Good afternoon, everybody, and welcome to Equinor's ESG Day for investors and analysts. We have participants here in the room at Fornebu and also digital participants. You are all very welcome. My name is Bård Glad Pedersen. I'm heading up Investor Relations in Equinor. Safety first. There are no fire drills planned for today, so if we do hear an alarm, we will evacuate through the emergency exits that are marked with the green sign around this side of the room. When you get out, please walk away from the building and spread out. Today, we will have two sessions on the program. First, we will have presentations from our CEO, Anders Opedal, and from Jannicke Nilsson, our EVP for Safety, Security, and Sustainability.
After those two presentations, there will be a Q&A session with Anders and Jannicke, and we will take questions both from the room and from digital participants. We will have a break before the second sessions, where we will have presentations from Pål Eitrheim, who is EVP for Renewables, Irene Rummelhoff, our EVP for Marketing, Midstream and Processing, and Philippe Mathieu, the EVP for Exploration and Production International. There will be a Q&A also with Pål, Irene, and Philippe. I think we are ready to start, and I give the floor to you, Anders.
Thank you very much, Bård. It's really good to see you all. I've been looking forward to this event. Many of us met during our capital market update. I'm pleased to see an even broader group here today, both at Fornebu and also virtually. We have called this day Energy, Sustainability, Growth. At our capital market update in February, we said that we will grow our cash flow and become stronger, transition and become broader, and cut emissions and become better. Today, we will further elaborate on how our growth plan, our energy production, and our sustainability focus are integrated parts of our strategy. I will focus on three key messages. Safety and sustainability are key business enablers. Our integrated sustainability approach provide competitiveness and contributes to long-term value creation. Collaboration is key to progress in the energy transition.
In Equinor, we always start our meetings with safety as a team. I will do so also today. The energy transition comes with new opportunities and new challenges, also when it comes to our most important task, safety. In the pictures behind me, you see the administration building for our CO2 transport and storage facility, Northern Lights, on the Norwegian west coast. Northern Lights Phase One is on track to be completed by end of 2024. It is the first commercial CO2 storage facility in Europe. When we design a new facility like this, we use the experience and expertise from our industry. We apply our framework for major accident prevention, building barriers to prevent incidents, and to mitigate the consequences if incidents should happen. The administration building is, as you can see, built on stilts.
Should a leak occur from the storage tanks, the cold CO2, which is heavier than air, will accumulate on the ground and move towards the sea beneath the building. This safety design avoids hazards, making it cheaper to build and safer to operate. We know that CCS will be key to cut emissions and reach climate ambitions. Many companies are now positioning to play a role in this area. We have almost 30 years of industrial CCS experience. We know how to manage the CO2, transport it, and store it safely. This is an important qualification when developing new solutions. We believe this gives us a competitive advantage. Safety is at the core of all our activities. Our Energy Transition Plan is our action plan as we transition.
It is part of our strategy and provides direct directions for Equinor. Our sustainability priorities, net zero, just transition, and a nature positive approach are integrated principles across the portfolio and part of our decision-making processes. As we change, we provide visibility for cash flow growth from $20 billion after tax last year to more than $26 billion in 2026-2035. We enter new value chains and markets with discipline and value-driven approach. We are becoming an energy company with a broader energy offerings and lower emissions. At our capital market update, we demonstrated how our strategy will enable us to deliver an expected return on capital above 15% to 2030 and target around 15% all the way to 2035. This strategy also enables transition and competitive returns in a low-carbon future.
Today, we bring more granularity on the building blocks for reducing the net carbon intensity of our products by 40% in 2035. This includes Scope 1, 2, and 3. Solving for climate must also address the world's need for energy. This metric measure how we deliver energy with gradually lower emissions. Paul, Irene, and Philippe will go into more detail on each of the actions. We are optimizing our oil and gas portfolio to maintain high production of energy while lowering our emissions. We will develop and deliver renewable projects. Significant growth in this area will only be possible if we can achieve competitive returns. We will maintain discipline and have demonstrated in auctions that we are not willing to compromise on value creation. Carbon capture and storage will enable our customers to lower their emissions. This will contribute significantly as the CCS industry commercializes.
Over time, we also aim to deliver decarbonized energy to the market, such as hydrogen, ammonia, and gas to power with CCS. We also believe that in the future, a larger share of oil and gas will be used for non-energy and not be burnt. Since 2015, we have delivered a 30% reduction in our Scope 1 and 2 emissions while maintaining energy production at a stable level. We plan to deliver at least 90% of our 2030 ambition through absolute emission cuts. In 2023, 20% of our gross investments were invested in renewables and low carbon solutions. Finally, on net carbon intensity, we have achieved a small decline towards our ambition. As our renewable projects come in operation towards 2030, we expect a significant drop in net carbon intensity.
This will further decrease as we scale up CO2 transport and storage towards 2035. Our transition will not be linear, but the direction is clear and our strategy is firm. Our oil and gas portfolio is expected to deliver a strong cash flow from operations of around $20 billion after tax all the way to 2035. This is based on a highly competitive portfolio, robust towards lower prices and possible decline in demand. Our oil and gas projects coming on stream for the next ten years have an average breakeven of $35 per barrel, payback time of 2.5 years, and upstream CO2 intensity below 6 kg per barrel. Since 2015, we have cut around 5 million tons of our own emissions.
Energy efficiency has been a large contributor, along with portfolio changes and electrification of new fields such as Johan Sverdrup. In 2023, we implemented 82 big and small CO2 reduction initiatives across the portfolio. This led to emission cuts of almost 400,000 tons, equivalent to NOK 500 million in saved annual OpEx. Let me give you an example of a recent improvement project that will add to our results in 2024. Heating energy optimization, a project initiated by our technology experts in Porsgrunn, identified a potential for reducing emissions at Oseberg B. They work together with operations at Oseberg B and Kårstø, optimizing operational parameters. Together, they have demonstrated that it's possible to reduce CO2 emission at Oseberg B by almost 40,000 tons with a saved OpEx of approximately NOK 190 million per year.
We have a pipeline of projects to half emissions by 2030. Like Hywind Tampen, that will have full effect in 2024. Troll West electrification that can reduce emissions by 450,000 tons per year from 2026. Snøhvit Future, which is expected to reduce 850,000 tons annually. In 2023, our CO2 intensity was 6.7 kilograms per barrel. This is significantly lower than the reported industry average of 16 kilograms CO2 per barrel. Low CO2 emissions will be a competitive advantage, as we will also hear from Jannicke. Philippe will tell more about how we work to cut emissions in our international portfolio. Carbon capture and storage will be important to reach the goals of the Paris Agreement. Equinor has safely stored CO2 for almost 30 years.
On our capital markets update, we announced an increased ambition for CO2 transport and storage capacity to 30-50 million tons annually in 2035. This is significant. 50 million tons are equivalent to the current total emissions of Norway. We believe that the profitability and its competitiveness will strengthen as CO2 prices increase, regulations tighten, and as CCS technology industrializes at scale. Irene will come back to this later, but please allow me a personal reflection. I grew up in Sauda, a small town on the west coast of Norway, where everything was centered around the smelter factory, Smelteverket. In Europe, 3-4 million people work in industries where emissions are hard to abate, as steel, concrete, and chemicals.
One of my personal drivers for succeeding with carbon capture and storage is the role it will play for value creation, for jobs, but also for families and local communities. This is important to make the energy transition fair, inclusive, and more just. At the same time, we will create value for Equinor and our shareholders using the competitive advantage we have. Last year, we added 8 GW to our renewables project pipeline. This year, we expect to double the power generation. This is possible due to early access and projects in execution. We are firm on our strategy, flexible in execution, and have adapted to market conditions. We pursue both onshore opportunities and offshore wind. Together with our partners, we develop own projects, like the solar plant Mendubim in Brazil, and the world's largest offshore wind park, Dogger Bank, in the U.K..
We acquire projects and companies like Wento in Poland and Rio Energy in Brazil. We use our trading capabilities to enhance value from merchant projects and project financing to achieve higher return on equity. We showed at our update in February that both our solar projects in Poland and Dogger Bank can achieve 12%-16% nominal return on equity. Since then, we have progressed on Empire Wind. We got significantly improved terms in the New York fourth bid round. The next step, our final investment decision and project financing. We now expect 12%-16% nominal return on equity also for offshore wind at the U.S. East Coast. We plan to farm down again and bring in a new partner, and this can create further value uplift.
