Varo Energy sets low carbon strategy, net-zero goals

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LONDON, July 5 (Reuters) - European downstream firm Varo Energy announced on Tuesday a plan to become a net zero carbon emitter by 2040 and to accelerate growth into sustainable energy solutions, a strategy it expects will triple its EBITDA by 2026 from $320 million in 2021.

Varo plans to reinvest cash flow from its conventional fossil fuels business into its sustainable energies business, which focuses on growth in biofuels; biomethane and LNG; hydrogen; electromobility; and carbon removal.

The firm said it will invest around $3.5 billion in 2022-26, two thirds of which it will allocate to its sustainable energies business, while around $140 million per year will sustain capital expenditure in the conventional hydrocarbons business.

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“Our customers’ needs are changing fast as they adapt to the energy transition while expecting reliability of supply,” chief executive Dev Sanyal said in a company statement.

Europe faces a regional energy crisis and pressure to diversify its energy needs after Russia’s Feb. 24 invasion of Ukraine, which Moscow calls a "special military operation." read more

“We believe the current crisis has demonstrated the need for diversification, and the diversification won’t happen overnight,” Sanyal told Reuters in an interview.

Sanyal added the company expects faster growth over the next five years in its biofuels, biogas and carbon removals business.

Hydrogen growth will take time because of the scale of investment, while the pace of growth in e-mobility will be determined by the demand for electric transport, Sanyal said.

In the longer term, Varo aims to repurpose older fossil fuels assets to become part of the decarbonised business.

The strategy will triple Varo’s 2021 EBITDA to around $1 billion in 2026, Varo said, with over 50% of that coming from the sustainable energies business.

By setting net-zero ambitions, Varo, whose shareholders include Vitol and the Carlyle International Energy Partners, follows in the footsteps of its larger industry peers that have pledged to reduce or eliminate emissions. read more

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Reporting by Rowena Edwards; Editing by David Gregorio

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