BP really is moving "beyond petroleum"

IN 1997, then-BP chief John Browne gave a speech to Stanford University proclaiming his concerns about the environment and climate change.
BP really is moving "beyond petroleum" BP really is moving "beyond petroleum" BP really is moving "beyond petroleum" BP really is moving "beyond petroleum" BP really is moving "beyond petroleum"

Supermajor finally walking the walk

Mark Tilly

Journalist

Mark Tilly

"There is a discernible human influence on the climate, and a link between concentration of carbon dioxide and the increase in temperature," he said. 

"It would be unwise and potentially dangerous to ignore the mounting concern." 

However it wasn't until 2001 when the supermajor launched a US$200 million advertising campaign advising of its "Beyond Petroleum" ambitions and setting up a green division in the company under the same name. 

But that move beyond never sought to cut oil or gas production, just associated emissions from it, but the company did win a Campaign of the Year award from PRWeek in 2001 for the blitz. 

With little to show after years of minor investment in the-then very new tech, the alternative energy division was shut down in 2009. 

Last year, lawyers for campaign group ClientEarth launched a legal suit against the supermajor, saying its advertisements claiming it was "working to make energy cleaner" were misleading and in breach of guidelines for multinationals issued by the OECD. 

This year under the new stewardship of the relatively young Bernard Looney the company retired reputational advertising, and reassessed industry association memberships, cancelling three with groups that it believes are not aligned with Paris climate targets. 

The supermajor is finally putting its money where its mouth is, albeit this process has seemingly been accelerated by the global pandemic and the oil price crash. 

BP had flagged its intention to transition to net-zero by 2050 in February however most analysts took a wait-and-see approach for when the company would map out their plans in detail - that moment has arrived. 

In its newly released transition plan, chief Bernard Looney said BP will invest a 10-fold increase, or US$5 billion a year, in low carbon investment, increasing its renewables capacity to 50GW by 2030. 

It will reduce oil and gas production by 40% by 2030, with no exploration in new countries. In June it lowered it long term oil price outlook to US$55 per barrel from $70/bbl. 

It will lower emissions from its operations by 30%-35% by 2030 and reduce carbon intensity of its products by 15% by 2030 and to top it off, it will partner with cities to help decarbonisation efforts. 

"We aim to be a very different company by 2030," Looney said. 

 bernardlooneyprofilejpg BP chief Bernard Looney 

Now even the company's staunchest critics have welcomed the move, with Greenpeace UK senior climate campaigner Mel Evans describing the move as "a necessary and encouraging start".

Wood Mackenzie corporate analysis vice president Luke Parker said if ever there was a moment to reset, this was it. 

"Our view is that BP has taken the most prudent course of action," he said. 

"It constitutes the clearest and most detailed roadmap to Big Energy that any of the majors have provided to this point." 

Economist Intelligence Unit's energy lead analyst Peter Kiernan said the sustained period of depressed oil prices that is likely to continue, as the COVID-19 pandemic shows no sign of slowing down, will see other oil and gas companies make similar moves. 

"The impact of the coronavirus pandemic will sharpen the focus of operators on the future of fossil fuel demand, while likely enhancing the attractiveness of investing in lower carbon sources of energy over the longer term," he said. 

"This announcement by BP is a significant step in terms of committing the business to a lower carbon energy future." 

While the announcement came with a giant caveat for investors who will see a 50% cut in dividends, shareholders didn't seem to mind, with the company's shares climbing by 7.8% on the London Stock Exchange. 

"BP is the first oil major that walks the walk instead of just offering ambitions for 2050, like its peers," green shareholder group Follow This' Mark van Baal said. 

Earlier this year BP and Follow This agreed to work on a shareholder resolution to jointly ask shareholders for support of Paris-aligned targets and investments, which is expected to come to a vote in May next year at its AGM.

Despite the plan being widely lauded, BP's critics have pointed out flaws in the company's "sudden green ambition", noting its 20% stake in Rosneft, which as no decarbonisation policy, as well it still being able to explore for oil and gas in the numerous countries it already operates in. 

Van Baals said next year's AGM will offer BP the opportunity to secure shareholder support for investments in the energy transition, believing other oil majors would follow.  

"The resolutions will be a true test for BP and its investors," he said.