Towards 2035, our ambition is more than $6 billion in cash flow after tax from renewables and low-carbon solutions. Renewables are vital to transform the energy system, but also comes with their own ESG challenges. We work to minimize impact on nature and do studies to facilitate coexistence. On Empire Wind, we have deployed buoys with acoustic sensor to monitor whales to avoid ship-to-whale collisions in the construction phase. In Poland, at our offshore wind park, Baltic, we collaborate with partners to develop jobs and skill opportunities for local communities. We use these initiatives to find the best solution for existing and future projects. Let me conclude with the following. To progress in the energy transition, society as a whole has to move in the same direction. We see progress in mindsets, policies, projects, and technologies, and still we have a long way to go.
Progress is dependent on collaboration between many parties. No one is able to or responsible for taking on the task alone. It is hard work by many over time. We will need political will and stable framework conditions to ensure progress at scale. Customer must gradually demand product that have less impact. Equinor will do its part, and as I put forward today, we are making progress. Our approach to sustainability provides both competitiveness and long-term value creation. Jannicke will elaborate on this now, and we will take some questions afterwards. Pål, Irene, and Philippe will provide deeper dives from their perspectives. Now, Jannicke, the floor is yours.
Thank you, Anders. It's really great to be here, and good that you give Anders an applause for a good message. Safety, security, and sustainability are key business enabler and are integrated in everything we do. They are our license to operate and key to succeed in the energy transition. I will focus on three important topics today. One, the execution of the Energy Transition Plan. Two, how we integrate ESG into governance and decision-making. Three, how we work with our suppliers and partners to deliver on the transition together. To deliver on our strategy, we must get the fundamentals right. We will only succeed in delivering on the net zero, the 50% reduction, and the 40% reduction if we manage to safeguard our people, protect all our assets, and ensure a just transition for people and nature.
On safety, we do have a positive trend, reducing the number of serious incidents with 25% the last five years. Last year, we also had a fatality, and also this year. We can never rest. It requires continuous effort to further improve, to make sure all of our people are safe every day. Equinor's gas supply has become vital for Europe's energy security, and we are delivering around 20% of the gas to Europe's gas demand. Being a reliable energy provider is a role that we take very seriously. We have very close collaboration with authorities, and we have strengthened the security measures on our assets and also on the infrastructure. We also need to manage our impact on people and nature. How we conduct business is as equally important as what we do.
We have 50 years of experience working alongside fishery, complying with strict environmental regulation, and creating value for societies. We will use this to our advantage when we move into new value chain and also into new countries. We have an extensive portfolio of ongoing projects, and I would like to highlight a few examples from 2023, also to underpin the message from Anders on how we are progressing on the Energy Transition Plan. Last year, we reached several milestones, as we have listed on this slide. We completed the Hywind Tampen, which is providing one-third of Gullfaks and Snorre energy with floating offshore wind. Per year, this is saving 200,000 of CO2 emissions, which is the same as 100,000 fossil fuel cars. We completed electrification of Gina Krog, and we also got approval to electrify the Snøhvit Future.
This will really deliver results for all of us. We have already reduced 30% of our emissions since 2015, and with this new project, we will also continue to reduce our emissions towards our ambition of the 50% reduction in 2030. In parallel, we are increasing our investment in renewable and low carbon solutions, and we ended at 20% of our gross investment in 2023. I would like to highlight that these investments do not include electrification or other projects to reduce the Scope 1 and 2 emissions. Last year, we demonstrated our willingness to invest in the transition by also acquiring Rio Energy and BeGreen. Altogether in 2023, we added 8 GW to our renewable pipeline. We also acquired 25% interest in the Bayou Bend, which is a large U.S. CCS project.
All together in 2023, we added a potential CO2 storage capacity of 9 million tons per year. We are starting to see the result of our investment over time. Last year we had a first power from Dogger Bank, and the Northern Lights will be ready for operation this year. We are committed to deliver energy with lower emission, and our ambition is 40% lower net carbon intensity by 2035. The energy transition is not a sprint, it is for sure a marathon. It takes time until we invest in renewable and low carbon solution until it materialize into new energy production or CO2 storage. That's also why you see slower progress on this indicator.
However, we do expect to grow tenfold in renewables towards 2030 and have a storage capacity between 30 and 50 million tons of CO2 per year by 2035. We do have a strong portfolio, and we will focus on value over volume as we would deliver towards 2030 and beyond. We have a long-standing history as an industry leader on carbon efficiency with an upstream CO2 intensity which is less than half of the industry average. We're also an industry leader on methane intensity with 0.02%, which is around one-tenth of the industry average. Scope 1 and 2 emissions from oil and gas production account for around 10%-50% of the total oil and gas related emissions. This is also why it is important for us to continue to reduce the emissions from our own production.
The International Energy Agency also recognized this. Last year, they had a new framework to assess all the oil and gas companies, how we are aligned with their net zero scenarios. The first criteria for alignment are the company's performance on the Scope 1 and 2 emissions. The second criteria are looking for the company's investment strategy. Investment in new oil and gas production are not fully aligned with IEA's net zero scenarios. For the company that are continuing to investing in oil and gas production, the company are assessed based on the share of investment in the transition. These metrics are very well aligned with the metrics Equinor use to measure our progress. As you can see on this slide, we are according to this framework, we are quite well positioned in the upper right corner, the green upper right corner here.
I started my introduction by saying that safety, security, and sustainability are integrated in everything we do. We understand the importance of integrated ESG at all level, from strategy, risk and governance to performance and incentives. The board have the overall oversight of environmental, social governance issues and risks. The safety, sustainability and ethics committee review the policies, the risk, performance related to safety, security, ethics, sustainability and climate. Our board members have a broad experience and competence including ESG. They represent different nationalities and have a diverse background for both private and public sector. In addition, we have employee selected board members representing the workforce. The board annually assess its ability to follow up ESG issues and to understand climate related financial risk and also opportunities. To deliver on our transition strategy, we need robust performance framework.
On this slide, you can see key indicators that are linked to remuneration, including climate and safety indicators. Our CEO and the broader leadership team are also assessed holistically on safety, security and sustainability. This is to assure alignment with our Energy Transition Plan and commitment to creating a long-term value for our investors. Through our financial framework, we focus on value over volume and maintaining robustness also to lower prices. We do apply an internal carbon cost to all oil and gas investment. We also assess CO2 emission and breakeven to ensure robustness to climate risk. We have an attractive oil and gas portfolio. Key project coming on stream within the next 10 years have low breakeven, short payback time and low CO2 intensity.
By combining a robust oil and gas portfolio with high value growth in renewable and low carbon solution, we will be able to create value in many different scenarios. Since 2016, we have assessed transition risk by comparing the net present value of our portfolio based on Equinor's price assumption and comparing that to the price assumptions in the IEA's main scenarios. As you can see on the bottom part in the middle here, we do see a reduction in the portfolio value in two of the scenarios.
This is mainly due to a sort of a steep drop in commodity prices in the net-zero emissions scenario, particularly towards 2030, where IEA are assuming a 50% drop in oil and gas prices. Our oil and gas portfolio low breakeven and short payback time, combined with significant flexibility are positioning us very well to remain robust. In this stress test, we do not adjust. In reality, we would of course adjust and optimize in changes to the price situation. We also assess our portfolio if it's exposed to physical climate risk. The blue dots are representing our offshore portfolio where wind, and therefore also the waves, is the main hazard. The green dots represent our onshore asset, where wind, heat, wildfire and flooding are the main hazard. As you can see from this plot, we have very limited exposure to physical climate hazard.
Our goal is to build a resilient portfolio. The hub include detailed data set for a wide range of ESG topics, including asset-based climate data. Our sustainability performance and reporting are recognized by external rating and benchmark, including CDP, MSCI, and also ESG hundred. To succeed in the energy transition, safety, security, and sustainability must be at the heart of everything we do. We firmly believe that by working together and be transparent, we build trust and show our commitment to create value and a better future for all of us. Thank you.
