It looks like the Ampol Ltd (ASX: ALD) share price is turning over a green leaf. How will the new green energy strategy affect the Ampol share price?
ALD share price
Renewable energy is the name of the game
Ampol has announced its Future Energy and Decarbonisation Strategy, which includes a number of new commitments and initiatives.
The petroleum company is aiming to achieve net-zero emissions from operations by 2040.
Under the decarbonisation strategy, it will fork out at least $100 million on “future energy” projects by 2025.
On top of this, Ampol will commence three new industry collaborations, including with Tesla Inc (NASDAQ: TSLA) and Enerven to pilot a virtual power plant. This power plant will be used to develop hydrogen-based generation and storage technology.
Ampol will also be working with Fusion Fuel Green PLC
to develop a green hydrogen production plant at Lytton.
Green light or red light?
It’s encouraging to see Ampol taking steps in the right direction as the demand for renewable sources of energy continues to climb at a rapid pace.
In saying this, investors should remember to consider the potential loss in value from its existing operations.
Also, there is going to be some short term pain as Ampol deploys capital towards these new initiatives. So, I would monitor the return on capital for these projects.
I like how Ampol is entering a structurally growing market but the jury is still out on whether it has a sustainable competitive advantage.
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