GE Commits Additional $10 Billion To Clean Technology Development

by Trefis Team
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Earlier this week, General Electric (NYSE:GE) announced that it will invest  additional $10 billion by 2020 for development of clean technologies which along side generating revenues will help reduce the impact on environment. [1] Labelled ecomagination, the industrial conglomerate initiated this project involving development of clean technologies in 2005. At the time, it initially committed to invest $5 billion on these projects within five years. By 2010, the company decided to invest another $10 billion through 2015. With that second round of funding set to expire next year, the company in its latest round announced this additional $10 billion funding through 2020 for development of clean technologies.

The return on this investment in the ecomagination project has also been strong for GE. Since its launch in 2005, this project, according to the company’s own assessment, has generated around $160 billion in revenues with $300 million in savings realized through reduced freshwater usage and lower emissions. [1] Overall, these investments in clean technology development now constitute a significant part of the company’s R&D budget, which totaled $4.7 billion last year. [2] Here we highlight some of the key projects that GE will work on under its latest round of funding for ecomagination.

We currently have a stock price estimate of $27 for GE, around 5% ahead of its current market price.

See our complete analysis of GE here

Use Of CO2 As An Alternative To Water In Hydraulic Fracturing

GE has tied up with Norway’s Statoil to figure whether CO2 can be used in place of freshwater in hydraulic fracturing. With growing extraction of natural gas from shale rock formations, the usage of freshwater, which helps extract gas trapped inside rocks, is growing. This is leading to reduced water availability for human and agricultural use, especially in water stressed states. While CO2 is already used for hydraulic fracturing, its use on a large scale is nonviable due to high costs. GE in partnership with Statoil will figure whether CO2 once used at a well can be trapped and then reused at another well. If the company is able to economically build such a system for CO2 usage, then it will greatly benefit from the growing exploration and extraction of natural gas. Going by previous experience, there is good chance that GE will be able to develop such a solution. Consequently, the company will bag a larger share of the growth expected in the natural gas sector over the coming years. Currently, the company sells a variety of equipment to the global oil and gas industry, spanning the entire value chain from drilling, production, compression, pipeline monitoring to downstream processing.

Reduction In Flare Gas & Its Use

Another partnership that GE has initiated is with Ferus Natural Gas Fuels. Currently, with increasing exploration of oil and gas in remote areas, operators are forced to flare unused natural gas as the infrastructure to compress and transport this gas is far off. The partnership between Ferus Natural Gas Fuels and GE will study how previously flared natural gas could be captured, separated from natural gas liquids, to be then sold. The remaining methane will be stored using GE’s CNG-In-A-Box system and transported using Ferus’ containers to remote wells. There it can be used in place of costlier and more polluting diesel to power field operations.

Apart from these projects, GE will also undertake research under its ecomagination initiative to improve its wind turbine designs so as to improve their output and lower wind power generation costs. The industrial conglomerate will also work towards raising its turbine efficiencies under this most recent budget allocation.

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Notes:
  1. GE renews ecomagination commitments, February 24 2014, www.ge.com [] []
  2. GE’s 2013 10-K, February 27 2014, www.ge.com []
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