Thank you, Jannicke, and thank you, Anders. We are now ready to start the Q&A. Before we move in, let me just say that there is a QR code on all the tables. If you scan that, it gives access to the presentations from today. We will take questions both here in the room and from virtual participants. Here in the room, it's easy. You raise your hand, and you will be on my list, and then you will get a microphone to ask your question. I ask that you also introduce yourself when you ask. For virtual participants, you have received an email with a separate link to click on if you want to be in the queue to ask a question.
We also take questions in writing, but obviously prefer that you ask yourself, so we will prioritize those. I think we are ready to start. I think, Teodor, you had your first hand up. Teodor Sveen-Nilsen.
Teodor Sveen-Nilsen, SEB Capital Markets. Thank you for presentation, and thank you also for hosting ESG Day. That's very useful. So, two questions from me. I just wonder when you set out your energy transition strategy, how much do you actually look at your European peers? And if there's any particular companies you're following more than others, which companies are that? Then, maybe a personal question to you, Anders. Of course, most of you in the management group have been in the oil and gas business for many decades, maybe not so much working on renewable projects. I just wonder where you seek advice when you set out the energy transition strategy and also make business decisions? Thanks.
Thank you. Good questions. European peers. Actually, I think when you work a strategy, you have to start with the position you are at as a company, because copying someone else is never a good recipe to succeed. We with the climate change and the need for energy today and oil and gas for a long time, at the same time, there is a need for more decarbonized energy in the future. We have looked at where can we play a role, where we do have competitive advantage, where do we have expertise. That's why we ended up with offshore wind, as we have started for a long, long time. I worked in my first offshore wind projects, I think it's 13, 14 years ago now.
At the same time also with hydrogen and particularly CCS. We have looked at, you know, how can we develop a business out of this expertise that is also then lowering the emission from our own production of oil and gas. At the same time, we grow new business with the new business areas. That's how we have developed it. That's why you will see that the Energy Transition Plan from company to companies are different, and by some of the American companies that are using their competitive advantage.
I think that is really kind of how we have worked as a group in a corporate executive committee together with the board. When it comes to renewables and seeking advice, we work very closely. We're actually with many partners like we have done in the on the oil and gas business working with other COs in the oil and gas business to develop oil and gas project. It's the same, meet regularly with utility companies, pure play renewable companies, discussing industry trends, discussing how supply chains evolve, et cetera. At the same time, using other sources like experienced people and particularly banks, investment banks, et cetera.
A broad set of external companies and institutions are, you know, what I and the rest of my team on a daily basis discuss with and bringing ideas into the company.
Can I just add a little bit on the Energy Transition Plan? We had a process late 2021 and beginning of 2022 before we launched ETP. Of course, at that time we had a lot of dialogue with all our peers to see how they were doing, how we were doing. Should we go on the Scope 1 and 2? Should we go for the operated emission or should it be our own emission or should it be more like related to the equity? The net carbon intensity, the definition you will see from the different peers is not exactly the same. We do compare notes in a way to help each other so that we are progressing together.
Now when we, everybody is doing, not everybody, but several companies are doing an update, of course, we need to discuss and see how we can also learn from each other. We have different strategy and we have different portfolio. Sort of some of the fundamentals in the ETP, we see how we can compare notes and help each other.
Thank you.
Could I have one final question?
I think to cover.
It's very specific.
To cover as many as possible. Let's do the round and then raise your hand and we return to it. The next I have on my list is Arild Skedsmo from KLP.
Thank you and thanks for the presentation. You already introduced me. You mentioned average break-even cost and payback time. I'm not sure if you meant average on both of them or just on the two of half year payback time. I was interested in your thinking on those projects are above the average. What's the strategy? What's the thinking? What's the criteria for moving into higher cost, longer term projects? If that's an entry point to sort of longer term infrastructure investments that will tie into production in the longer period as well, particularly or both in abroad and for Norwegian conventional stuff, particularly if this relates to your thinking for the Barents Sea.
Thank you. Yes, as I said, this is the average portfolio of 35 in breakeven and 2.5 years in payback time. Obviously, some are better and some are a little higher. Even if a project is better, we have the mindset of ensuring that, you know, how can we make it even better then as well? How can we find new ways of the concept? Can we reduce the breakeven, shorten the payback time, taking down the emission from this project? That goes for those that are below the average and those also that are higher. As you have probably seen, that we have postponed some projects and FIDs or projects by Equinor and Wisting.
We clearly saw that the cost was moving towards higher level due to cost increases in the supply chain. We said, this is not good enough, not robust enough at the current time. Let's see what we can do to improve those projects in terms of cost break even and payback time. This is what we do for the whole project portfolio, not only oil and gas project, but all the projects that we do have. That's kind of a toolbox we have developed after 2014 and the STEP program that Jannicke was actually accountable for. This is applicable for all projects, including projects also, in the Barents Sea.
Thank you. I think the next one is from Xander Urbach from MN and Climate Action 100+.
Thank you. Thank you also for providing the granularity on kind of getting to the 2035 CO2 intensity target, because it was one thing we've been asking for, and thank you so much. Diving into that, looking at how much CCUS will contribute to that target, and currently the framework that Greenhouse Gas Protocol does provide and kind of international standards do not let you account that fully in your Scope 3 target. Looking ahead, guidance is going to be provided. How confident are you that this guidance will kind of suit your needs in getting to that target? Also looking at, for example, Shell, who has now dropped their 2035 target. You're industry-leading now with that target, I think.
They dropped it because they weren't able to include that they thought, or one of the reasons at least. Maybe some reflection on that.
Yeah, as I mentioned earlier, we have 30 years of experience in transport and storage, particularly storage of CO2. If you compare our ambition to the emission we are responsible for, 11.6 million tons in 2023, you know, we have a much bigger scope of storing CO2 because we believe this is actually a business and want to develop this as a business, not as a business to abate our own emission. Building on all of that experience and all the progress, we are actually taking all the points for Irene's presentation later now. I might stop here, but basically it's because we are not seeing this as abatement, but as building a business, and we have seen the progress. That's why we increased the ambition.
Irene will be very firm on our beliefs that we will achieve this ambition.
I will not steal Irene's point that on the pathway to net zero, and if you look at the world, we need to store CO2. So whether it's calculated or not, if you get sort of a big score because it's done or not, that's another discussion in a way. We will have to work, of course, to see how this can be part of the net carbon intensity going forward, because we believe this is part of the solution. Yeah.
I'll take one more in the room, and then we'll take a couple of questions virtually. Natasha Landell-Mills from Sarasin, in the middle of the room.
Great. Thank you very much, and thank you so much for the presentations. I'm gonna zoom out a little bit and just ask the kind of bigger picture question, if I may, which is very much rooted in the commitment to support the Paris Agreement goals, which Equinor has commendably made, and we're very supportive of that. What we see when we look at the transition plan targets are targets set short of that, and that's in your own transition plan that you have that. When we look at the CapEx proposals that you've also touched on today, they fall short in our view of even the targets that you've set, which fall short of the Paris goals. The question really is. How does the board and senior executive reconcile its commitment with those CapEx plans? Thank you.
Yes. Thank you. A broad question. Basically, we allocate CapEx according to our project portfolio. You know, really, it's really about making sure that we're able to develop the project both within oil and gas, renewables and low carbon solution, building the optionality in the portfolio. And then, you know, back to the previous question, really ensuring that these projects are executable in terms of profitability, break even, IRR, you know, biodiversity and all of those elements that are embedded in any project decisions. We also have the Energy Transition Plan that we have 97% approval from investors at the AGM in 2022.
Two.
You know, trying to balance this such that, you know, we are delivering on the Energy Transition Plan by building profitable business. That is the basis for how we do allocate capital. We need to be a part of this affordability, sustainability and energy security, trying to solve for the energy trilemma, the Energy Transition Plan, and also the demand for energy at this point in time. At the moment, we see an increasing expectation to us as a company and the Norwegian Continental Shelf to ensure that stable flow of oil and gas is delivered to Europe while transitioning.
Europe has a very ambitious energy transition plan, but are also very clear on the expectation that Norway needs to play a role also for delivering oil and gas. We are the one that are able to do a lot of that. All of these elements, meeting the Energy Transition Plan, the profitability criteria, the expectation to be a reliable supplier of oil and gas, all of these are, you know, put together when we are making the final capital allocation plan.
Thank you, Anders. We'll try to take one from the internet. Catrine Birkevold Liem from Nordea, please. Hello. Did that not work?
