BP plc’s new boss set out the oil industry’s boldest plan to tackle climate change. All that’s missing is the map for how to get there.
Bernard Looney, who has been chief executive officer for just a week, committed BP to eliminating all emissions from its own operations and production by 2050. That’s a radical shift for one of the world’s largest and oldest oil companies, and he gave a blunt admission that he didn’t know how to achieve it.
“Every journey has to begin with a destination,” Looney said as he presented his new strategy in London on Wednesday. “I appreciate you want more than a vision -- you want to see milestones, near-term targets, some ways to measure progress. We do not have those for you right now.”
One thing was clear from Looney’s plan, and it’s a big deal for a company that tapped the first fields in Iran in the early 20th century and drilled wildcat wells on the Alaskan frontier more than 60 years ago.
In an industry obsessed with finding the next barrel, BP has accepted that its oil and gas production will decline. The company will reconsider its exploration strategy, sell its most carbon-intensive assets and divert spending from fossil fuels to other things.
get it. The world does have a carbon budget. It is finite and it’s running out fast,” Looney said, adopting the language of climate activists in his pitch. “We have got to change, and change profoundly.”
BP’s own operations emit the equivalent of about 55 million tons a year of carbon dioxide, while the oil and gas it pumps from the ground adds another 360 million tons. Looney said both categories of greenhouse gases will be eliminated on a net basis by 2050 or earlier.
That goes further than pledges from Royal Dutch Shell plc and Total SA, and is far ahead of U.S. peers Exxon Mobil Corp. and Chevron Corp. Only Spain’s Repsol SA has gone further by pledging to fully eliminate “Scope 3” emissions, including fuel it buys from other producers and sells to consumers.
BP will reduce by half the carbon intensity of the fuel it sells but doesn’t produce itself, Looney said.
Deep reductions in Scope 3 emissions are a big step for an industry that produces the bulk of the world’s planet-warming gases. To fulfill that pledge, Looney or his uccessors may one day face a hard reckoning – either shift energy production completely to renewables, invent a commercially viable technology to store the carbon emitted from burning oil and gas, or shut down the business.
Looney was clear that he had no intention of choosing the third option.
“BP is going to be in the oil and gas business for a very long time,” he said in a question and answer session after the presentation.
Whatever hydrocarbons BP is still pumping in 2050 will have to be subject to carbon capture and storage, a technology that’s been touted for decades but hasn’t yet been implemented on a broad commercial scale.
“I’m not going to get drawn into how much oil we’re producing in 30 years time ,” Looney said. “I do believe the technology exists” for carbon capture, he said.
On clean energy investments, the CEO was intentionally vague. “We don’t plan to commit to an arbitrary or pre-set number,” he said. “The goal is not just to spend more money, it is to invest wisely.”
In one of his last interviews before leaving office, Looney’s predecessor Bob Dudley warned against Big Oil moving too fast on new technologies to counter climate change, because their failure could lead to financial ruin.
Still, 49-year-old Looney is clearly embracing a different style and agenda to Dudley. He’s often seen in jeans and open-necked shirts with his sleeves rolled up. He recently joined Instagram, where he talks about climate change.
BP’s ultimate goal to be a thriving and sustainable energy company, Looney said.
“BP will have a very high quality oil and gas business” that over time is likely to get smaller and be de-carbonized, he said in an interview with Bloomberg television. “At the same time, I see us building and growing new low- or zero-carbon businesses.”
Looney said he will offer greater detail in September “and in the months and years to come.”
BP’s bold plan drew wide support, with industry insiders, major investors and even environmental pressure groups voicing their praise.
“Looney made an outstanding decision,” said Mark van Baal of Follow This, an activist investor that’s been pressing oil companies to set carbon targets. “We, the shareholders, have to support him through thick and thin now.”
Yet the lack of detail left BP open to criticism, suggesting it will remain in the cross-hairs of some environmental groups.
BP’s ambitions “leave the urgent questions unanswered,” Charlie Kronick, oil adviser from Greenpeace U.K., said in a statement. “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?”
© 2020 Bloomberg L.P.