BP has confirmed it will abandon its green renewable power ambitions by increasing its oil and gas investment to $10bn a year as part of a “fundamental reset” of its plans.
The company will scrap its plan to reduce fossil fuel production and will instead grow oil production to 2.3 million to 2.5 million barrels of oil a day by the end of the decade.
Murray Auchincloss, BP chief executive, said: “We have fundamentally reset BP’s strategy.”
He described it as a “radical shift” but insisted BP had not completely abandoned its plans to be a diversified energy company. “I don’t really see anybody else doing any more than we’re doing at this type of scale,” he said. “You will see no better integrated energy company in the world than BP.”
It follows Donald Trump pledge to “drill, baby, drill” for oil and gas and remove US government support for clean power.
Auchincloss justified the switch by saying the “optimism of a rapid transition” to renewable energy had faded and that the world’s demand for crude oil is stronger than the company had predicted. “We adapt to how society moves,” he told the Financial Times.
Higher investment in oil-and-gas fields would see BP pump more profitable fossil fuels for years to come, he said, adding that the company would be very selective in the renewable investments it makes in the energy transition.
BP said it hoped “major” oil and gas projects would start by the end of 2027, with a target of eight to 10 commencing by the end of the decade.
It confirmed it would cut spending on renewable energy by 70 per cent. It has cut back its hydrogen and biofuel plans as well as putting its onshore-wind business in the US up for sale.
It had aimed for a 20-fold growth in renewable power this decade to 50 gigawatts (GW), but announced in December that it would spin off almost all of its offshore wind projects into a joint venture with Japanese energy group JERA.
In the company’s 2024 report, it had managed just 4GW of installed renewabled capacity and an addition 8.2GW close to being approved.
BP said it was putting a share of Lightsource, its solar power and battery storage business, up for sale, along with its Castrol oil lubricants unit.
It is also shelving plans to add biofuel production plants to existing refineries and has pulled back plans to develop new sustainable aviation fuel and renewable diesel production projects in the US and Europe. At the time it said it was “simplifying” its biofuel portfolio.
The company intends to keep developing its electric vehicle charging projects, having opened its first EV charging site in the UK this month.
The latest move is a further step back from its previous ambitious green targets, which were promised by former chief executive Bernard Looney in 2020. BP had pledged to cut oil and gas production by 40 per cent by 2030, and increase investment in renewables.
This was later scaled back to 25 per cent in 2023 under Looney, meaning that oil and gas production would be about two million barrels of oil equivalent a day in 2030. The decision to cut back on renewables came as it reported record profits of $28bn in 2022.
Looney left last year after failing to disclose to the board a series of personal relationships with colleagues.
BP has been under intense pressure since it was reported earlier this month that US activist investor Elliott Associates had built up a stake worth almost $5bn in the company.
Elliott, renowned for its aggressive tactics towards target companies, demanded radical changes including a faster and more comprehensive retreat from BP’s low-carbon energy plans.
Charlie Kronick, 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.
“The Climate Change Committee has said today UK emissions must be drastically slashed – the reality is now it’s up to the Government to see this through and to ensure companies like BP pay their share for the climate damage they’re causing.
“The UK is seeing more and more storms and floods – with people’s lives, homes, or businesses ruined. Responding to the climate crisis can’t be driven by the whims of investors or the markets.”
Alexander Kirk of environmental campaign group Global Witness said: “A few years ago BP undertook a massive public relations campaign to tell the world it was going green, highlighting its renewable energy investments. Now, while the world is reeling from fossil-fuel driven extreme weather, BP is widely expected to double down on the oil and gas creating climate breakdown.
“So why the U-turn? BP appears to be focusing on short-term profits to shareholders while energy prices are high, with the rest of the world picking up the tab from its climate-wrecking products. 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 damages they cause.“
Lindsey Stewart, research director Morningstar Sustainalytics, said: “BP’s decision to reduce capital expenditure on renewables and double down on its fossil fuel assets will be shocking but not surprising to investors focused on sustainability.
“Having already cut back its energy transition targets in 2023, BP’s subsequent underperformance compared with peers has created pressure for BP management to focus on sustainability of a financial rather than ecological nature.
“For sustainable investors, this will hardly be the end of the argument. Several of BP’s shareholders decided to vote against the company’s chair the last time BP reduced its commitment to energy transition, after not being offered the opportunity to vote on the company’s adjusted strategy. That’s a possibility again this year, unless the BP decides to table a ‘say-on-climate’ vote at its upcoming AGM, as 48 investors have already requested.”
James Alexander, chief executive of the UK Sustainable Investment and Finance Association, said a rollback of green promises should “sound alarm bells for investors and UK policy makers alike”.
He added: “Expansion of BP’s oil and gas extraction activities is misaligned with long term global energy projections and at odds with the decarbonisation trajectory needed to limit global warming to 1.5C.
“This shift must raise serious questions over whether decisions are being made in the interests of the long-term viability of the company and whether it exposes investors to growing risks from stranded oil and gas assets.”
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