In 2018, the Norwegian oil company Statoil rebranded itself as Equinor (NYSE:EQNR) to remove the word “oil” from its name. The business remains almost entirely dependent on oil and gas, but the rebranding was more than a public relations stunt.

Equinor wants to become the most carbon-efficient oil and gas producer and a leading renewable energy company. The idea is to leverage its offshore oil experience (earned in the ferocious North Sea no less) to become a global leader in developing, building, and operating offshore wind assets. The global industry is virtually non-existent today, but figures to be a major player in decarbonizing the global economy in the next few decades. After all, many major population centers are positioned on coastlines, which opens the door for massive offshore wind farms capable of providing reliable, nearly always-on electricity.

The company’s strategic shift was no doubt influenced by the more aggressive climate change policies in Norway and Europe. For example, Norway has committed to reducing greenhouse gas emissions 40% by 2030 from 1990 levels. The country is also phasing out fossil fuel subsidies by redirecting them to climate-friendly initiatives such as reforestation. That’s quite a policy for a country that still owns a 67% stake of its homegrown energy giant.

Of course, the strategic shift also prepares the business for the upcoming transition to electric transportation. When liquid fuels demand becomes electric fuels demand, then oil supermajors will need to own electric power assets to maintain market share. Many are beginning to build out power generation assets, but Equinor has already positioned itself as a leader among peers.

The company used its first-mover advantage to gobble up promising offshore wind acreage in Japan, Europe, and the United States; then de-risked the projects by taking responsibility for initial regulatory paperwork. That has created opportunities to sell ownership stakes in projects to de-risk commercialization, immediately monetize its renewables portfolio, and generate cash to invest in additional projects.

For instance, Equinor acquired the lease rights to the Empire Wind Project off the coast of New York City and the Beacon Wind Project off the coast of Nantucket for a combined $177.5 million. The company recently sold a 50% stake in each project to oil and gas peer BP for a total of $1.1 billion. The pair needs to spend billions in total construction costs to commercialize the projects, but they’ve pledged to work together on additional offshore wind projects in the United States.

Even though the renewable business is a small contributor for Equinor today, it provides an important glimpse into the future of major fossil fuel producers. If Equinor decides to accelerate its timeline for renewable energy projects — perhaps because it just hired an engineer as CEO for the first time, or perhaps because a global pandemic just increased economic, political, and societal pressure on the oil and gas industry — then investors might be surprised at how quickly the offshore wind strategy can scale. And at how quickly the idea of low-carbon energy transition sweeps through the oil and gas industry.

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