Oil major BP’s new chief executive Bernard Looney has unveiled ambitious climate commitments, an ambition to become a net zero company by 2050 or sooner, and a commitment to greater investment in non-oil and gas business – which could include offshore wind
Over time BP aims to increase the proportion of investment it makes into non-oil and gas businesses. BP’s chief executive did not specifically mention offshore wind, but in keeping with other oil majors such as Shell and Equinor, the company has taken a growing interest in the market.
Earlier in February, Equinor also launched an ambitious strategy that includes a significant commitment to renewables and more offshore wind. Unveiling its new ‘climate roadmap’ for the energy transition, which it said would be a good fit for long-term value creation and was in line with the Paris Agreement, Equinor said it aims to grow renewable energy capacity tenfold by 2026, developing as a global offshore wind major.
Mr Looney 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.”
Speaking at the launch of the new strategy, Mr Looney said “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.”
BP chairman Helge Lund said, “Energy markets are changing, driven by climate change, technology and societal expectations, and the board supports Bernard and his new leadership team´s ambition for BP. Aiming for net zero is not only the right thing for BP, it is the right thing for our shareholders and for society more broadly. As we embark on this ambitious agenda, we will maintain a strong focus on safe, reliable and efficient operations and on delivering the promises we have made to our investors.”
BP’s ambition to be a net zero company by 2050 or sooner covers the greenhouse gas emissions from its operations worldwide, currently around 55M tonnes of CO2 equivalent (MteCO2e) a year, and the carbon in the oil and gas that it produces, equivalent currently to around 360 MteCO2e emissions a year – both on an absolute basis. Taken together, delivery of these aims would equate to a reduction in emissions to net zero from what is currently around 415 MteCO2e a year.
BP said it also aims to help its customers reduce their emissions by halving the carbon intensity of the products it sells, again by 2050 or sooner – offering customers more and better choices of low- and no-carbon products.
The structure of BP’s organisation has been broadly the same for more than a century, split into separate organisations – upstream, downstream, and other businesses. To deliver its new ambition and aims, BP will now undergo a fundamental reorganisation.
“We need to reinvent BP,” Mr Looney said. “Our historic structure has served us well but, in order to keep up with rapidly-evolving customer demands and society’s expectations, we need to become more integrated and more focused. So we are undertaking a major reorganisation, introducing a new structure, a new leadership team and new ways of working for all of us.”
Under the plans, BP’s existing, largely autonomous business segments – upstream and downstream – will be dismantled and the group reorganised globally into a more focused and more integrated entity, comprising 11 teams. The heads of these teams will make up BP’s new leadership team with, among other roles, a gas and low carbon unit led by Dev Sanyal, that will unite energy teams currently dispersed around BP to create focused low carbon solutions. It will also pursue opportunities in decarbonisation and new value chains such as hydrogen and CCUS.
Another new unit, innovation and engineering, headed by David Eyton, will bring added momentum to BP’s venturing and Launchpad investments and act as a catalyst for creating value from disruptive opportunities.
Mr Looney said the company also remains committed to its investor proposition of growing sustainable free cash flow and distributions to shareholders over the long term.
In setting out on a new path, BP has joined Shell, Total, Equinor and Repsol in making a major commitment to reduce its net carbon footprint.
Analysts at Wood Mackenzie said, “This will see BP’s business completely transformed over the coming decades: renewables and carbon abatement will get very big; legacy oil and gas will eventually get smaller. But the transition to 2050 is a multi-decade transition – not something that will happen in the next year or so.”
Oil & Gas UK sustainability director Mike Tholen said, "BP’s ambition to achieve net zero by 2050 shows the commitment of the oil and gas industry to lead the energy transition.
"We’re now seeing increasing and practical examples of how oil and gas companies are stepping up to provide solutions in the transition to a net zero carbon economy.
"This strengthens the UK industry’s response to government net zero commitments, offering a clear route to the sustainable, fair and inclusive transition we all want to see.”