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Engine No. 1, the hedge fund that bested ExxonMobil in a struggle over its method to local weather change, is teaming up with the supermajor’s rival Chevron to construct fossil gasoline vegetation to fulfill hovering synthetic intelligence-driven energy demand.
The previous activist investor stated on Tuesday it was forming a three way partnership with Chevron and agreed to a partnership with vitality firm GE Vernova to develop pure fuel energy vegetation beneath a fast-track timeline.
The enterprise comes 4 years after Engine No. 1 launched one among Wall Avenue’s most audacious proxy wars in opposition to Exxon, arguing that the oil main confronted an “existential enterprise danger” by pinning its future to fossil fuels.
On the time the hedge fund claimed Exxon had not adequately thought of that oil and fuel demand might decline, saying the producer lacked a “credible plan to guard worth in an vitality transition”.
Though it held solely 0.2 per cent of Exxon’s shares, Engine No. 1 received three seats on its board in a victory that despatched shockwaves throughout company America and have become the emblematic victory of the environmental, social and governance motion.
Chris James, Engine No. 1’s founder and chief funding officer, stated the funding with Chevron was in step with its earlier Exxon marketing campaign.
“This isn’t a pivot. The Exxon marketing campaign was targeted on governance and capital allocation as a method to create worth for shareholders. It was not about ideology or fossil fuels or renewables,” James instructed the Monetary Occasions.
“This partnership with Chevron and GE is about allocating capital in an economic system that’s present process a re-industrialisation and wishes dramatically extra energy . . . This can result in worth creation for shareholders.”
The businesses plan to co-locate energy vegetation with knowledge centres and ship as much as 4 gigawatts of electrical energy — sufficient to energy as much as 3.5mn properties — by 2027.
The funding, which analysts estimate at as much as $8bn, is a part of a race by vitality firms to capitalise on surging energy demand forecasts linked to the rollout of AI knowledge centres.
“That is the start of those AI wars,” James stated, referring to the race between China and the US to harness a know-how its boosters consider will rework the worldwide economic system.
“Everyone knows that China has an unlimited quantity of energy out there. But when we’re actually going to do a digital re-industrialisation of the US we’re going to wish to make these investments at scale,” James stated.
Engine No. 1’s determination comes as Wall Avenue and huge companies throughout the US beat a gradual retreat from ESG and different progressive programmes which have drawn fireplace from President Donald Trump and Republicans.
James, a hedge fund trade veteran who made a fortune as a know-how and biotech investor, has taken Engine No 1 in a unique course for the reason that Exxon marketing campaign. In 2023 he introduced the hedge fund would put $780mn into the bottom metals enterprise of Brazilian miner Vale and instructed the FT that he by no means thought of himself an activist investor.
“I think about myself an investor and activism is a instrument of final resort, not a method,” he stated.
The traders stated they anticipated the fuel vegetation to be designed with the flexibleness to combine carbon seize and storage — a know-how that has but to realize full industrial and technical feasibility.
The fuel plant three way partnership additionally marks a strategic shift for Chevron, which is getting into the electrical energy enterprise a number of months after Exxon additionally declared plans to construct fuel energy vegetation to gasoline AI knowledge centres.
The announcement on Tuesday got here a day after tech shares slumped on information that China had developed a less expensive AI mannequin that would want far much less energy than Silicon Valley’s energy-intensive AI programs.
“We nonetheless see the expansion in electrical energy demand being vital, simply in the remainder of this decade, to not point out previous it,” stated Jeff Gustavson, president of Chevron New Energies.
“AI would be the large driver, however there are different drivers: reshoring of US manufacturing and simply total electrification within the pursuit of a decrease carbon vitality future.”
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