Do you have that question in writing?
No, I don't. We'll take one in the room, and we'll see if we are able to sort that out. I think I saw your hand, John, John Olaisen, ABG Sundal Collier.
Yeah, this is John Olaisen from ABG Sundal Collier. You've shown a tremendous discipline over the last few years and not overbidding in offshore wind auctions. That trend continues by the renegotiations you had in the U.S. and also now lately in this Sørlige Nordsjø II in Norway and then last week in Holland pulling out because price is not attractive enough. I just wonder. How should we think about that when it comes to your CapEx guidance and your 2030 renewable targets of 12-16 GW? When offshore wind is not as profitable as it should be, will you continue to replace offshore wind with onshore investments? Or given the apparently very low profitability offshore wind, does that mean that your ambitions will be lower 'cause it's much less obvious to achieve? When you...
Every week that you pull out of offshore auctions, would that mean lower ambitions for 2030 when it comes to renewables? Or will it automatically be replaced with onshore solar and onshore wind somewhere in the world?
Well, the overarching target for us is to build a profitable renewable business. That's why you saw when we were early into this business, when fewer competitors and then everyone felt that they could do something in offshore wind and the price skyrocketed, and we stayed disciplined during that point in time and diverted some of the capital into the onshore business. Because we really want to build a profitable power production. It's not automatically like we need to reach 12-16 GW and so on, that is the driving part. It's not either our priority for us to scale down any ambitions. What we are scaling up is our efforts to continue developing this business in a profitable way.
That's like we have demonstrating in Sheringham Shoal, Dudgeon, Hywind Scotland, Dogger Bank, and now also Empire Wind. Pål and his team will work extremely hard to kind of constantly improve the business and be able to, you know, be more competitive. At the same time, we're seeing that probably the market is sobering a little bit up in terms of how forward-leaning companies will be in auctions going forward. I generally think that the time is not to kind of go away from ambitions. It's not the time to scale up ambitions either. This is really a time for where you scale up your efforts to constantly improve your competitiveness, and we do that working very closely with our suppliers. That is where our focus will be.
On the competitiveness, could you possibly comment on how much higher your last bid was relative to the winning bid in the Sørlige Nordsjø II was?
I cannot. Nice try.
Let's try online again. We have Alex Virgil from Santander.
Yes, hello. Thank you for taking my question and have saved a lot of CO2 emissions, you know, staying asking the questions from Madrid, Spain. The question is about CO2 prices? Because we have seen a significant correction in European CO2 prices. What are the implications of this environment for your CCS strategy? Thank you.
Well, as any other, you know, prices that are traded, they goes up and down. Of course, when we look into this, we look into kind of long-term prices and price scenarios. That is based on that the ETS prices are predicted to increase over time due to kind of less and less quotas are being there. So, you know, when we plan for long-term investments, we also need to take a long-term view on how we see the CO2 prices will develop and not necessarily looking at the price week by week. This is something Irene can elaborate a little bit more into when she is on stage a little bit later.
Thank you. I'm looking towards the back of the room to see if there are more people on the list. No, I think we have covered it, and we are a bit over time, so that sounds good. Thank you, Anders and Jannicke, and thank you all for engaging in this first session. We will now take a break for approximately half an hour and start 2:25 P.M. CET, again back in this room with the three EVPs presentation. For those in the room, there will be refreshments outside. For Alex and others who participate virtually, you have to fix your own refreshments, and then we'll see you soon. Welcome back to the second part of Equinor's ESG Day for Investors.
I hope you enjoyed the break. In this session, we will have introductions from first Pål Eitrheim, our EVP for Renewables, then Irene Rummelhoff, the EVP for Marketing, Midstream & Processing. Before finally, Philippe Mathieu, the EVP for Exploration & Production International. After the presentations, there will be a Q&A as well. For those following virtually, there is a separate link in the email that you got that you can click on if you want to register for questions. If you just want to follow and watch, you use the webcast link. We'll start. Pål, I leave the floor to you.
Thank you, Bård. Good afternoon. I think more or less since 2021, we have consistently delivered against our ambitions. We have a strong pipeline to underpin both the volume that we have put out there, but also the returns that we foresee. The strategy, as Anders Opedal said, remains very much firm, and we'll continue to place value over volume. In offshore wind, and as many of you know, there has been a couple of really challenging years, but hopefully now we could begin to see that the tide is turning. In markets like the U.K. and the U.S., we are actually seeing better terms on offer than what we have seen in the past. In the onshore, we're going to continue to acquire multi-tech platforms in select markets. We buy specialized local platforms.
We turn to Irene, M&P, and Danske Commodities for route to market and also for value uplift. As Anders said earlier today, we have made adjustments to the market realities that we see. We are building a flexible and increasingly merchant portfolio. There is more onshore renewables in the portfolio than what we maybe foresaw a couple of years ago, simply because in the short term, we see better returns in onshore in combination with storage than what we see short term in offshore wind. However, we are not changing the long-term belief that we have in offshore wind, but we will remain both selective and disciplined. We have built a solid foundation for profitable growth. Last year, we increased renewables production by 18%, and we added around 8 GW to our pipeline.
We expect to more than double our renewables production again this year, and towards 2030, we expect to install between 1-2 GW of new capacity every single year. We are building the pipeline that we need in order to develop and deliver on the ambitions that we have set out for 2030. Installed capacity of 12-16 GW, production in the range between 35-65 TWh in 2030, and real base returns for projects within our guided range of 4%-8%. We also have now an opportunity pipeline that is allowing us to high-grade. We can afford to be disciplined, and we are not chasing certain volumes by certain dates. As an example, we would have loved to develop the offshore wind in Norway.
When we set bid mandates, we set them based on value creation, and not based on the volume ambitions. Going back to one of the questions that was raised from the audience earlier, do we automatically infill with onshore volumes if we fail in an offshore wind auction? No, we don't. We are working on several offshore wind options in parallel, and when one option falls away, we have additional options in our portfolio that we can backfill. That type of prioritization you will have seen in our behavior in the U.K. in offshore too, and you will also have seen it in the Netherlands, where we together with Eneco decided not to participate in the auction. We also have pretty good optionality now in the portfolio between the onshore and the offshore.
The ultimate CapEx levels that we will see to 2030 will be a consequence of the decisions and priorities that we make, and ultimately the mix between the onshore and the offshore. Last year, we introduced the production outlook for the first time. Currently, we find ourselves at the lower end of the range of 35-60 TWh that we guided on last year. Then based on the investments plans that we currently have, we expect to deliver an operating cash flow after tax of around $2 billion in 2030 from renewables. We have a robust offshore wind pipeline in execution. If we sum it all on this, as we've done on this slide, we have 3.4 GW of gross offshore wind capacity under construction or up for final investment decision in 2024.
These are profitable projects with double-digit nominal equity returns, as Anders alluded to earlier today. I want to comment on three specific projects that are in our pipeline, Dogger Bank, the U.S. East Coast, and then Baltic 2 and 3 in Poland. When Dogger Bank is completed with all phases, it will be the largest offshore wind farm in the world. It will generate around 18 TWh of power per year when in full operation. Just for comparison, for those of you who are used to Norwegian continental shelf, that number is basically would cover electrification of the NCS. It's that type of a scale. It is pretty significant. Dogger Bank A is currently in the middle of execution of the installation and commissioning.
Installation and ramp-up has gone slightly slower than planned, and we expect full operation from Dogger Bank A now in the first quarter of 2025. The offshore platform for Dogger Bank B sailed from Aibel in Haugesund, the yard there to the field last week, and we expect to see first power from Dogger Bank B in the first quarter of 2025. Then on Dogger Bank C, the topside for Dogger Bank C left Thailand two weeks ago and is now on its way to Haugesund. One interesting observation looking at building these back-to-back are the learning effects from A to B to C. They are significant, and that is the importance of having scale and consecutive projects in your portfolio. We are also beginning to develop a fourth phase, Dogger Bank D.
This will add up to 2 GW of capacity inside of the lease area of Dogger Bank C, and we expect to sign an agreement with The Crown Estate to this effect during this quarter. The rental terms for Dogger Bank D are the same as for Dogger Bank C. Moving from the U.K. to the U.S. The offtake win in New York 4 was crucial to restore commerciality to Empire Wind. We have now won on a price level that is significantly above what we had in the original contract. Prices will be public at the point in time when the power sales agreement with New York has been negotiated and announced, and I'm really looking forward to that coming out.
