that so much oil is being sold to China and India still from from Russia some of that is coming back through into Europe and whether we should either be doing something about it not doing something about it well what we've seen are the sanctions that have been imposed primarily by the EU and the U.S have uh dramatically shifted the flows of energy they haven't actually restricted the flows or constrained them which was the concern a year ago when prices went highs there was a lot of belief that we actually see supply shortages the policies have been very carefully calibrated to not create supply shortages so the price cap on these various uh bands that are in place are designed to keep the oil flowing and to acknowledge that it's going to flow to other markets other than the EU and the U.S now this is the oil you mentioned India India's got a big refining system and oil that gets sourced from Russia refined in India can end up in Europe and so effectively those molecules have just been reconfigured and then they they get back on a ship and they go into the European market that's why price price oil seventy dollars today instead of 120 which it was about this time a year ago is because the markets are still well supplied there's been a belief that the Russian supplies would be cut off more than they have been and to this point their production numbers are really just about unmoved what they were before the war do you think that the U.S Administration and Europe should be doing something different than as a result you know I tried I stay out of offering policy advice I I'm an engineer and a business person and these are these are matters that we will see then as a business person is there a way to choke off uh profits to Russia via oil without undermining the price of oil and energy and the cost of goods in other places like Europe and elsewhere where our allies and we live that is the intent of what the U.S and the EU have done with their restrictions on insurance and shipping and uh and and tying those to a a maximum price at which Russian oil could be sold I have to tell you in in some of the people in this room are probably well familiar this oil trading markets are sometimes very opaque uh the trading companies and there's a lot of new companies that have come into oil trading in the last 24 months uh the shipping companies uh can be under uh you know kind of uh difficult to understand ownership and there's a lot of money made in working around sanctions this goes back to South Africa and apartheid and uh and and whatever sanctions are put in place to constrain or reshape these markets which finder there are clever people that understand how to how to make money working around that and so there are different opinions about how effectively this has cut you know reduced Revenue to Russia versus just uh having it show up in a different uh a different form let's talk about some of the new technologies that you're investing in 10 billion dollars between 2021 and 2028 uh two billion dollars I think just this year actually before we even get into the technology piece help us with this how do you think about allocating your capital today as it relates to new technologies like this 10 billion dollars versus having to continue Drilling and pumping more oil and what that balance if you want to call it that is supposed to be so I'm going to start at the highest level of capital allocation which is to our shareholders so our dividend is the first thing we allocate Capital to which we've increased for 36 consecutive years the second is to invest both organically and inorganically to grow future cash flows to support the dividend and that investment is agnostic to what type of Technology it's drawn to returns to deliver the cash flow uh the third priority is to maintain a very strong balance sheet because we're in a volatile commodity industry and the companies that aren't uh successful and many of them are not around today find their balance sheets were unsustainable when they hit a point of time where revenues collapsed and then we return cash through share BuyBacks if we've satisfied those first three criteria so we've been very consistent in managing the company under that kind of a capital allocation framework for for a long time when it comes down to investing in in projects to deliver energy to the world we have returns expectations for our traditional business we have returns expectations for new energies businesses which are renewable fuels hydrogen carbon capture and storage other emergency technology so how do you look at the Returns on the new technologies and what they should be and when they may very well come is this more of a venture capital kind of you know we're placing a a bunch of different bets all you know many of which we think are actually going to end up being zero but we're hoping one you know shoots the Moon versus what we know is a reliable produce you know producer of profits in cash yeah so our returns expectations ultimately for the new energies or they've got to compete with our traditional energy businesses today they don't and so we we invest in Venture we're on our seventh Venture fund we've been doing Venture investing for more than 20 years across a whole range of Technologies which could spend all day talking about those I visited one of our Fusion nuclear investments just last week and maybe we can come back to that one we invest in growth stage companies so this is companies that are moving towards commercial application two big companies in carbon capture and storage that we've recently made um nine-figure investments in to to scale and grow their businesses and uh and we're investing in uh you know renewable fuels we last year uh did an acquisition that was a multi-billion dollar acquisition of a renewable uh fuels company uh which is generating returns and cash flow today because there's a more established market for that so ultimately these things to scale up and solve the problem we were talking about earlier on climate we're going to have to mobilize trillions and trillions of dollars of capital in the markets and that capital is return seeking and we can't invest in things like they're not going to but that's what that's what I was going to go with this which is is there any part of you that says to yourself I'm investing in the in the these new technologies because frankly the public wants me to not that left to my own devices I actually wouldn't I'd let