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As Greentech Media reported, oil and gas giant BP announced yesterday that it will cut its oil and gas output by 40% by 2030 and increase its low-carbon investment tenfold by then as it begins to detail its 2050 net-zero strategy.
This announcement comes after BP head of strategy Giulia Chierchia told investors on a call that BP expects demand for fossil fuels to fall by 75% over the next 30 years if the increase in global temperatures is limited to 1.5 degrees celsius, or by 50% if warming is less than 2 degrees. However, as CNN wrote, the bulk of its annual capital expenditure over the next five years will still be in oil and gas.
Why This Matters: BP is the first of the oil majors to set a 40% emissions reduction target date by 2030, especially with a tangible plan of how they’ll achieve this. After the Deepwater Horizon oil spill in 2010, BP (despite its moniker of “Beyond Petroleum”) had one of the worst corporate reputations in the world. This is a notable step and markets have reacted in accordance. As Andrew Grant wrote for Carbon Tracker:
On the day of BP’s announcement, its share price is up 7% – the market has clearly shown that it agrees.
The question now is, as investors have clearly shown what they want, who else will follow BP’s leadership?
BUT: The Washington Post reported that the rally in BP’s stock comes with a downside for investors. Yesterday’s announcement means an immediate 50% cut in dividends, a significant hit for the British pension funds that rely heavily on BP’s quarterly payments to shareholders. But it will arm the company with more cash as the business reacts to climate change.
The ShakeUp: The announcement comes two months after BP wrote off billions of dollars in assets citing the COVID-19 pandemic. Yet despite the fact that oil and gas operations will still constitute the majority of BP’s operations in the foreseeable future, the company is now targeting 50 gigawatts of renewables capacity by 2030, an ambition that puts it on a level with French utility giant EDF, Greentech Media added.
BP’s renewables target includes a 20-gigawatt goal by 2025, up from the 2.5 gigawatts it has today.
It says it will not launch new oil and gas exploration efforts in countries where it does not already have a presence, although it is not ruling out new wells in countries where it already operates.
The Reaction: Climate activist Bill McKibben welcomed BP’s announcement as did most of climate Twitter. Meanwhile, Kelly Trout, Senior Research Analyst at Oil Change International, responded with the following statement:
“Today BP is finally starting to heed activists’ calls to ‘Keep it in the Ground.’ The fact that BP’s new commitment represents a major step up in ambition compared to other oil and gas majors only underscores how far behind the entire sector is in acknowledging climate reality. BP has changed the game, but in a league with zero climate credibility.
Today’s announcement is an important signal to the rest of the industry that the only credible way to cut pollution is to cut fossil fuel production.”
First off: BP is leaving out a *big* part of its business, it’s 20% stake in Russian oil giant Rosneft. It needs to account for those emissions.
Second, we don’t really know if BP’s investments in “clean energy” are really clean. According to a recent investigation by Greenpeace, some of those investments are just going towards new technology to find more oil.
Third, there’s nothing in this plan about taking responsibility for the damage BP has done and continues to do to communities around the world.
And lastly, we don’t know what this plan might mean for BP’s workers.
Yesterday, California Governor Gavin Newsom announced that the state will phase out sales of all gasoline-powered vehicles by 2035. As Governor Newsom said in a separate event with Democratic governors yesterday, people have climate “goal fatigue” and are ready for the application of those goals–this move on gas-powered cars walks the walk on California’s ambitious […]
H/T to renews.biz, an energy news platform, for that headline, and to PepsiCo for making it possible. PepsiCo, one of the largest companies in the world — with a global carbon footprint — announced plans this week to transition to 100% renewable electricity across all of its company-owned and controlled operations globally by 2030 and […]
Why This Matters: Methane leaks are dangerous — they have led to reports of tap water catching fire, toxic groundwater, and fatal explosions, all of which have been motivators for the federal government to track and seal these wells.
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