BP Scaling Back Production Reduction Plans After Revenue-Energy Trend
In February 2020, the British multinational oil and gas company BP released its plans to become a net zero emissions company by 2050. Three years later and 27 years away from its goal, the company is going back on its ambitions.
The original announcement listed 10 aims: five to get BP to net zero, and five to help the world get to net zero. Additionally, by 2030, the company intended to cut its operational emissions by 30-35%. In 2022, it increased its plans to 50% by that year. Both goals align with a 2018 report stating global net human-caused emissions of carbon dioxide (CO2) would need to reach ‘net zero’ around 2050.
For its mission to help the world get to net zero, BP planned to advise cities on “power packages” with renewables, backup batteries, and financing, as well as adding recharging stations for electric vehicles and convenience stores for its gas stations.
The CEO of BP, Bernard Looney, assured shareholders and investors that its core priorities are the same and that the company will maintain its commitment to performing while transforming. In 2019, there was support for stricter climate targets from 8.4% of shareholders. Looney’s promise worked well enough, as Reuters reported that in 2021, that number increased to 20.6%.
Initially, BP was praised for its initiatives by climate activists and saw an increase in share prices after its initial announcement. But what exactly changed BP’s plan to decrease the world’s carbon emissions?
Russia’s invasion of Ukraine had worldwide effects on the price of energy, which led to the company’s profits doubling to $27.7 billion in 2022. In early February of 2023, BP lowered its 2030 target of 50% lower emissions to 20-30%. Meanwhile, shareholder payout increased by 10%.
The company still plans on reaching net-zero operational emissions by 2050. But the pushback of their plans comes with a question: How committed to the fight against climate change is BP?
According to the New York Times, the company will increase investment in the production of fossil fuels by about $1 billion a year and will increase spending by a similar amount on low-carbon businesses.
Kate Blagojevic, Greenpeace UK’s head of climate justice, said in a statement “What’s worse, their green plans seem to have been strongly undermined by pressure from investors and governments to make even more dirty money out of oil and gas. This is precisely why we need governments to intervene to change the rules.” Because oil and gas companies benefit from recent increases in gas prices, activists and public officials are calling for them to pay higher windfall taxes.