the Venture Capital communities and other investors in other places who are investing in those things who are interested in that do that and maybe if if one or two or three of these Technologies actually works and we're in a position to buy one or to invest in it when we actually know more I'll do that but given the political landscape the just even the consumer landscape and what people want out of a company today that you think about this stuff we invest in them because we believe the future of energy is going to be lower carbon and we think there's a place for companies like ours that have uh experience capabilities technology balance sheet project management skills that can help bring these businesses into the market at scale to be viable parts of our portfolio so we're not doing this because we feel so this is not philanthropy and this is not marketing no this is this is running our business I won't take you through the whole thing but you know sometimes we get an energy transition discussion I tell people we've always been in an energy transition if you go back and study the history of it it's never been the same it's always been evolving the new technologies coming in from cold oil to gas to nuclear to hydro to wind to solar geothermal it's always been in transition and so you always need to be investing in things that you can do and that you believe so let's talk about what you think may work you've just mentioned nuclear which has historically been one of the great third rails of the energy world for a very very long time we were commenting outside when I was walking Oliver Stone uh almost uh surprisingly has now put out a documentary in favor of nuclear energy realistically what do you put the probability not that nuclear energy could work but that it could work and be politically palatable in a way where it could it could actually be delivered at scale well it it works today it's you know we see nuclear in a lot of countries around the world today it's been become prohibitively expensive in some places uh but the old generation of nuclear is not what people are talking about today uh small modular reactors on the fission technology side are very different than the historic fission energy the company I visited last week in California is one that's been working for 25 years on Fusion which has always been the Holy Grail right because there's no radioactive waste to deal with it's what powers the Sun the raw materials are an abundance Supply and but it's it's really hard as a physics problem uh this company is on its fifth generation of uh reactor technology they can contain a plasma at 70 million degrees centigrade in in pretty conventional Metallurgy and their sixth generation reactor which will be up before the end of this decade uh we'll operate at 100 million C which is where you can start to actually have a fusion reaction occur and they made tremendous progress I was blown away by the quality of their engineering the quality of their data the way they're using AI now because they've got a they've got to gather an incredible amount of data on trial runs and they're using AI to accelerate the simulation of some of these things so is it going to work we don't know that yet but is it on a path that that nobody could have imagined even a decade ago absolutely so these are the kinds of Technologies we need to support and I believe we're going to find it I'm a I'm a real Optimist are you a believer that politically we can find it meaning nuclear unto itself is such a stigma uh perhaps for the right reasons maybe for the wrong reasons we could debate that but there is such that that debate exists and what would it take do you think to actually make this real if we are serious about climate we need nuclear as part of the solution set it has to be it is it is the Z it has zero greenhouse gas emissions it is a dispatchable base load power when the wind's not blowing and the sun's not shining if you don't want a gas-fired power plant or a coal-fired power plant do you know politicians that are telling you or I have these discussions I'm so happy privately sometimes people say things a little differently than they do in public uh there there are people that are big supporters of nuclear particularly Fusion which again Fusion has been the Holy Grail it's further away than fission is but it there are smart people working on this and I do think we can make that a politically acceptable part of the solution set yes okay the other piece which I think is considered the Holy Grail is carbon capture at a reasonable rate which is to say that carbon capture ostensibly works today maybe but the cost of it is so astronomical that the talk of doing it at scale is almost impossible so you need to step back and talk about Define carbon capture we do carbon capture today we store millions of tons of CO2 a year today that we capture off of a project in Australia one in Canada and we store it safely in the earth these come off of relatively concentrated streams of CO2 where it's easy to capture because you've got high CO2 concentration so there are certain industrial processes that have that and that but vent the CO2 into the atmosphere historically that's where you start because that's the most economic the Technologies exist to do that the most difficult is to take it out of the air that we breathe right right because that's .04 of one percent of this error is actually CO2 and so you've got the most dilute Source the technology and the thermodynamics on that are simply overwhelmingly difficult and therefore they're expensive we've invested in direct air capture companies one in British Columbia that's got great technology that we're working with them on some of one of our uh you know peer companies is aggressively moving into direct air capture but it's hard and and again you're fighting the fundamental laws of physics and economics there which have not yet been repealed and so as an engineer do you think that they ever will be repealed and the reason I ask is a number of companies including Microsoft alphabet another number of big technology companies especially this is right around the Business Roundtable statement and the like started putting out some very aggressive um plans for where they want to be as it as it pertains to energy and some of them require effectively rolling back not not just stopping uh producing carbon but rolling back their carbon usage to when they were first founded for example