We now have full ownership to a mature large-scale project in a key market. Empire Wind 1 is one of the biggest renewable assets in the U.S. with all federal permits now secured. New York is an attractive market and is one of the markets where we think that offshore wind will actually work. It's a market that wants and needs offshore wind to decarbonize its power sector and also meet its climate goals. Current focus areas for the U.S. East Coast is that we are moving Empire Wind 1 towards an FID during the third quarter of this year. We intend to farm down and bring in a partner at the right time. That will allow us to take the project off balance sheet, reduce exposure, and also create a bit of a value uplift upside for us.
We are working on project financing to improve financial flexibility and the equity returns in the project. We have the option of bidding Empire Wind 2 in a later offtake option, auction. We will only do that when we have a commercially robust project. Finally, Equinor is already a broad energy supplier to Poland. We're a significant gas supplier. We have a strong presence in renewables, both in the onshore as well as in the offshore. Onshore, we have a rich pipeline in wind, solar, batteries through Wento and also Danske Commodities. In the offshore, we are developing a strong portfolio together with Polenergia, which is our partner in Poland. In total, we are working on a power portfolio of around five GW offshore and onshore. We're developing Baltic 2 and 3 together with a total capacity of 1.44 GW.
It's one of the biggest offshore wind developments in Poland, and it's a key building block for the country's energy transition ambitions. These projects have a 25-year inflation adjusted CFD at robust levels and a real base project returns or above 5%, and the plan is to move it forward towards FID during the year. We plan joint project finance for Baltic 2 and 3 with financial close by the end of this year. On the ESG side, we are taking action across the value chain to improve our ESG performance. We are mapping net positive and biodiversity for all new renewable projects. We are facilitating coexistence with nature and with other users of the areas and the seas. We are mapping and designing to avoid conflict areas that we can face both in the offshore as well as the onshore.
We have been conducting studies in the U.K. on reducing noise pollution while installing monopiles, and we have been active in monitoring birds through targeted programs in Hywind Scotland. We are also working with our ventures division to identify opportunities to work on recycling of blades, which is an industry challenge and has been so for a while. With ventures, we are looking at opportunities to mature new supply chains for recycling the main blade components in Norway. Renewable projects are also facing new challenges in human rights. All the EVPs that are present here today sit on the Human Rights Steering Committee in Equinor. The purpose of that committee is to help drive policy developments and managing it as we would any other business-related risk.
For example, we are really trying to avoid sourcing from areas with the highest human rights risk. We are also working with our solar supply chain to increase transparency and traceability. That is a supply chain that is known to have human rights challenges, and it's difficult to fully mitigate all of these risks. We are working with partners and peers in the solar industry to advance human rights performance in our joint supply chain for solar. We are also working with the construction yards in offshore wind to address known challenges, and Jannicke referenced some of them earlier today, typically living conditions and different issues associated with wages. We have people on the ground building on the experience from other parts of Equinor, where we are monitoring and actively engaging yards on human rights issues.
Then finally, we see that sustainability is becoming a competitive factor in auctions where we participate in many of the markets. Typically with more qualitative criteria now coming in, sustainability is becoming a differentiator between winning and losing offshore wind auctions in different geographies. It's definitely one of the areas where we need to boost our performance as well. With that, happy to yield the floor to Irene, who will take the next session. Thank you very much.
Thank you, Pål, and good afternoon to all of you. Rapidly increasing customer interest combined with the CO2 storage potential on the Norwegian Continental Shelf and Equinor's thirty-plus years of experience makes CCS a rather obvious new business opportunity for Equinor. Already later this year, Northern Lights, the first third-party CO2 storage in the world, will be ready for operations, fully booked. Also in 2024, we plan to take an FID together with the partners on the Endurance CO2 transportation and storage project outside the industrial Humber region in the U.K. Our biggest and most ambitious and exciting plans center around the Smeaheia license on the Norwegian Continental Shelf. Two wells will be drilled later this year and to confirm the storage potential. An FID for a shipping solution is expected late in 2025.
We also intend to make Smeaheia the anchor storage of a large-scale CO2 pipeline from Northwest Europe to the NCS called the CO2 Highway Europe. Such a pipeline will most likely start in the Antwerp and Ghent area, where there is a very high concentration of CO2 emissions from industries such as steel, cement, and chemical processing. Fluxys are developing the domestic Belgian infrastructure, and GRTgaz are developing a French connection into Dunkirk. We're also maturing a later tie-in into the German market. Such a pipeline solution will actually reduce the transportation cost of CO2 with approximately 50%. We're doing a landfall and seabed survey along the pipeline route as we speak, and we are maturing and applying for more licenses to underpin the potential.
An FID for such a pipeline is expected in 2026, and we expect the pipeline to take 20-30 million tons annually. We've also acquired our first CO2 license in the U.S., where the IRA tax incentives now makes it cheaper to store CO2 than emitting it. These activities, combined with the growing recognition that CCS is a necessary tool to net zero, gave us the confidence, I guess, to increase our CO2 ambitions to 30-50 million tons annually at a recent CMU in 2035. That was a tough one. CCS can also be an enabler for clean energy and clean feedstock by transforming natural gas to hydrogen.
Natural gas from the Norwegian Continental Shelf comes with very low CO2 emissions and allow us to produce hydrogen with as low as 1-1.5 kg per kg hydrogen. This compares to the 3 kg that EU has adjusted into their taxonomy. In Europe, heavy industries are clearly under pressure to decarbonize. CO2-free CO2 quotas are being phased out, and customers are actually requesting cleaner products. Hydrogen is emerging as a key tool to decarbonize hard-to-abate sectors such as steel, chemical industries, as well as refineries. The hydrogen is also seen as an important element in the decarbonized energy system. Hydrogen-ready gas-fired power plants are emerging as the preferred solution to back up the intermittent nature of renewables in all northwestern European countries. Policies are also shaping up for hydrogen, particularly, I would argue, in Germany.
Germany has recently announced plans to develop 10,000 kilometers of hydrogen infrastructure, and it comes with the budget, which is important. They will conduct two carbon contracts for difference auctions adding up to EUR 23 billion already in 2024, which will support the development of a hydrogen market. Several steel producers have received billion-dollar-plus funds to build new furnaces that can run on hydrogen rather than coal. We in Equinor are well positioned to serve the German markets through our Eemshaven project, through our Rostock project, through our Norwegian hydrogen projects, and we are also developing hydrogen projects in Belgium and the U.K.
By combining our offerings of natural gas, CO2 management, hydrogen, and renewable power, we believe we are uniquely positioned to be the decarbonization partner towards industrial customers in northwestern Europe. I'd also like to spend a few minutes on how Equinor is driving the shipping industry towards a more sustainable agenda, because I think this has gone a little bit under the radar. We are positioned throughout the maritime value chain as a fuel provider and as an active global charterer. We charter approximately 100 deep sea tankers at any given time to support our global trading activity. In addition, we are contracting around 100 supply and service vessels serving our oil and gas installations.
Equinor's ambition is to become a broad supplier of emerging low carbon shipping fuels, and already today we offer our customers bioblend and bio-methanol, and we were a proud supplier of bio-methanol to Maersk's groundbreaking cargo vessel last year. On the charter side, we've been an early mover in the deployment of alternative fuels, but also technical and operational measures like hull cleaning, route optimization, speed reduction, and energy efficiency measures. Since 2008, we have reduced our yearly well to wake greenhouse emissions from maritime activity from 4.4 to 3.8 million tons of CO2 equivalents. Important measures in that respect has been introducing dual fuel LNG vessels already in 2004. Running 25 of these vessels currently.
We were pioneering battery hybrids from 2016 and we have 28 of those vessels today, and 30+ of our vessels can now use power from shore. We were also a first mover on dual fuel LPG vessels in 2021 and are currently running 10 such tankers. Going forward, we will start using bioblends, and today it was announced that we have contracted 4 dual fuel methanol tankers with sails, actual sails, wing sails they call it, and also as a very, very early mover in this space. We are in the market for the first ever dual fuel ammonia supply vessel. With the introduction of the EU ETS and the FuelEU Maritime regulation, this is a huge competitive advantage, and I think this is what we're trying to achieve all over the place.
