MILAN (Reuters) - Europe’s biggest gas pipeline company Snam (SRG.MI) pledged on Thursday to spend more money on new green business lines and set up a new hydrogen unit as it moves to position itself for the industry-wide transition to cleaner energy sources.
In its business plan to 2023 the group said it would increase its investments in its sustainable energy unit SnamTec by 65% to over 1.4 billion euros ($1.55 billion), more than 20% of its overall investments.
“We are convinced that hydrogen produced from renewable sources will make a decisive contribution to achieving climate objectives,” CEO Marco Alvera said.
Snam, which makes most of its revenue from gas transport in Italy, is keen to develop the use of hydrogen in its pipelines and hopes to have the hydrogen blend at 10% by year end in experiments it is carrying out in the south of Italy.
The cost and difficulty of making hydrogen has meant that to date the gas has mainly been used in niche areas like fueling rockets.
But the cost of producing hydrogen with renewables is likely to fall rapidly in coming years, making it one of the most promising technologies to help cut greenhouse gases.
Snam, controlled by Italian state lender CDP, confirmed targets in its previous plan for earnings and dividend growth. It said it expected net profits to increase more than 4% a year and dividends to rise an annual 5% to 2022.
Net profits this year are expected to be 1.08 billion euros, rising to 1.1 billion euros next year.
Reporting by Stephen Jewkes; editing by James Mackenzie