right which effectively means you have to somebody's gonna have to figure out a way and it's not just putting new trees in the grounds to actually get the carbon out of the atmosphere to make those numbers work so there are a lot of these statements and pledges that have been made many of them by companies whose primary uh you know the largest source of their emissions are you know the electricity to run their computers and their lights and their business travel and the like so they're not heavy inherently heavy emitting uh organizations but their strategies are around nature-based offsets uh investing in CO2 capture from there and I think when the pledges were made you know at least some of the CEOs I've talked to probably didn't fully understand the challenges inherent in some of that and uh do you think they're not going to reach this well I don't want to say that I believe I I believe we are going to address right but as an engineer you said there are certain certain laws of physics which have to effectively be undone well no you just look you the things that we take as commonplace today walking around with a super computer in your pocket um you know 20 years ago 30 years ago people said this is impossible so uh we're we're in a period of time where the Innovation and progress in in technology and science has never been faster and so I don't rule anything out but but all the all the technologies that we work on whether it's your your iPhone or whether it's Fusion they all still obey these physical rules of the world and smart people figure out how do we do that better and so I'm I'm I'm a technology Optimist I believe that we're going to find solutions to this and we've harness markets to scale these things and uh and find solutions that we can't even Envision today I do want to open up to the audience sorry I will in just one second but I do want to ask you this when you sit with your board and talk about what the world looks there's a company that you want I imagine to be around 100 years from now right we're in 2023 you'd like it to be around and you know three Thirty Thirty twenty three but let's just go out Mary Barr is talking about 2035 let's go to 2050. let's go to 2070. when you because you're also making Investments that have to have a long-term payoff even when you're Drilling multi-decades multi-decades first of all how far out are is your farthest out sort of prediction or or model for any of your Investments currently and when you think about what the company looks like in 2050 or 2060. what do you imagine it would be yeah so we're getting ready for our annual board strategy off-site so so we're working on this right now uh we look at the world out into 2050 in those discussions uh we look at the the primary drivers of energy demand which are population GDP growth technology policy uh consumer behavior and um and we run scenarios and we evaluate what those things look like and then where can we compete what what do we have the ability to do you know one of the things we've not gone into in a big way are wind and solar not because we don't think they're good Technologies but we don't bring anything to wind and solar we don't manufacture panels or turbines uh installing them is something that that big engineering and construction contractors do and um and we don't we just don't bring in a unique capability so liquid fuels carbon capture and storage geothermal things that leverage capabilities that that our organization has or the things we look to see where can they grow what's what use cases do they address what problems do they solve and by 2050 I think our company will still be in the oil and gas business I think these other business renewable fuels will be bigger carbon capture and storage will be your hydrogen we haven't talked about hydrogen where's hydrogen well hydrogen is the the cost on hydrogen is tough and hydrogen has a challenge because they're kind of broadly speaking you'll hear people talk about hydrogen using colors gray hydrogen is what is manufactured today with a pretty heavy emissions footprint what's called Blue hydrogen would capture those emissions and store them but it's still the raw materials are fossil fuels and then green hydrogen is made from electrolysis of water with Renewable Power we're working across all three of those we're investing in all three of those uh I hope to have some Investments some sizable Investments to talk about soon that we're working on on a green hydrogen project here in the United States we've got blue hydrogen projects we're working on that may be a little bit further out just given the complexity of putting them together but that would be part of our business uh in in 2050 for sure costs will have come down the technology will have improved well markets will grow for this there's not a lot of markets for hydrogen right now it goes into goes into fertilizer and chemicals and refining primarily we've got to find ways to apply it in transportation in cement and steel and other heat intensive manufacturing processes all of which are being worked on fabulous let's open up for questions I've still got more but I do want to give everybody an opportunity if we can Brianna in the front here we'll get you a microphone thank you I think that last discussion piece we're talking about really leads into this question so it's great timing so right now like as you mentioned the market for energy is transitioning like with General Motors making promises like that but regardless of domestic production China is still leading the world right now with the resources and the tools necessary to make that transition do you feel like you're missing out and letting China win in a way in terms of the Green Revolution by not jumping on the bandwagon like other companies well I think China's a big and complicated question geopolitically militarily and China has um you know a heavy role for the government in their economy and they've directed resources into some of these Technologies as a high priority the United States has tried to do the same thing with the inflation reduction act which will bring a lot of incentives to invest in some of these Technologies and bring it here to the U.S and and some of these Supply chains I talked about earlier on some of the metal and rare Earths that are essential for this that now are mostly processed in China the idea that we'll find ways to bring those Supply chains into the U.S really sits at the core of the