Linde Signs Long-Term Agreements to Purchase Renewable Energy in China
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Insights
Renewable Energy Procurement: The acquisition of 320 gigawatt hours per year of renewable energy by Linde signifies a substantial commitment to clean energy, which is likely to positively influence the company's operational sustainability and cost-efficiency in the long term. By locking in the energy prices for 25 years through these power purchase agreements (PPAs), Linde mitigates the risk of volatile energy prices, which is a significant factor for investors to consider. The move also aligns with global trends where companies are increasingly adopting renewable energy sources to hedge against future regulatory changes and potential carbon taxes.
Impact on Scope 2 Emissions: The shift towards renewable energy will directly reduce Linde's Scope 2 emissions, which are the indirect greenhouse gas emissions from the consumption of purchased electricity, steam, heating and cooling. As Scope 2 emissions are a focal point for investors assessing environmental sustainability, this reduction could enhance Linde's appeal to socially responsible investors and may positively impact its stock valuation in an increasingly eco-conscious market.
ESG Implications: Linde's renewable energy agreements are a significant step in its environmental, social and governance (ESG) journey. The commitment to a science-based emissions reduction target and a 2050 climate neutrality ambition reflects an adherence to ESG principles, which can attract ESG-focused funds and investors. The ability to provide industrial gases with a lower carbon footprint not only improves Linde's ESG metrics but also supports the decarbonization efforts of its clients, potentially expanding its market share among environmentally conscious customers.
Long-term Strategic Benefits: Linde's investment in renewable energy can be seen as a strategic move to future-proof its business against stricter environmental regulations. The long-term nature of these agreements suggests a long-term vision that may reassure investors of Linde's commitment to sustainability and its potential to maintain a competitive edge in the industrial gas sector, where environmental considerations are becoming increasingly important.
Cost Structure and Profitability: The financial implications of these power purchase agreements are multifaceted. Initially, there may be capital outlays or higher operational expenses as Linde transitions to renewable energy sources. However, over the 25-year span of the agreements, the company is likely to experience reduced energy costs, contributing to improved margins and profitability. Moreover, the use of fixed-price PPAs can provide financial predictability, which is favorable for financial planning and budgeting.
Stock Market Reaction: While the direct impact on Linde's stock performance in the short term may be limited, the long-term benefits of energy cost savings and improved sustainability profile could lead to an upward revaluation of the stock. Investors will likely monitor the implementation of these agreements and their effect on Linde's financials closely, with particular attention to upcoming earnings calls and financial reports for indications of cost savings and efficiency gains.
WOKING, UK / ACCESSWIRE / February 1, 2024 / Linde (Nasdaq:LIN) announced today it has signed two new long-term power purchase agreements for the supply of renewable energy in China.
Linde has signed separate 25-year agreements with Guangdong Energy Group (GEG) and China Three Gorges Corporation (CTG) to secure a total of 320 gigawatt hours per year of renewable energy. The renewable power will be generated by solar projects located in the provinces of Guangdong and Jiangsu, and supply is due to start in the first quarter of 2024.
These and other recent renewable energy agreements support Linde's progress towards its science-based absolute greenhouse gas reduction target for 2035 and its 2050 climate neutrality ambition.
In addition to reducing Linde's Scope 2 emissions, the renewable energy will help Linde's customers decarbonize their processes by using industrial gases with a lower carbon footprint. Linde's solutions, technologies and services help customers avoid more than two times the emissions generated by Linde's own operations.
"These agreements take us another step towards our 2035 emissions reduction target and enable us to supply industrial gases with a lower carbon intensity to our customers in China at a competitive price," said Will Li, President Greater China, Linde. "They are central to two important objectives for the company: helping our customers to decarbonize and reducing Linde's own emissions."
About Linde
Linde is a leading global industrial gases and engineering company with 2022 sales of
The company serves a variety of end markets such as chemicals & energy, food & beverage, electronics, healthcare, manufacturing, metals and mining. Linde's industrial gases and technologies are used in countless applications including production of clean hydrogen and carbon capture systems critical to the energy transition, life-saving medical oxygen and high-purity & specialty gases for electronics. Linde also delivers state-of-the-art gas processing solutions to support customer expansion, efficiency improvements and emissions reductions.
For more information about the company and its products and services, please visit www.Linde.com
| Contacts: | |
| Investor Relations Juan Pelaez Phone: +1 203 837 2213 Email: juan.pelaez@linde.com | Media Relations Anna Davies Phone: +44 1483 244705 Email: anna.davies@linde.com |
SOURCE: Linde plc
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