bp slashes investment in renewables to focus on ‘high-margin’ fossil fuels

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BRITISH energy giant bp is slashing its investment in renewables in favour of priortising its oil and gas business, aligning with the current trend of energy companies scaling back on green commitments.

In its “reset strategy”, the firm plans to increase its oil and gas investment by around 20% to US$10bn, while shrinking planned funding for renewables by more than US$5bn.

bp is the latest in a long line of energy companies pivoting back to oil and gas production despite promising to invest in large-scale carbon reduction.

Murray Auchincloss, the CEO of bp, said: “We are reducing and reallocating capital expenditure to our highest-returning businesses to drive growth.”

Despite bp’s net income falling from US$13.8bn in 2023 to US$8.8bn last year, the BBC reports that 48 investors requested a vote on any potential plans to move away from renewable projects.

Renewable cool-off

Late last year, bp merged its offshore wind business with Japanese energy company Jera, to form a joint venture that would free up cash flow for oil and gas.

bp says it will distribute 30-40% of cash flow to shareholders and increase their dividends by at least 4% annually.

Norwegian energy company Equinor has followed a similar strategy, recently announcing that it will half its renewables investment to US$5bn, reallocating it into oil and gas, which it expects to grow in production by 10% between 2024 and 2027.

Green outrage

bp’s reset has been met with dismay by green organisations and charities.

Charlie Kronick, a senior climate adviser for Greenpeace UK, said: “This is positive proof that fossil fuel companies can’t or won’t be part of climate crisis solutions; this conversation is over.”

Alexander Kirk, a campaigner for environmental investigation organisation Global Witness, said: “This is a company that cannot be trusted to deliver the clean energy transition. Fossil fuel companies like bp must be forced to pay for the climate damage they cause.”

The International Energy Agency have said there is no need for new oil and gas projects as it will slow down the world’s net-zero goals.

Recently, bp concluded a deal with Iraq to redevelop and rehabilitate its oil and gas fields. It also struck a deal with India’s Oil and Natural Gas Corporation (ONGC) to ramp up exploration in that country.

Auchincloss said: “This is a reset bp, with an unwavering focus on growing long-term shareholder value.”

He added: “We will grow upstream investment and production to allow us to produce high-margin energy for years to come.”