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March 7th, 2024 | 06:30 CET

Sustainable investments in focus: Occidental Petroleum, Carbon Done Right, Plug Power - Which stock offers the greatest advantage for a net zero economy?

  • Sustainability
  • Technology
  • AI
  • Oil
  • greenhydrogen
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True sustainability is a delicate balancing act for investors seeking high returns. Companies worldwide still need fossil fuels to keep their businesses running and growing. The US oil and gas producer Occidental Petroleum is no exception. The Company, in which Warren Buffett also invests, is doing a lot to reduce its carbon footprint. On the other hand, Carbon Done Right is sustainable through and through. Its business model involves the reforestation and greening of forests and rainforests to trade real CO2 certificates for companies such as Amazon and Microsoft. Thanks to innovative AI, Carbon Done Right is finally bringing the desired transparency to the carbon market by monitoring tree growth via satellite. Meanwhile, Plug Power relies on in-house hardware and expects a restructuring of tech companies to favour its CO2-friendly solutions. Who truly has the edge when it comes to sustainable measures and returns?

time to read: 6 minutes | Author: Juliane Zielonka

Table of contents:

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    Sustainable growth: Occidental Petroleum invests in CO2 reduction measures

    Occidental Petroleum (NYSE: OXY) is an exploration and production company valued at USD 53.3 billion and headquartered in Houston, Texas. Warren Buffett's investment firm Berkshire Hathaway holds a significant 28.8% of shares outstanding in this company. According to TIKR - a platform for financial data and analysis - OXY is one of Berkshire's top 7 investments by share in the Company portfolio with 3.86% of the total portfolio. The other six top investments include Apple, Bank of America, American Express, Coca-Cola, Chevron and Kraft Heinz.

    In his latest Shareholder Letter, Buffett speaks favourably of the Company's female CEO, Vicky Hollub: "Under her leadership, Occidental is doing the right things both for its country (US, editor's note) and its owners. No one knows what oil prices will do in the coming months, years or decades. But Vicki knows how to separate oil from rock, an unusual talent that is of value to her shareholders and her country." He emphasizes that no one can predict the price on the oil markets, but the extraction of fossil fuels such as oil and gas is a solid business that will continue for years to come. After all, these fuels are also needed for the transition to renewable energies.

    The production volumes to date show that the business is profitable. Occidental Petroleum posted strong results in 2023, with record productivity rates, increased proven reserves of approximately 4 billion barrels of oil equivalent, a 137% RRR, and free cash flow of USD 5.5 billion.

    The Company Occidental Petroleum is exploring new ways to reduce emissions at its energy and chemical operations. Its subsidiary, Oxy Low Carbon Ventures, is advancing cutting-edge technologies and business solutions that grow the business economically while reducing emissions. The Company believes that carbon removal technologies in its production process can help support the transition to a less carbon-intensive economy.

    Buffett has already identified the risk associated with an investment in OXY: Should OPEC decide to exert more pressure on the oil industry, this could negatively impact the OXY share price. Meanwhile, production remains stable.

    Carbon Done Right: Transparent CO2 certificate trading thanks to innovative AI

    Anyone who goes out into nature after a stressful day on the stock market knows how valuable it is for people to recharge their batteries and find peace and quiet. The reduction of CO2 emissions is on the agenda of economies worldwide due to the Paris Agreement. Political agreements force companies to take action to leave a green footprint. Not all companies are able to do so; for example, Occidental Petroleum is an explorer and producer of fossil fuels for numerous industries. Global players such as Microsoft or Meta have little influence on their CO2 emissions due to their business model with electronics.

    **For such companies, Carbon Done Right Developments Inc. offers a solution through the purchase of CO2 certificates, which are generated through the active reforestation and protection of forests that Carbon Done Right manages. In other words, nature, the protection of nature, and the restoration of nature are exchanged for CO2 certificates. Reforestation and forest protection mainly take place in developing countries. In the recent past, harmful practices have influenced trust in the international carbon markets. Reason enough for Carbon Done Right to ensure transparency and use AI to monitor the Company's project progress.

    The name change from Klimat X to Carbon Done Right alone shows that they are serious. Their name says it all. Through the Carbon Quantification System (CQS) developed by Klimat X, all planted trees are monitored by satellite. AI models at tree level track their health and provide accurate carbon sequestration data. Unlike other companies, Carbon Done Right operates as the direct owner and operator of projects to meet the growing demand for carbon credits.

