Global oil and gas major BP is to “fundamentally re-organise” its business, establishing a new low carbon power unit and doubling down on clean investments in a bid to become net zero by 2050.
In a major strategy announcement unveiled today, new BP chief executive Bernard Looney, who took the reins last week, has set the company the aim of becoming net zero on an “absolute basis” by 2050 or sooner.
This will require the firm to cut the carbon intensity of all of its products by 50% by 2050, coupled with a major methane reduction across its major oil and gas processing sites.
But another major tenet of its new strategy is to increase the proportion of investments it makes into non-O&G businesses over time, reorganising the business into four distinct groups, one of which will be dedicated to gas and low carbon energy.
BP’s Alternative Energies division has already amassed a portfolio of investments in clean energy firms, perhaps most notably to UK audiences the European solar developer Lightsource BP and EV charging infrastructure specialist BP Chargemaster.
These companies have seen marked upticks in scale since BP’s involvement, with Looney today stating that the energy giant would continue to “invest wisely, into businesses where we can add value, develop at scale and deliver competitive returns”.
Looney said the world needed a “rapid transition to net zero”, commenting that energy that is just reliable and affordable 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 has also set out to instigate behavioural change within the company and intends to incentivise its workforce to deliver on its new aim. It said it wants its employees to become “advocates for net zero”, and would be increasing the percentage of remuneration linked to emissions reductions.
More detail on the strategy is expected to be unveiled both within a webcast later this afternoon (12 February) and at a capital markets day later this year.
But while BP would appear to have scaled up its ambition with its net zero pledge, it comes with a major caveat. BP has also today said it would not change the company’s fundamental commitments, which include delivering on the company’s investor proposition and to grow shareholder distribution.
Green groups have responded quickly to the announcement, condemning BP for what they have labelled as an “inadequate and cynical” announcement.
Rachel Kennerley, climate campaigner for green campaign group Friends of the Earth, said: “It’s an obvious, bare-faced act to maintain their dirty business and it’s this short-sighted vision that has contributed to the crisis we face.
“BP’s new plans, like its shiny sponsorship deal with the British Museum and hypocritical promises of future action, is a distraction.”
More to follow…