BP reveals strategy to reach net zero

FOLLOWING its announcement in February to become a net zero company by 2050 or sooner, BP has revealed its net zero strategy. The plan includes many shorter-term objectives, including cutting oil and gas production by 40% by 2030.

The announcement earlier this year by new BP CEO Bernard Looney that the company will become net zero by 2050 or sooner was part of Looney’s vision to “reinvent BP”. The strategy revealed this week signifies some major changes for the company, and further details are expected at a shareholder meeting in September.

The strategy is notable for containing many objectives to be reached this decade. BP said it will increase its low-carbon investment from current levels of US$500m/y to US$5bn/y by 2030. This will include investing in technologies such as bioenergy, hydrogen, CCS, and renewables. It aims to have 50 GW of renewable energy capacity by 2030, up from 2.5 GW in 2019. Bioenergy production will grow from 22,000 bbl/d to 100,000 bbl/d.

It will partner with cities and core industries to increase decarbonisation efforts, and has committed to no new exploration in new countries.  

Crucially, it plans to reduce oil and gas production by 40% by 2030, equivalent to reducing its production from 2.6m boe/d to 1.5m boe/d. Refining throughput will also decrease from 1.7m bbl/d to 1.2m bbl/d. It has also committed to reducing emissions from operations by 30–35%, and reducing emissions from upstream oil and gas production by 35–40%. It also plans to reduce the carbon intensity of its products by 15% by 2030.

“We are announcing a new strategy that will reshape our business as we pivot from an international oil company focussed on producing resources to an integrated energy company focussed on delivering solutions for customers,” said Looney. “All of this means we aim to be a very different company by 2030. And that’s what the world needs. The next decade is critical in the fight against climate change. We believe this new strategy provides a comprehensive and coherent approach to turn our net zero ambition into action.”

Reducing oil and gas production is a ‘breakthrough’

BP’s strategy – particularly the announcement of a 40% cut in oil and gas production – has largely received a positive response, even from climate action campaigners.

Mel Evans, Senior Climate Campaigner for Greenpeace UK, said: “BP has woken up to the immediate need to cut carbon emissions this decade. Slashing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry needs to do for the world to stand a chance of meeting our global climate targets. BP must go further, and needs to account for or ditch its share in Russian oil company, Rosneft. But this is a necessary and encouraging start.”

Andrew Grant, Carbon Tracker’s Head of Oil, Gas and Mining, said: “Most oil and gas peers have conveniently ignored the global need to produce and use less oil and gas – BP’s production cut of 40% by 2030 makes them unquestionably the industry leader. The question now is, as investors have clearly shown what they want, who else will follow BP’s leadership?”

Activist investor group Follow This applauded BP’s strategy, calling BP the first oil major to truly change course. Mark van Baal, Founder of Follow This, said that BP is showing a sense of urgency and imagination beyond oil and gas, unlike other oil majors who want to appear as if they are taking the energy transition seriously but in reality want to remain as oil and gas companies.  However, commenting on BP’s commitment to not explore for oil and gas in new countries, van Baal said that BP also needs to cease exploring where it already has operations in order to meet the goals of the Paris Agreement.

Kathy Mulvey, Accountability Campaign Director at the Union of Concerned Scientists, said: “BP’s announced strategy of reducing oil and gas production by 40% is a breakthrough that ratchets up the pressure on its competitors.”

“Of course, if BP reduces emissions from its oil and gas production by selling operations to other companies, that won’t slow global warming. But other investor-owned companies also are feeling the pressure to reduce emissions to net zero, and oil and gas assets are not the appealing purchases they might have been a decade or so ago.”

Mulvey said that there were still questions on BP’s strategy, which she hoped would be answered at the meeting in September. This includes what assumptions are made on the feasibility and costs of CCS, if BP will set firm targets where it can be held accountable by investors and policy makers, and how the company defines “low carbon” and if it is erroneously counting fossil fuels as low carbon. Follow This also said that it would be assessing the details of BP’s low carbon pledge. “We prefer a shift in investments from fossil fuels to renewables,” said van Baal. “That’s more than semantics. Low carbon is not no carbon.”

Bruce Baizel, Energy Program Director at Earthworks, also welcomed the production cut, but cautioned that BP’s plan still doesn’t specify which clean energy measures it will take. Baizel also said that the industry’s voluntary actions won’t be enough, and clear government policies are needed to hold the oil and gas industry to account.

“Without national standards requiring dramatic cuts to all oil and gas methane pollution, BP’s plan, even if successful, isn’t enough to prevent climate catastrophe. The only clear way to protect community health and our climate is to stop permitting new production and begin a more comprehensive managed decline in the use of all fossil fuels.”