    This step enables equitable distribution of the value generated by the sale of carbon credits to landowner families and ensures rapid payments to smallholders through automated tools. This is a blessing for customers and investors, who can rest assured that they are buying genuine carbon credits or investing in a company that understands the value of carbon trading from the ground up, with clean sources.

    Kevin Godlington, President-Designate, affirms: "Carbon Done Right's unique carbon quantification system will provide unprecedented insight into forest change and carbon sequestration at the individual tree level. We are excited to change our name to reflect the technology while aligning our business mission with its values of innovation and transparency."

    Furthermore, Carbon Done Right supports local economies in the countries where it operates projects. For example, with existing projects in Sierra Leone already covering 1400 ha of forest and 14 ha of mangrove, the Company plans to expand to at least 100,000 ha, with about half of all land suitable for restoration in Africa being managed by smallholder farmers. For investors interested in truly sustainable investments, Carbon Done Right is a clean play.

    Plug Power anticipates increasing demand for green hydrogen fuel cell systems for data centers by 2025

    Expectations for Plug Power's green hydrogen fuel cell systems are rising. The Company expects demand from data centers to increase in the second half of 2025. The decision to use this technology results from the limitations of diesel drives and the continuous need for power supply in data centers. Green hydrogen is considered an energy-neutral fuel and could, therefore, serve as a backup power option for data centers.

    In a conference call, Andrew Marsh, CEO of Plug Power, explained that the Company is planning initial deployments and testing with the three largest data center operators. Marsh emphasized that these deployments are not expected to take place on a large scale until the end of 2025. This announcement comes amid an expected increase in electricity demand in the US due to data-intensive data centers. Some utilities have already struck deals to handle the increasing load in the coming years.

    Analysts, including James West from Evercore ISI, are forecasting increased demand for hydrogen in stationary business applications as industry leaders such as Amazon, Microsoft and Google step up their sustainability efforts. These companies are increasingly looking for ways to reduce their carbon footprint and move away from using diesel fuels. Hydrogen fuel cell systems are seen as a promising option for achieving these goals. In addition, the companies mentioned are all ideal business customers for Carbon Done Right.

    As a result, the increased integration of hydrogen into business applications could help accelerate the transition to a lower carbon economy while meeting the growing energy demands of the digital world. Smart investors are reading between the lines and hearing a "could". Before existing systems are rebuilt, trading carbon credits is a good option as it does not change any processes on the buyer side. The transition to a net zero economy is a gradual process and will not happen overnight.

    Occidental Petroleum, Carbon Done Right and Plug Power are committed to sustainable growth and carbon reduction measures to support the transition to a lower carbon economy. Occidental Petroleum is focused on record productivity rates and carbon reduction measures in the energy industry. The actual exploration and production business can be transformed in its production process so that less carbon is released into the atmosphere. Carbon Done Right is one of the few companies that independently carries out reforestation projects and uses innovative AI to bring valid CO2 certificates to market via satellite - an ideal opportunity for companies such as Amazon, Meta and Alphabet to reduce their carbon footprint. Green energy companies such as Plug Power expect an increasing demand for green hydrogen fuel cell systems from tech moguls as part of the solution for the transition to a more sustainable future.

    Conflict of interest

    Pursuant to §85 of the German Securities Trading Act (WpHG), we point out that Apaton Finance GmbH as well as partners, authors or employees of Apaton Finance GmbH (hereinafter referred to as "Relevant Persons") may hold shares or other financial instruments of the aforementioned companies in the future or may bet on rising or falling prices and thus a conflict of interest may arise in the future. The Relevant Persons reserve the right to buy or sell shares or other financial instruments of the Company at any time (hereinafter each a "Transaction"). Transactions may, under certain circumstances, influence the respective price of the shares or other financial instruments of the Company.

    In addition, Apaton Finance GmbH is active in the context of the preparation and publication of the reporting in paid contractual relationships.

    For this reason, there is a concrete conflict of interest.

    The above information on existing conflicts of interest applies to all types and forms of publication used by Apaton Finance GmbH for publications on companies.

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    Der Autor

    Juliane Zielonka

    Born in Bielefeld, she studied German, English and psychology. The emergence of the Internet in the early '90s led her from university to training in graphic design and marketing communications. After years of agency work in corporate branding, she switched to publishing and learned her editorial craft at Hubert Burda Media.

    About the author

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