IRA there's a lot of people working on that now so I think you know generally speaking industrial policy by governments is something the U.S is kind of backed away from but the the inflation reduction acts a big step into that the chips Act is another one and a lot of that is about I think competing with China economically particularly in these strategic sectors of the economy will participate in uh they're incentives for hydrogen carbon capture there that we're working on and uh and trying to make those Investments here and we do a little bit of business in China and probably always will uh but it's not one of our bigger markets to create a question back there where the microphone is and we'll try to come up here and come around hello my name is Claire I work at check my ads um the thing that we see at check my ads is that next year there are going to be 50 elections around the world we are in the midst of an acute and Urgent Global authoritarian power grab and from a purely business perspective how do you see that threat or opportunity thank you yeah uh thanks for the question Claire uh we work in um you know on every continent except Antarctica we work in places that have um governments that you know you would say through the lens of an American uh set of expectations are are imperfect for sure and um and yet you know we're a we're a guest and an investor in these countries we have to deal with them on the ground as they are uh so it makes it hard we follow you know U.S laws we try to bring our values on things like safety and protecting the environment uh to the places where we work everywhere our standards are not lower in a country that has lower standards we try to help them raise those standards uh we don't pay bribes we you know there's a whole series of things actually that some companies that we compete against under their country's laws are able to do make payments that we we won't make so you have to you have to take a look at each one of these things to to one of Andrew's earlier comments um the the life cycle of our investments tends to be multiple decades and so we have to look through any particular political uh moment in a country or maybe globally as you refer to it and look to the long term and have some assessment on what are the geopolitical risks and how do we manage our way through those including even here in this country to to some of the comments as well so the the administration in in any country at any given point in time we deal with in the short term but longer term we really have to take a look at do we think we can operate in this country do we can we operate at our standards and our uh our values and expectations and if not uh then it's a place we probably shouldn't be doing business and there are times we slow down we're in Venezuela right now as one example and um and we're not investing anything in Venezuela other than social money to try to help people that are living very difficult lives and safety and protecting the environment on the operations they're hoping for a better day when um when investment can come back you see a moment where you say you know what what would be the circumstance would you say we got to get out of here yeah I mean it's it's a hypothetical because they're all uh unique we're exiting Myanmar right now as an example where the circumstances have led us to conclude that the business we're running there and the challenges that come with that are not compatible and and so we're leaving so it it comes but it's all very situational in fact specifically just related the shift in in the consumer mindset the idea that we do talk about ESG that people are much more mindful of you know which country is an authoritarian country versus a democratic country or this or that and which companies do business in this country versus that country has that changed I mean that's that's clearly changed just the mindset has it changed the way you think you should operate the business as a result living with us for a long time uh because we the resources are laid down in some places that aren't um very Advanced economically politically and um and so we've had to um understand how do we we don't align ourselves with politicians of any particular stripe in any of these countries we try to be there for the people of the country and add value to the quality of life and development of of the economy and we pay our taxes we follow the laws but we don't get involved in the politics per se because they can change I think we have a microphone here why don't we go oh you're there why don't we come down here and then we'll come around to you sir hi John Michaelson electric ladies podcast um first of all Chevron announced that they would go Net Zero by 2050 and you haven't talked about that but also at the risk of touching the third rail Chevron made over 35 and a half billion dollars in net profit in 2022 why should our taxpayers go to oil and gas subsidies when you guys have all that money to to do what you need to we don't why should we subsidize that especially we are looking for a cleaner climate yeah so look I don't I'm not a big fan of subsidies uh but I don't write the laws either and so we have to take the laws the politicians put out there and we operate within those laws our industry actually doesn't get subsidies it gets there's a this is a uh you know a claim that often gets made uh you know we have we have tax policies that apply on uh depreciation or research and development apply to Industries across the entire American economy that you know follow those same laws so I don't think that uh subsidies are you know should be a part of a policy uh you said markets should sort out winners and losers let technology customers and competition make those choices I do when I visit that's absolutely I that's a big part of the conversation with congress with the administration is none of us are smart enough to decide which Technologies are going to win let's let the market sort these things out and like competitions sort of out and get rid of subsidies gentlemen in the Hat thank you uh Dave Hodgins sistento group so I guess coming back or continuing on the topic of subsidies you touched on Ira I wonder how any of the the credits that are in there impact any of your Capital allocation decisions in the near term and related to that the methane capture fee how that impacts the economics of of existing projects if if at all I'm curious yeah so I'll start with methane uh