Chevron (CVX 1.07%) is a leading global oil and gas producer. Last year, the energy giant produced a record 3.3 million barrels of oil equivalent (BOE) per day. That was 7% more than the prior year, fueled by its heavy investment to maintain and grow its fossil fuel output.

However, while Chevron is a leading oil and gas producer, investors shouldn't overlook that it's also investing to build its lower-carbon new energies businesses. The company's CEO discussed its progress on several key lower-carbon initiatives during its fourth-quarter conference call.

Building an energy company of the future

Chevron has a dual focus: It's investing to supply the world with the oil and gas it needs today to fuel the economy. It's also investing to develop the lower-carbon energy resources it will require in the future.

CEO Mike Wirth discussed the progress of its strategy to build out a diversified lower-carbon energy platform on the call, stating:

We continued to build our new energies business and complete projects to lower the carbon intensity of our operations. In 2024, we sold over 20 million barrels of bio-based diesel and advanced foundational projects in CCUS and hydrogen. We also completed projects designed to abate over 700,000 tons of CO2 emissions annually.

The company is building a new energies platform focused on three core areas: renewable fuels, hydrogen, and carbon capture and storage. It has several projects across that platform that should start contributing to its financial results over the next couple of years.

In renewable fuels, Wirth noted that the company is in the final stages of commissioning its Geismar renewable diesel expansion project. Meanwhile, it's constructing a new oilseed processing plant in Louisiana as part of its joint venture with Bunge. That project will increase its exposure across the renewable fuels value chain by helping it meet the increased demand when that project enters commercial service in 2026.

The company is also working to start up its ACES green hydrogen project in Utah later this year. It will produce hydrogen from water and excess renewable power and store it underground. The stored hydrogen will act as a battery that the company can use to produce power when needed in the future. It will be the largest such project in the world, with over 200 megawatts of hydrogen production capacity.

Finally, Chevron is working toward approving its large-scale Bayou Bend offshore carbon capture and storage project. It's also developing plans for a carbon capture and storage project at its Pascagoula refinery.

Investing for the future

Chevron plans to invest about $1.5 billion this year on projects to lower the carbon intensity of its existing operations and build out its new energy businesses. That's about 10% of its overall organic capital spending budget for the year.

While that's a fraction of its budget, Chevron isn't just investing this money to be a good corporate citizen. These projects will earn high returns for the company to drive future free cash flow growth while also lowering its carbon intensity.

These investments are all part of the company's pledge to spend $10 billion to reduce its carbon emissions and build out lower-carbon businesses by 2028. That's triple the company's initial investment spending plans on lower-carbon energy.

Chevron has set 2030 production goals for each of its lower-carbon energy businesses. It aims to grow its renewable natural gas production to 40 billion thermal units (BTUs) per day and boost its renewable fuels output to 100,000 barrels per day. The company also plans to grow its hydrogen production to 150,000 tonnes per year and capture and store 25 million tonnes of carbon dioxide annually.

The company has accelerated its ability to achieve those goals by making several strategic acquisitions and investments over the past few years. It bought Renewable Energy Group (REG) in a $3.2 billion deal in 2022 to accelerate its renewable fuels business, which will get a big boost this year from the start-up of REG's Geismar expansion project. Meanwhile, it purchased a majority stake in ACES in 2023 and invested in the Bayou Bend joint venture in 2023. Those transactions enabled Chevron to invest in large-scale, advanced-stage, lower-carbon energy projects.

Not just an oil stock

Chevron is one of the world's largest oil and gas producers. However, it's also investing money to build out lower-carbon energy businesses. This strategy positions the company to provide the economy with the oil and gas it needs today and the lower-carbon energy crucial to the future. It's one of the many reasons that Chevron is a great energy stock to hold for the long term.