Oil giant BP seeks to ‘reinvent’ itself with 2050 zero carbon goal

“The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero,” said Bernard Looney, BP's new CEO. [Tim M / Shutterstock]

BP set one of the oil sector’s most ambitious targets for curbing carbon emissions on Wednesday (12 February) as new chief executive Bernard Looney launched the biggest revamp in the company’s 111-year history.

“We have got to change and change profoundly because the world is changing fast and so are society’s expectations of us,” Looney said in his first major speech as CEO, after earlier highlighting a need to “reinvent BP”.

“It is aiming to reduce and neutralise the carbon in the oil and gas that we dig out of the ground,” Looney added.

The 2050 carbon-neutral objective is in line with the EU’s own climate targets. In December, EU heads of states signed off on plans tabled by the European Commission to make Europe the first climate-neutral continent in the world by 2050.

The Commission is now busy drawing up a European “Climate Law” that will enshrine the 2050 objective into hard legislation. A proposal is expected to come out on 4 March. Once adopted, it will become legally binding for all EU member states.

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The European Commission launched a public debate about the EU’s upcoming Climate Law on Tuesday (28 January), with a view to enshrining the bloc’s 2050 “climate neutrality” target into binding legislation before the UN climate conference in Glasgow later this year.

BP did not say how it intends to get emissions from its operations and barrels produced to net zero and halve the intensity of emissions by all products it sells, including diesel and petrol, a measure known as Scope 3.

The company has tried and failed to reinvent itself before, with a pioneering plan to build a large renewables business in the early 2000s, which ended with huge losses.

One possible way to hit greenhouse gas reduction targets is to buy offset certificates and bet on carbon capture and storage technology, which is not yet used on a commercial scale.

Investor groups welcomed the company’s 2050 targets, which put BP ahead of rivals Royal Dutch Shell, Total, Equinor and all of the US oil majors. But Charlie Kronick, oil advisor from Greenpeace UK, was sceptical about how BP can deliver.

“How will they reach net zero… When will they stop wasting billions on drilling for new oil and gas we can’t burn?”

The world’s top oil and gas companies are under heavy pressure from investors and climate activists to meet the 2015 Paris climate goal of limiting global warming to below 2 degrees Celsius from pre-industrial levels.

The oil and gas industry must “act much, much faster and go farther in reducing the carbon footprint,” said Tim Eggar, chairman of the UK’s Oil and Gas Authority (OGA).

“This requires ambitious thinking, capital investment and bold leadership. Action not just talk or more analysis,” he said last month in comments that sent shockwaves through the industry.

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Tim Eggar, chairman of the UK’s Oil and Gas Authority (OGA), sent shockwaves through the industry on Wednesday (15 January) when he said growing public awareness about climate change was putting the sector’s very survival at stake.

“Absolute reduction” to net zero

BP, which produced around 2.64 million barrels of oil equivalent per day in 2019, said it would cut emissions to net zero from some 415 million tonnes of CO2 equivalent a year. Near term plans will be published by September, Looney said, adding BP is likely to produce fewer barrels by 2050.

Stephanie Pfeifer, a member of the global Climate Action 100+ Steering Committee and CEO of the Institutional Investors Group on Climate Change, welcomed BP’s plan.

“Building on the positive engagement with BP…investors will continue to look for progress from the company in addressing climate change. This includes how it will invest more in non-oil and gas businesses,” she said in a statement.

A spokeswoman for climate change activist group Extinction Rebellion said the group welcomes BP’s “recognition of the reality we now live in but 2050 is too late”.

Other environmental groups were more supportive. “Looney deserves support and credit for starting BP on the journey towards carbon neutrality and policy leadership,” said Fred Krupp from the Environmental Defense Fund (EDF), a US-based pressure group.

“The direction is good, and we look forward to hearing more about the specifics. Time will tell if he gets BP where it needs to go. It’s real actions and verifiable emissions reductions that will be the measure of success,” Krupp said.

Scope 3

While European majors have taken steps to reduce their emissions, BP’s time-bound plan to reach an “absolute net zero” level by 2050 surpasses any industry announcement made so far.

Anglo-Dutch group Shell has set Scope 3 targets based on intensity rather than on absolute reduction terms. Intensity-based targets measure the amount of greenhouse gas (GHG) emissions per unit of energy or barrel of oil and gas produced. That means that absolute emissions can rise with growing production, even if the headline intensity metric falls.

Scope 3 emissions vastly exceed greenhouse gases caused by the production of crude oil, natural gas and refined products, including electricity generation, typically by a factor of about six among oil majors, according to Reuters calculations.

BP will also set “new expectations” for relationships with trade organisations and be ready to quit if they are not aligned.

“The world’s carbon budget is finite and running out fast; we need a rapid transition to net zero,” Looney said.

Last year, BP invested around $500 million in low-carbon technologies including wind power, electric vehicle battery charging systems and solar power firm Lightsource BP. That compared to an overall budget of $15.2 billion in 2019.

Meanwhile, US groups such as Exxon, Chevron and ConocoPhillips are far less ambitious with their greenhouse gas reduction targets than their European rivals.

European oil majors better prepared for energy transition than US, Chinese counterparts

Oil majors are “lagging” when it comes to preparing for the low-carbon energy transition, according to a new report from financial watchdog CDP, which nonetheless praised BP, Eni, Equinor, Total, Repsol and Shell for taking the industry’s lead.

[Edited by Zoran Radosavljevic]

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