BP has announced plans to become a net zero emissions company by 2050 or sooner, one of the most ambitious climate pledges yet made by an oil major.
Along with absolute net zero commitments across all of BP’s operations, it will also cut the carbon intensity of products it sells by 50 per cent by 2050 at the latest.
Accompanying the raft of new pledges are plans to transform BP’s business, reorganising its autonomous upstream and downstream segments into a more integrated entity made up of 11 teams.
Bernard Looney, the firm’s new chief executive, said in a statement:
“The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero. We all want energy that is reliable and affordable, but that is no longer enough.
It must also be cleaner. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it.
“This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP.”
Looney also said that BP was intending to increase the proportion of investment it makes into its renewable energy businesses.
He said: “We expect to invest more in low carbon businesses – and less in oil and gas – over time. The goal is to invest wisely, into businesses where we can add value, develop at scale, and deliver competitive returns.”
Richard Howard, research director at Aurora Energy Research, told City A.M. that the move was “hugely ambitious” and urged patience while BP work out the specifics of what the transition entails:
“This will be the defining challenge of Looney’s tenure. You would not expect him to know all the answers yet”.
Howard pointed to a number of steps BP could take to hit its target, including reducing methane emissions, which are fare more harmful than carbon dioxide emissions, and investing in carbon capture and storage technology.
He added that it would also have to invest much more in renewable energy sources, but that this would be a challenge due to the much lower returns that such assets produce.
Carbon Tracker’s head of oil, gas and mining Andrew Grant said that the move was “a big step forward”:
“In our research we have pointed out the need for oil and gas producers to reduce emissions and production in absolute terms in order to fit within climate constraints, and crucially to make sure that they only invest in the lowest cost assets in order the mitigate the financial risk of them being stranded in the energy transition.
“BP’s recognition of the finite emissions limits imposed on our planet is a big step forward”.
He added he was keen to understand how BP would go about making the transition. In an event to launch the new pledges, Looney shied away from such details, saying that today’s announcement was “about a vision, a direction of travel” rather than specifics.
Climate activists Greenpeace, who blockaded BP’s St James’ Square headquarters on Looney’s day next week, said that the commitments were not enough. Charlie Kronick, the group’s oil adviser, said the pledge left “urgent questions unanswered”:
“How will they reach net zero? Will it be through offsetting? When will they stop wasting billions on drilling for new oil and gas we can’t burn? What is the scale and schedule for the renewables investment they barely mention? And what are they going to do this decade, when the battle to protect our climate will be won or lost”, he said.
Environmental NGO Global Witness added its voice to the criticism, saying that the plan “is simply not credible”.
Pointing to the fact that only four per cent of the company’s investments currently go on renewable sources, the group’s oil and gas campaigner leader Murray Worthy said:
“BP’s net zero pledge looks like an attempt to grab some positive headlines by a new chief executive, but with little of substance to show how it will achieve these grand claims.”
“The only way these plans could be considered credible is if BP immediately stops drilling for new oil and gas and until this happens they will continue to a driving force behind the climate crisis our planet faces. Positioning itself as a climate leader while labelling gas as low-carbon is just another example of why the world still cannot take BP seriously.”
BP’s decision means that it is only the second oil company after Spanish firm Repsol to make a net zero by 2050 commitment. Other firms, such as Norway’s Equinor, have made similar pledges on carbon intensity but have stopped short of absolute net zero commitments.