We're trying to be an early mover when the cost of CO2 really hits us, then we're gonna benefit from all the investments that we do over time. Safety is a priority in Equinor, and we've been working very closely with the shipowners through our Working Safely with Supplier programs since 2007. We're thoroughly vetting all the vessels that we take on contracts. We report and we follow up incidents similar to what we do on oil and gas. Through our chartering process, Equinor sets extensive human rights requirements on the shipowners, and some of them have been caught by surprise by the aggressiveness. We're getting there.
These requirements are based on international standards and other relevant laws and regulations, but we do go significantly beyond the contract scope, and we follow up with awareness sessions, guidance and tools for driving implementation at the shipyards, protecting worker health and safety. In a nature perspective, Equinor is hull cleaning all our tankers regularly, and all our vessels have ballast water treatment system, which reduces the risk of transferring organisms from one ecosystem to another. Equinor recognizes that the implementation of sustainability measures in the shipping sectors require collaboration, and so we actively engage in strategic and innovative partnerships involving shipowners, technology suppliers, governments, and international organizations. On that note, I'm trying to make a bridge here. I hand it over to my good colleague, Philippe.
Thank you, Irene Rummelhoff. Good afternoon. Let me start by underlining the importance of safety, security, and sustainability for the international business in all decisions we're taking, albeit related to operations, projects under development, or business development activity. This with a strong focus on emissions and human rights. In recent years, we've been working to high grade the international oil and gas portfolio with a clear strategy to focus and deepen the portfolio, focus on fewer countries where we believe that we can create more value through deepening. As a result, we have exited 15 countries since 2020, and deepened in these core areas.
We have continued to deliver on this strategy in 2023 with exit processes which have been triggered in Azerbaijan and in Nigeria, but also deepening in the U.K. with the acquisition of the Suncor Energy U.K. portfolio. As well as deepening through FIDs with the three projects development that we have internationally. The aim of the strategy is to secure cash flow longevity, but also to secure short-term cash flow. EPI is therefore an important contributor to financing the energy transition for Equinor. In 2023, the business has delivered solid and stable earnings throughout the year, driven by high liquids prices, but also very solid operational performance.
We have produced an average of just above 700,000 barrels of oil equivalent per day, with an overall CO₂ intensity of 11 kg CO₂ per barrel. Twelve if you look at operated asset. As a reminder, the average for the average GP is of sixteen. We are working hard to reduce emissions from each of our operated assets, and we have progressed with some key measures in 2023. At the Peregrino field in Brazil, we are swapping diesel for gas as a fuel, which will lower CO₂ intensity, and we expect thereby to avoid some 100,000 tons per year when this is fully implemented. Still in Brazil, we have also installed a vent gas recovery unit on the FPSO at Peregrino to address our single biggest source of methane emission.
In the U.K., at Mariner, we are systematically implementing the measures that we have identified from our Emission Reduction action plan via a series of small but yet significant improvements. In the U.S., onshore, on the Appalachian Basin gas asset, which is one of the lowest emission fields in the Equinor portfolio, we are also still looking to make some improvements. We have also completed biodiversity site-specific inventories in all our operated assets, as well as all our sanctioned projects, and we are working to find ways to make a net positive impact on and across the portfolio. Let me turn to our projects under development, our next generation assets. As mentioned, in 2023, we have taken three final investment decision on Rosebank in the U.K., Raia in Brazil, and Sparta in the Gulf of Mexico.
These projects represent the next generation fields. They are designed with emission-reducing technologies to make them some of the most carbon efficient facilities of their type. The Bacalhau and Raia fields in Brazil will incorporate combined cycle gas turbines, CCGTs, while at Rosebank, we are modifying the repurposed FPSO to make it electric chain ready from day one. These new projects will have a combined CO₂ intensity of less than five kilos per barrel in 2023, and they will drive down the overall CO₂ intensity of our operated international portfolio to less than seven kilos per barrel in 2030.
In terms of cashflow, we also see that the quality of these projects are contributing and will help to grow cashflow from operations from our international portfolio by more than 50% between 2024 and 2030, while production will increase by 15% during the same period. This project will also contribute to make the international business cashflow positive at $30 per barrel in 2030. These are robust project, both on economics, but also in terms of emissions. In addition, these projects will bring jobs. They will bring substantial investments to the host communities, as well as strengthening the energy securities in the countries they are developed and globally.
Last but not least, in all our projects under construction, we are actively working to drive improvements in working conditions, albeit on our supply chains or construction facilities. Let me now say a few words about the way we work with our partners, because as you know, a large portion of our international production comes from non-operated assets, and we work hard to support both operators and partners towards achieving the same goals that we have for ourselves on our operated assets. There we focus on three things. First, improve data and quality and transparency. Second, reducing flaring and methane emissions. Third, driving emission reductions through both operational and technological measures.
We have seen some quite big improvements in 2023 on that front, in particular in Block 17 in Angola and on the Agbami field in Nigeria, which both have reduced flaring by more than 50%. At the Roncador field in Brazil, where we have a strategic technical alliance with Petrobras to, you know, revitalize the field, we're also looking at jointly reducing significantly emissions from those operations. Additionally, we also support NOC partners, national oil companies, to decarbonize their operations. To that effect, we have signed a series of MOUs with these national oil companies to basically compare notes, share our experience, and help them decarbonize.
The aim, of course, is for us to make sure that we are supporting the implementation of the Oil and Gas Decarbonization Charter, which we have signed at COP28, as you know, alongside around 50 other companies, all determined to keep 1.5 degree within reach. In conclusion, we are taking actions to create a robust international oil and gas portfolio. Through these actions, we believe that the Equinor portfolio internationally is of high value and will generate robust cash flow to fund our transition. Last but not least, our position as a long-term trusted partners in some of the core areas where we are present is helping us to build on our transition business, you know, moving from only oil and gas activities to add renewable power and low carbon solutions.
These are things and opportunities that we're pursuing in countries like, for instance, the U.K., the U.S., or Brazil. Thank you for your attention. Yeah.
Thank you to Philippe, Irene, and Pål. We will now do the Q&A session. The system is the same. You can raise your hand in the room, and if you are following the webcast, there is a separate link that you click on, and that will put you in the queue for questions. We'll start in the room, and I'll start over there, Natasha Landell-Mills from Sarasin & Partners.
Thank you so much for all three presentations, all of which were really excellent and very enlightening. I have a quick question for Philippe, if I may. In terms of the resilience of the portfolio, you I think had some figures around growing the international returns, or growing your international cash flow returns by 50% between 2020 and 2030, if I'm correct. Can I ask what underlying assumptions you have there for the oil price, which sort of underpins those return calculations? Is it the $75 that you're using? Linked to that, how resilient are those returns to lower prices, and at what point do you get to cash flow breakeven? Thank you.
Good. The figure is on cash flow from operations growing 50% between 2024 and 2030. That is the result of, well, new generation, next generation project, as I mentioned, that are, you know, designed to be more competitive, both on, you know, breakevens, but also on CO2. These projects are going to bring $5 per barrel more of CFFO in 2030 compared to today. Yes, $75, this is the assumption for all the numbers that we have communicated today and at the CMU. The robustness of these projects under development will, you know, have a contribution to the improvement of the robustness of the overall portfolio on the international side.
The breakeven is going to be also of $35 per barrel. As for the overall project portfolio, oil and gas portfolio across Equinor.
Thank you. The next question is, Teodor Sveen-Nilsen from SpareBank 1 Markets.
Thank you. Yeah, question for Pål. You mentioned the Empire farm down. What should we expect in terms of timing, and how much should we expect you to farm down? Down to like 50% like you did in the BP deal or more? And second question that's maybe to Irene. On CCS, of course, very interesting and promising business area. But I think it's a little bit hard to model, so in a financial model. How should we think about this after 2030? Is this like a volume and margin game, or is this some other way to model this? Will it be like a M&P earnings which is basically black box or any discussions around that would be really useful for trying to modeling earnings after 2030.
Okay. On Empire and timing. The next milestone now is that we are planning towards a final investment decision during the third quarter. We are working already in parallel on project financing and getting that in place. I think that is one of the enablers in terms of a farm down. We are not sort of constrained by time. We are not pushing towards a certain deadline. We will farm down and bring in a partner when the time is right, where we think that it is optimum from both selecting the right partner for the next phase, but also in terms of what type of value and risk reduction that we can see in the project.