we tend we're in the um the best performing decile on methane emissions so we we have a very we don't have routine flaring and venting we've got aggressive use of everything from aircraft to drones to satellites to ground-based detectors on methane so our methane emissions profile is very very low so the fee I think is going to be not an issue for us it's really targeted people that have got heavy methane Emissions on your first question what the some of the tax incentives in the ira will do is they will take investments in Technologies like hydrogen and like carbon capture that are today uneconomic that won't generate a return they'll make them more attractive they have you know they Sunset they don't last forever there's a window of time that a project has to start up and there's only a window at a time when those tax incentives would apply about what they what they may do and it's it's premature to say this but what they may do and I think what they're intended to do is encourage investment in things that are going to bring Technologies down cost curve make the Technologies more cost competitive which means then they can find a place in the market without that same level of subsidy foreign we participate in something called the environmental partnership which involves a lot of companies especially smaller companies that might not have the same practices Technologies and standards and try to help uh you know Advance those to to everybody in the industry hi thanks again Michael Stubbs from Los Angeles um could you speak to the recent corporate accountability report that deemed 93 of your carbon offsets is worthless or junk I I can't because I haven't seen the report I'm sorry can I ask you a question this is a related question though I think there's a I think there's a a real and genuine conversation to be had about carbon offsets more at least broadly if not in respect directly to Chevron and my question to you is do you think that the offset Market is a real Market is a genuine Market or that there is a lot of uh better word Shenanigans going on in that space well any Market that is created by kind of Fiat as opposed by real natural Supply demand forces is prone to you know some of the the kinds of things you're talking about um this is a market that is a nascent Market just to explain that this is this is a market where people are selling uh trees for example uh would be you I don't know if you you want to explain how you guys do it for example we're not doing a lot of it right now what we're actually doing is we're looking at how that would fit into our our portfolio in the future but the idea is there's something called nature-based offsets where you would go into Mangrove restoration which we have done uh you can you can reforest areas that have been deforested uh you can use cook you you can help cook stoves get into markets where they're burning uh very um greenhouse gas intensive fuels and reduce that and then within your overall accounting for your greenhouse gas emissions those offset other emissions that are more difficult the conundrum being that there are forests that for example were already conserved that are being counted in these kinds of collections two and three and four times in ways that make them untrue the standards for additionality permanence verification is a whole series of principles that need to be applied if you're going to have a reliable high quality offset market and there's a lot of work going on on that but it needs to be a market that has very high standards of Integrity or you're going to find all kinds of problems like this we are going to run out of time let's seeking one one more question right here in the front hey Mike Sid Wilson presidency of the Hispanic Association on corporate responsibility my question is um you know you and Chevron have always been you know great champions for d e and I and you have an amazing Chief diversity of Presidential Center Jones given the current environment where we're seeing more and more uh pushback against Deni what's your message to Corporate America as to why it's so important to not only stand strong and supportive diversity equity and inclusion but if anything to double down on dni rather than hold rather than pull back I think the the business case for Deni is um is overwhelmingly uh evident we need the skills and talent of people from all different backgrounds with all different experiences with all different ideas uh if we're going to meet these big challenges that we're talking about today and so you need to Source people we operate around the world we need people that come from every country every culture every educational discipline every ethnic and racial background and we need to and then we need them to be their best selves when they're at work and we need an environment where they can speak up where they can share their ideas where they feel comfortable and safe in helping to solve these problems and so if we can't have that we won't have the talent to deal with these big challenges so it's why I appreciate your kind words about josetta our chief diversity officer and it's why we've been on this for for my entire career there's always more we want to do there's more we can do but we're not turning away uh because it's it's part and parcel of our business strategy and our our success depends upon it final question it's curveball your golfer live golf PGA most most powerful oil producer in the world should they merge Andrew I um I'm in the uh I'm an engineer who plays golf I'm going to let others you had a nice interview on this I think I think the rest of this is still being negotiated and to be determined and so I hope for the good of the game that there's a solution here that works for everybody Mike work thank you for the conversation [Applause] [Music] thank you [Music] this evening [Music] foreign [Music]

Channel: CNBC Television

Views: 11,870

Keywords: CNBC, business news, finance stock, stock market, news channel, news station, breaking news, us news, world news, cable, cable news, finance news, money, money tips, markets, nyse, investing, traders, trading, stock trading, dow, s&p 500, stock charts, live markets, stocks to buy, stocks to trade, stocks and bonds, stocks and crypto, stocks explained, markets live, markets news, markets cnbc, markets explained, investing in stocks, investing 101, investing basics

Id: s7z10zxJvqc

Length: 53min 40sec (3220 seconds)

Published: Mon Jun 26 2023