BP Wants to Be Carbon Neutral by 2050, but Doesn't Say How -- Update
February 12 2020 - 11:43AM
Dow Jones News
By David Hodari and Adriano Marchese
LONDON -- BP PLC pledged to reduce its net carbon emissions to
zero by 2050 and restructure its oil-focused businesses to better
navigate a transition to other fuels -- a dramatic, if vague,
promise by one of the world's biggest energy companies amid
investor and consumer pressure over fossil fuels.
The goal is the latest in a series of commitments, made over
decades, by big oil companies to reduce emissions. While bold in
ambition, BP didn't provide details about how it expects to
accomplish the goal, or how much it will cost. The time horizon, 30
years, provides plenty of wiggle room.
BP's move comes a week into the tenure of new Chief Executive
Bernard Looney and marks a striking departure from the course set
by his predecessor, Bob Dudley.
While BP doubled down on oil through mergers and acquisitions
under Mr. Dudley, Mr. Looney has posted on his LinkedIn and
Instagram pages that "It's now up to us as a business to work
through the energy transition."
Previous efforts by Big Oil to tilt away from oil and natural
gas have had mixed results. More than a decade ago, BP rebranded
itself as "Beyond Petroleum" and committed to ramping up production
of renewable energy, like solar and wind, before abandoning that
effort. BP allocated 3.2% of its budget last year to investing in
renewable energy, compared with an industry average of 7.4%,
according to analysts at Bernstein.
Still, Wednesday's pledge is notable coming from one of the
largest oil majors, whose business is centered on producing and
selling carbon-emitting products like the gasoline refined from
crude oil.
BP's commitment is also unusual in that it goes beyond reducing
emissions from its own operations, for instance, the carbon and
methane emitted at BP sites that pump oil and natural gas. BP is
also committing to negate the emissions of the oil, gas and refined
products it produces, including from cars that use its
gasoline.
BP says it emits about 55 million metric tons of carbon
equivalent from its operations a year. Another 360 million comes
from the burning of products made using oil and gas it has
produced.
The company hasn't pledged to stop emitting carbon. Instead, it
is promising to offset its emissions by taking the same amount of
carbon out of the atmosphere. It didn't say exactly how.
Amid heightened scrutiny over global warming, investors and
consumers have ratcheted up pressure on big companies to reduce
their environmental toll. Many institutional investors have asked
companies to make reducing emissions a priority -- threatening to
pull investments in some cases.
The world's largest oil-and-gas producers have generally moved
to reduce greenhouse-gas emissions from their drilling sites,
pipelines and other operations. But the industry hasn't agreed on
whether to commit to reducing emissions from the oil byproducts it
sells. That accounts for the lion's share of any oil company's
greenhouse gas footprint. Some companies argue that it would be
difficult, if not impossible, to realistically set such goals.
The 2050 deadline represents when BP hopes to be carbon
"neutral." At that point, it says, carbon emissions from its oil
and gas operations and from the fuels it sells should be completely
offset by reductions from more-efficient production, carbon removal
and carbon "sink" projects. A carbon sink typically refers to a
natural reservoir, such as a forest, that can absorb carbon.
BP said it would strive to reduce the carbon intensity of its
oil and gas production by 50% by 2050 or sooner. It promised to
install new methane-measurement technology at its facilities to
half its methane intensity by 2023.
BP promised to boost investment in non-oil-and-gas businesses,
and said it plans to reorganize the company into four divisions
that would help it reach these goals. A "production and operations"
division would strive to unite all operations under one roof. It
would also create a "gas and low carbon energy" unit, which would
focus on developing natural gas and low-carbon solutions, including
hydrogen power.
In 2019, the company began expanding its low-carbon business,
increasing ownership in its solar joint venture, Lightsource BP, to
50%, as well as completing the formation of its new Brazilian
biofuels and biopower joint venture, BP Bunge Bioenergia.
"It is clear to me, and to our stakeholders, that for BP to play
our part and serve our purpose, we have to change," said Mr.
Looney.
BP also said it would step up advocacy for government policies
that help reduce emissions, such as a carbon tax or some other
"price on carbon." The company also said it would re-examine its
involvement in industry trade groups, some of which have actively
lobbied against policies such as a carbon tax and emissions
reductions.
Write to David Hodari at David.Hodari@dowjones.com
(END) Dow Jones Newswires
February 12, 2020 11:28 ET (16:28 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
BP (NYSE:BP)
Historical Stock Chart
From Feb 2024 to Mar 2024
BP (NYSE:BP)
Historical Stock Chart
From Mar 2023 to Mar 2024