Energy transfer (NYSE: ET) it currently has one of the largest energy infrastructure companies in North America. The master limited liability company (MLP) operates a fully integrated franchise that transports oil and gas from the wellhead to market centers. It transports more than 25% of all natural gas and natural gas liquids produced in the United States and 35% of its oil. While this infrastructure is vital to meeting the economy’s current energy needs, it is beginning to transition from fossil fuels to alternative sources like renewable energy.
The transfer of energy must join the transition so that it does not become extinct. This led her to recently launch an alternative energy group to increase her focus on finding ways to stay relevant like the power industry changes fuel sources.
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Evolving with industry
The transfer of energy has already started to clean up its act in recent years. The company has spent the last decade focused on reducing its greenhouse gas emissions. For example, it installed a dual drive compression system along some of its natural gas pipelines that reduced its carbon dioxide emissions by more than 632,000 tonnes last year alone. The company also recently supported the construction of the Maplewood 2 Solar Project in Texas, signing an energy purchase agreement to buy clean energy from that location to offset its energy use. The company also operates more than 18,000 solar powered measuring stations across the country. As a result, 20% of the electricity it uses comes from renewable energy.
Energy Transfer’s new alternative energy group will increase its efforts to find new renewable energy projects. The group will focus on finding opportunities to purchase energy from solar and wind farms or develop projects with third-party operators. These investments will mainly offset the company’s energy use. The company will also seek to develop opportunities for renewable diesel and renewable natural gas when they make economic sense. These projects would leverage the company’s existing pipeline network, as it could reuse some of these assets for renewable fuels.
Image source: Getty Images.
Taking different approaches
Energy Transfer is the latest fossil fuel company to announce plans to increase its participation in the energy transition. Earlier this month, the oil giant ExxonMobil (NYSE: XOM) revealed plans to launch a new business to market its low-carbon technology portfolio. Exxon initially plans to focus on carbon capture and storage projects, although the company also said it would consider other opportunities, including hydrogen. Exxon plans to invest $ 3 billion in low-emission energy projects by 2025. However, this is just a drop in the ocean for a company that plans to invest up to $ 25 billion a year during that period.
Meanwhile, energy infrastructure operator Kinder Morgan (NYSE: KMI) revealed how it is transition to the future of energy earlier this year. It is already involved in the storage, handling and mixing of renewable liquid fuels for transportation, such as ethanol and biodiesel, in the pipeline and terminal segments of its products. However, it sees mature opportunities for expansion into renewable diesel. Kinder Morgan also believes that it can expand to adjacent markets by mixing hydrogen in its existing natural gas network and transporting and sequestering carbon dioxide. Meanwhile, it sees long-term potential in the production of renewable hydrogen and diesel and joins Exxon in the carbon capture market. The company believes it could convert much of your existing infrastructure network to transport and store the fuels of the future.
Meanwhile, other energy companies are taking bolder approaches to capture opportunities in the energy transition. For example, Canadian energy infrastructure giant Enbridge (NYSE: ENB) it currently makes about 4% of its earnings from renewable energy assets. It operates 22 wind farms, seven solar farms, six renewable natural gas installations and a hydrogen installation, among other assets. Enbridge expects to invest US $ 2 billion Canadian (US $ 1.6 billion) in the construction of additional offshore wind farms in Europe by 2023 and spend an additional CA $ 500 million (US $ 393 million) during that period on energy projects renewable energy supply in North America. It has several other renewable energy projects under development and other opportunities, such as carbon capture and storage projects and those focused on hydrogen and renewable natural gas later on.
An important first step
Energy transfer is placing a greater emphasis on discovering its role in the energy transition. It is starting small, looking to self-power more of its existing infrastructure with renewable energy and exploring ways to leverage these assets to transport renewable fuels. However, as the energy transition accelerates, the company will need to do even more. Otherwise, it runs the risk of falling behind rivals like Enbridge, which are already capturing opportunities to create value for their investors by spearheading the process of helping the global economy switch to energy sources.
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