Global Spending on Renewable Energy to Hit $243 Billion in 2021, 22% Lower than Oil and Gas Spending.
Capital spending on renewable energy is in a period of robust growth and is on track to catch up with oil and gas spending.
The world’s largest oil company Saudi Aramco, projected its total 2021 capex at $35 billion, $10 billion lower than previous estimates. According to its earnings report for 2020, the company posted a 44.4% profit decline in 2020.
Exxon Mobil Slashes 2021 Capex by $16 Billion, Chevron by $8 Billion
The spending gap between renewable energy companies and oil and gas companies has been narrowing in recent years.
In 2019, oil and gas companies spent a collective $422 billion. Comparatively, renewables only spent $177 billion. Similarly, the former spent $306 billion in 2020, while the latter spent $224 billion.
In the period between 2019 and 2021, spending on upstream oil and gas has declined by a 15% compound annual growth rate (CAGR). Risky market conditions amplified the situation in 2020. According to Rystad’s analysis, businesses in oil and gas suffered a 23% year-over-year (YoY) revenue drop. In contrast, those focused on wind and solar energy grew sales by 18%.
For Saudi Aramco, profit declined from $88.2 billion in 2019 to $49 billion in 2020. It is, however, optimistic expecting it to return to pre-pandemic levels by the end of 2021. Its capital expenditure for 2020 declined by 18% from $32.8 billion to $27 billion. It joins a throng of world oil majors planning to cut costs significantly in 2021.
Exxon Mobil announced plans to keep annual spending at $19 billion or less. Previously, it had estimated $35 billion in annual capex. Chevron also projected its total expenditure at $14 billion to $16 billion through 2025, down from a previous estimate of $22 billion.