Chevron buys renewable energy group for $3 billion

Chevron is buying biodiesel maker Renewable Energy Group for $3.
15 billion, the company's biggest bet yet on alternative fuels, hydrocarbon processing website reported on February 28
.

The second-largest U.
S.
oil and gas producer said on Monday it would pay $61.
50 a share in cash for renewable energy, a premium of more than 40% to the company's closing price on Friday
.

Given their huge contribution to global emissions, big oil companies are facing increasing pressure from governments and investors to reduce their carbon footprints and participate in the fight against climate change
.

Many U.
S.
refiners have been ramping up production of renewable diesel to take advantage of increased state and federal subsidies to decarbonize the fuel
.

Chevron has set a goal of reducing operational emissions to zero by 2050, and in September pledged to invest $10 billion to reduce carbon emissions by 2028, including about $3 billion in renewable fuels
.

　　The Ames, Iowa-based Renewable Energy Group produces biodiesel and renewable diesel
.

　　Biofuels are made from agricultural waste and traditional food crops grown specifically as fuel feedstocks
.

　　While biodiesel and renewable diesel use similar feedstocks, renewable diesel undergoes a separate refining process that gives it the same chemical composition as ultra-low sulfur diesel
.

　　The company said it was looking at opportunities to blend biodiesel into renewable diesel in certain markets
.

　　Mark Nelson, executive vice president of Downstream and Chemicals, said: "Most people see (biodiesel) growing in the U.
S.
and Southeast Asia.
.
.
and see it as the best-margin blend because it's cheaper than renewable diesel
.

　　The U.

　　The agreement is expected to accelerate Chevron's goal of increasing renewable fuel capacity to 100,000 barrels per day by 2030, as well as bringing additional feedstock supplies and pre-processing facilities, the company said in a statement

　　Chevron Chief Executive Mike Worth told Reuters that Chevron would not immediately release a separate financial report for its renewable energy business

　　The transaction is expected to close in the second half of this year and could add to Chevron's earnings in its first year and free cash flow after the Renewable Energy Group's expansion in Geismar, Louisiana, kicks off

　　Goldman Sachs acted as financial advisor to Chevron and Guggenheim Securities acted as advisor to the renewable energy transaction