We don't have a specific timing, but we will, we have the flexibility to do it earlier, and we have the flexibility to do it later. We're not pushed by a schedule.
Will you keep the operatorship?
We intend to be the operator of the development, yes. That's one of the reasons why we agreed with BP that they would do Beacon and we would do Empire, because we have that organization up and running on the ground in New York ready to go. Whereas BP would need something that is a bit further out in time, and Beacon was a good option for them to work for the longer term.
I think with respect to the value creation from CCS, there's gonna be two phases. One phase where you're dependent on subsidies basically from governments. In Europe, we estimate that that phase is gonna be between now and maybe 2030. In that period we've set the CMU and also today that we expect to get returns in the order of four to eight real returns similar to what Pål have said. It's hard to see that the government will give you more than that. As we go closer to 2030, we expect the EU ETS prices to increase and hit 100 at least. We see, you know, some countries are already playing around with 200 CO2 prices.
We know that the cost in that period also will have come down, you know, to that sort of level. You're in a sort of a commercial game, and returns can actually be quite higher. It depends on how many competitors you have and what the demand for this is. In the U.S., we're already in a situation where given the IRA, 45Q incentives of $85 per ton stored, you don't no longer need any additional incentives or subsidies from the government, and there you could expect to see higher returns.
We've said, you know, in this phase, early phase, we're not gonna go crazy and promise anything, but we do see room for a commercial phase post 2030 in Europe and already now in the U.S..
You actually expect positive EBIT contribution by 2030, assuming that the government will provide subsidies corresponding to 4%-8% return on capital?
Mm.
Okay.
We've shared, I guess, some of our cash flow expectations at the CMU, and we indicated a little shy of $1 billion, I guess, in 2030. But a lot of the projects are coming on stream, you know, just before or after 2030, so but it's in that order of magnitude.
Okay. Thanks.
Okay. I think I saw your hand, John Olaisen, ABG Sundal Collier.
Yeah. John Olaisen from ABG Sundal Collier again. I think very few investors are questioning your competitive position when it comes to Northern European CO2 transportation and storage, or offshore wind for that matter. Both those businesses, you were early movers, and the nature of the projects are very similar to your core competence from your oil and gas experiences. When it comes to onshore solar and wind, there's a lot more questions. Arguably, you're a late mover into that market, more mature markets, and also the projects are very, very different by nature to the core of your Equinor's normal, usual oil and gas business. Maybe this question is for Pål.
Pål, could you tell us what you think are the key competitive advantages that Equinor has relative to the other hundred players onshore in Northern Europe, please?
I guess talk on trading.
There are probably more than 100 as well. Yeah, it is a very crowded, competitive space, and that's exactly why we are not doing it the traditional Equinor way. We're not moving in as Equinor and sort of doing everything ourselves and using our balance sheet to invest in the regular way that we would do on the oil and gas side or on Irene's midstream area. What we've decided to do is to go into. We start with the markets. We are quite selective on the markets where we go in, and we need more risk in the onshore than in order to get the returns to be acceptable than what the hundreds of players that you referred to, John, usually would have.
We are working with local platforms who bring a combination of opportunity pipelines and people who are embedded in the local market and know that market inside out and can generate opportunities. What we bring to the table is the balance sheet to actually allow them to invest, because typically these are companies that flip assets and are not sort of generating production and cash at the end of the day. Secondly, we are supercharging them. We're linking it to Irene, M&P's ability and Danske Commodities ability to provide route to market. We see uplift on the commercial side of what we bring to the table, which are far bigger than what we would be able to do by cutting cost. We do not have a competitive advantage, and this is not the technology game.
It is very much of a commercial and logistics game, and the added value we bring is the ability to take merchant risk and bring these volumes to market in alternative ways at higher prices. We indicated, Irene and I, when we presented in London, that we see in some markets an uplift of between EUR 5-EUR 9 per MWh in prices. That's what we bring in. We would not be a player that will go in and compete on sort of very simple stuff where you are paid as produced. That is a game for others, and we are trying to scale it up and add the ability to warehouse risk is what we bring to the table. Irene, what do you wanna-
No, I think you-
We are very much relying on you and your capabilities.
I think you alluded to it. We need more risk than the traditional onshore players, and the risk we'd like to take on is the market risk. We have developed Danske Commodities into one of the largest and best, I would argue, trading houses in Europe, and they are currently trading something like 12 gigawatt of power from third-party sources and utilizing that muscle to really trade around the business. Also combining Pål's renewable power production with batteries, hydrogen-ready gas-fired power plants and building an integrated power portfolio is part of what we are looking to do. That can create significant value. You alluded to the 5%-9%, and that's, you know, in the order of 10% at least uplift on the wholesale price.
If you compare it to what we traditionally do on the trading side in the oil and gas business, then we're talking maybe 1%-2%. This is an area where you can add more value, as a trader, in the power sector than we traditionally have seen in the oil and gas side. We're as excited about it as Pål, I guess. Pål, in Equinor's executive committee are 12 members, and you're the only one doing pure renewable person. Equinor is planning to invest more than $50 billion between now and 2030. Does the responsibility weigh on your shoulders? Do you sometimes feel lonely in the executive committee on the renewable side?
No, I don't. That was a good question, John, by the way. No, I don't feel lonely because partly I, like everybody else on the CEC, I own the full strategy. I'm as engaged in Kjetil Hove and Philippe's strategy on the oil side, and they are engaged in my strategy. The Energy Transition Plan that we've spent quite a bit of time as a team developing together, moving it through the board, moving it ultimately through the AGM, that is the platform that we all stand on. No, I don't feel alone. It's not as if our projects in renewables are being treated any differently than Irene's projects or Philippe's projects. They are part of the same business plan.
We need to fight for survival like everybody else, and it's not as if I have a carte blanche check where I can just go off and do renewable projects. That's not the way it works. I am convinced that renewables needs to demonstrate discipline and the ability to build this, build a business around this. That is what is going to earn us the right to grow, and that is no different than what Philippe is having on his agenda or Irene on her agenda. No, I don't feel alone. I'll admit that the last two years have been tough, you know. I've been in this role now for six years. First four years, sun was shining and there was tailwind and, you know, the sky was the limit.
The last two years, a pretty tough downturn that we spent a lot of time managing well. Was there a hand over here? Yes, please.
Hi, it's Henry Repard from DNB Asset Management . Thank you all for the presentation so far. I actually have a question for you, Irene. It's regarding your slide about shipowners. It was really great to see the work that you're doing with the transportation of crude. A number of the shipowners that we speak to, they highlight the challenges associated with offering low-carbon vessels. They say that there's, as a generalization, sort of low demand and really high significant build costs. I'm interested to understand how Equinor is shoring up supply of these low-carbon vessels for the future and so that you can charter them. How is this impacting profitability? Because the message we're hearing from a number of the shipowners themselves is it's expensive to build this.
Interested to hear that. If I can, Pål, as well, jump in. You mentioned the issues to do with human rights within the solar supply chain. We saw First Solar impacted last year in Malaysia because of some issues that they identified themselves. It would be interesting to understand how Equinor are looking at your supplier selection strategy and how you're balancing cost with this human rights risk with low carbon trajectory as well. Thank you.
Maybe I'll start with the shipping. When I took on this job, I guess five years ago, after having that lonely job that Pål is now having, you know, I thought we needed to compromise between sustainability and cost on the shipping side and having a trader organization, of course, they are dead set on. I think the fact that we are both a supplier and a buyer, I guess, of fuel is helping. The big breakthrough, I guess, has been the EU ETS being implemented in the shipping side and also the FuelEU Maritime coming, which creates significant advantages to those with the low emissions. You know, for this last deal that we announced today with the four vessels, there was a tremendous competition.
I don't know, I haven't seen the press release yet. I don't know if they have the rates there. We had long list of shipowners that wanted to participate, and some of them also had came with some domestic subsidies on their back. They were willing to offer us very, very attractive rates.
