Why green and blue hydrogen worldwide to be able to have those profitability rates being the characteristic of the project? And then probably we’ll be focusing on hydrogen for hydrocarbons and not for new markets. We’re working on this every day, but we know this is a technological project for in which we’re committed to and it’s facing challenges that are not minor, but of course, we are working hardly on them because the capital discipline and their profitability parameters are very important for us and we will continue doing so. And as far as the opportunity start to make sure. I hope this has clarified your concern. Jamie, I would like to add, to give you a group perspective. I think Jamie’s answer is absolutely clear. We’re looking for competitive returns, two digit returns, and we’re following all the criteria of capital discipline that for which we’re known.
This should be also seen within a broader context. If you look at the allocation of capital 70% of the company’s capital is directed to the hydrocarbon business line. 20% to transmission and roads, so we’re talking about 10% allocation first. Second as part of that 10% in our business line of low emissions, the predominant component is gas as to capital allocation. It will continue to be gas in the short and medium term. So, what we’re talking about is plans that in the context of the total allocation of capital are measured, calculated, and calibrated, where we want to understand and make these business models viable and understand its long-term profitability. And second, I would like to mention that comparison with the hydrocarbon business because as you very well know the hydrocarbon business and its profitability is highly linked to the price cycle.
One thing is when we are in the good times of prosperity and it is different when we have all the opposite, and as history has shown, nobody can anticipate that entirely and what we have noted historically is that there is great volatility. So, for us, in the context of hydrocarbon having returns and you know that we always look for sustainable returns over time of about 10%, that’s what we’re looking for. And in that line, we see that the low emission businesses can be competitive with those returns. This could be favorable and with less volatility, we’ll have to see how this evolves and if we have the regulatory conditions, market conditions, execution, and environment that will enable those returns to become real. That’s the way we see this topic.
And third, the structure of the capital that accompanies the project. While in the hydrocarbon business, given its long story and that the value chains are quite mature and well established. The general pattern of the capital structure is that the company contributes cash flow 100% in many of the projects. And in these low-emissions businesses, we see other schemes where partnerships are protagonists. The project finance is also the protagonist as part of the structure of the project for several reasons. First, because given the maturity conditions of those value chains, we need those alliances for the market to materialize. And second, also because of the risk capital ratio, we’re inviting that risk capital and financial institutions that are willing to offer financial conditions that are more competitive than in the competitive area.
To give you an example, while the capital cost of a hydrocarbon business, depending on the company, of course, could be close to 8% and 12%, depending on who’s the player in this business, it could be as low as 4% or 7% or 8%. So, really the issue here is to understand if we’re able to generate profitability for the shareholders, that differential of their profitability and the capital cost is something that we have seen so far. To the extent that those projects are sanctioned, we will be able to confirm that value proposal. That’s the way we’re approaching it. Thank you.
Bruno Montanari: Okay, thank you.
Operator: The next question comes from Luis Carvalho from UBS. You can ask now.