On your human rights question on the solar supply chain, this is an industry-wide issue, and we are spending extensive efforts into understanding where things are coming from, what lies behind in that supply chain, partly through ourselves, partly through industry associations and intermediaries. We're doing quite extensive HRDDs of our supply chain. There are transparency limitations in that supply chain which are making this difficult. If you pushed me against the wall and say, "Can you guarantee that there are no issues in your supply chain?" No, I can't. Can I promise you that we've done everything that we can to sort of get to the bottom of the supply chain? Yes, I can. It is really tough.
It is an industry that is still very much dominated from parts of Asia in terms of supplies. There are transparency issues in getting sort of all the way into the sharp end of that supply chain that we have on our plate all the time. We are spending on the HRDD side. I think we are doing everything we can, but still, we would probably have wanted to do even more than what we're able to do today.
I have a question in writing, and as in the room, it's more than one question camouflaged in one part. You mentioned $3 billion in cash flow from operations from renewables and low carbon energies in 2030, split between $2 billion from renewables and $1 billion other. Can you further delineate the renewables cash flow from operations between onshore and offshore, and low carbon energies between CCS and other, and how is the split in 2035 for the $6 billion?
I can start and then you can build on me. It's a bit difficult to be specific in 2030 because there are things that are in the portfolio today that won't be there in 2030, and then there are things which are not in the portfolio which will probably contribute in 2030. There is a generic element to the profile. We gave an indication on a capital markets day on what is in there, and it's a mix of the big offshore wind projects that are coming on stream over the next few years, and then it's the effect of the platforms. And just as an indication, the cycle times of these two industries are very different.
This year alone, we are looking at more than 10 FIDs onshore, big and not so big, projects, whereas in offshore wind it's typically longer cycle times, more capital intense projects, and also much longer, cycle times. That's a long way of saying I can't give more specificity or whatever it's called in English than what I gave in, what we gave in February.
I thought I'd just say no. To, as I alluded to earlier, 2030 is a bit early for my I have a lot of projects that are coming in 2029, 2030, 2031, so. We do expect to see, I guess, CCS moving a bit faster than hydrogen. And then hydrogen-ready CCGTs, I guess, or CCGTs with carbon capture and storage is also part of that mix.
Thank you. I forgot to say that the question was from Jason Gabelman in TD Cowen. In the room, I have Arild Skedsmo from KLP.
Thank you. Thank you again for very interesting presentations. Philippe, it's been mentioned several times that you have taken down the international portfolio substantially. You mentioned five or six sort of priority countries, I think, right, roughly. There is then 10, 15 countries left. Can you say something about your strategy there? What's the sort of criteria for you to leave them or to engage more substantially? How do you engage or lobby with governments of those countries with respect to your interests? Thanks.
Thank you. I guess the criteria is simply about the possibility we see to further deepen and create more value around the existing positions that we have. If these are less mature areas where we maybe are not so big yet, we need to see line of sight for having material positions. The criteria are the ones that I've mentioned in my speech, which is basically trying to make sure that we build a set of projects and a portfolio in these countries, but also across EPI, which is as robust as possible, both in terms of economics, break even, but also in terms of CO2 footprint and emissions. That's the way in.
To be able to have that strategy and that robustness long term, this is why we're engaging with national oil companies. This is why we're engaging with, you know, governments to try to make sure that we're doing our utmost and, you know, bringing our experience to decarbonize the operations that we have operated or non-operated, and also contribute to, you know, further knowledge transfer to help them decarbonize other operations across the country.
On dialogue with governments, lobbying and also political risks, how do you deal with this in these countries?
What we need is, you know, to have, you know, stability and visibility in terms of the frameworks that we have across. This has been, you know, the mantra for the industry. This has been one of the, you know, success factors of developing the oil and gas industry in Norway, and this is exactly what we need across in all jurisdictions, in all geographies.
Thank you. We have a question over here on this table. If there are additional questions in the room or virtually, I ask that you use the opportunity while this question is asked to raise your hand.
Sorry. Morten Gjesdahl , BNP Paribas. Irene Rummelhoff, on hydrogen, the various projects, do you plan to do project financing on those?
We have not decided yet, but I think these projects will be right for project financing because there's very limited risk in them when we have contracted long-term supply and we have the cost. But I think we also should look at farming down, as we've done and create additional value from that. So I think both opportunities are there, but we don't have any current plans yet. Developing these new value chains in huge partnerships or with many stakeholders are kind of hard, so we like to control them a little bit longer and then make that decision.
Thank you.
Thank you. I have one more from Natasha Landell-Mills in Sarasin.
Thank you. I'm trying to bring down the carbon intensity of each of my questions, so having flown here. Thank you again. Irene, I wanted just to follow up on a point that you made just for clarity. I think you said something about subsidies being important, until certainly 2030, and at that point you could see commercialization numbers like $200 a ton being potentially quite attractive. First of all, is that the number at which it becomes attractive and what sort of return would you get at that number? And secondly, of course, if you got to that level, which is well above, I think the management's long-term assumption for carbon prices of $123 by 2030 per ton of carbon, what would that mean for the rest of the business? Thank you.
I'm glad I had the chance to clarify that. If you thought that I was expecting 200, because I'm not expecting 200, as you rightly point out. There are countries like Netherlands, Denmark, Sweden talking about 150, potentially 200 carbon prices, so beyond, I guess, the EU ETS. Our assumption when I say we think there is a trigger point in around 2030 is that we expect the EU ETS prices to be at around 100 in that period, and also the cost of capturing, transporting and storing should be at that level, as well. That's when you no longer need that direct negotiation with government, that will not allow you to have super profits, obviously. Then it comes down to, as I said, the competition.
Good news in this business is that the entry barriers are quite high. This is the big company's game. It's not the onshore mom-and-pop shop that we're competing against. We're talking, you know, big pipelines, and you know, lots of drilling of wells, et cetera. I'm actually quite excited about the potential, but realistic, I guess, in the shorter term.
Okay. Xander?
Thank you. If you have the time, maybe two questions. On CCS, and kind of thinking about CapEx going to 2030, is it a big CapEx kind of business? Do you think right now, 10% of CapEx went to CCS, and do you see that moving kind of upwards to, I don't know, to 2030? On hydrogen, thinking about kind of technicality of the hydrogen readiness of power plants, I see very different stories from companies, utilities on that actually being able to be commercially viable or kind of you need very, very high CO2 prices to even make that happen. How do you see that moving and also kind of your investment levels then going into 2030, I don't know, 2025?
Again, we haven't been specific on what CapEx is gonna come from what project. Obviously, what I alluded to was that we might take an FID on this pipeline in 2026, and that comes with a significant amount of CapEx that by that time we could have farmed down or brought in a partner or project finance. You know, these are CapEx-heavy projects, and also that's also why I say the entry barriers are quite significant. When we get closer to 2030, my project's gonna start to weigh quite heavily on this 50%, you know, between oil and gas and renewables and low carbon solution. Then you talked about the hydrogen-ready CCGTs and, you know, there's a technological aspect of it.
You know, are there turbines there that can do it today? I think we're on the brink. You know, we are in a lot of R&D partnerships with turbine suppliers. Currently we haven't seen anyone concluding that they can take 100% hydrogen, but we're right there of getting there. But there are certainly blending opportunities that are available already today. I think the biggest constraint is gonna be hydrogen availability. Obviously, quite a few host countries, I guess, would like to see green hydrogen being available, but that's a bit of a long shot. I think we expect at least these to be invested in, whether they're gonna run on hydrogen significantly before 2030, I doubt. They're at least ready.
Even when they're being built, they might not be used that often, because this is backup. This is backup for the growing intermittent. The way they will be commercialized is more likely through a capacity fee mechanism from a governmental source that pay you to be available whenever there's no wind or solar in Germany or neighboring countries. The economics are gonna be dependent on that. It's gonna be dependent on ancillary services that you're gonna provide to the grid, and it's gonna be on the spark spread. This is definitely gonna be more expensive, and you would not run it on hydrogen if you have EUR 100 EU ETS price. You need more support mechanism.
As I said, this is definitely the choice for almost every government today.
Good. I think we have been able to take most questions, and we are spot on time, so that is perfect. I want to thank you all for attending and for engaging and asking your questions. The presentations and other material is available on equinor.com. As always, if you remember tomorrow that you have additional questions or want to discuss further, the IR team remains available for you. Thank you, and have a great rest of the afternoon, and goodbye.