YNTR: Under Investor Pressure on Industry BP Sets “Net Zero 2050” Ambition

You Need to Read about BP’s “net zero by 2050” announcement made last week. Linking to several outlets’ coverage this time — there are a lot of angles to this one. On the same day a study showed that the BP-contracted Deep Water Horizon oil spill was 30% worse than thought (oops), BP’s new CEO Bernard Looney announced the company’s “Ambition” to become net zero by 2050. (“Reimagining Energy” on BP.com).

The ambition is significant – nearly the most promised by an oil major to date – but, why not a goal or target? Will BP make enough impact to meaningfully help slow the climate crisis or is this more PR?

“We are aiming to earn back the trust of society,” said Bernard Looney, BP’s chief executive, at a news conference in London. “We have got to change, and change profoundly.” quotes Brad Plumer, NYT, BP Pledges to Cut Emissions to Zero, but Offers Few Details

BP’s “Ambition” is second only to what Spain’s Repsol has announced, and it does account for the carbon footprint of much, but not all, of the oil and gas they sell.

Shell (RDSA) has set targets to rein in emissions from its products, but doesn’t go as far, while America’s Chevron (CVX) and ExxonMobil (XOM) lag far behind. – Julia Horowitz, CNN, BP’s New CEO Pledges Net Zero Emissions by 2020

BP proclaimed 10 “aims” – 5 each internal and external – to get there. Internally (to become net zero): net zero operations, net zero oil & gas, 50% less carbon intensity in products, 50% less methane intensity (with attention to methane leaks), and to “increase proportion” of investment in alternatives.

Externally (help the world meet net zero): move reputation ad spend to advocacy for “progressive climate policy,” increase climate component of employee bonuses, reframe relationship to trade associations and exit if needed, lead in transparency by supporting and “working to implement” TCFD recommendations, create a team dedicated to promoting clean cities.

BP characterized the energy transition as “a big opportunity,” but also acknowledged they offer no short term numbers. From their FAQ:

Where are the near-term targets to back up your long-term ambition?
I appreciate you want more than a vision – you want to see milestones, near-term targets, some ways to measure progress. We do not have those for you right now. But we will have more to say in September when we announce our new strategy, and in the months and years to come.

BP’s announcement is careful to promise investors continued dividends and financial performance. It excludes responsibility for the carbon footprint of oil and gas it buys from third parties – roughly half of what it refines and sells.

Reporting in The Financial Times reveals BP invested just $500-$750 million in renewables compared to oil and gas capital expenditures of $14 billion (20x more) and investor dividends of $8.4 billion. Repsol by contrast earmarked 25% of its 2020-2025 investments to go to renewables. So, how much more will BP invest?

We don’t plan to commit to an arbitrary or pre-set number. But make no mistake, we aim to invest more and more in low carbon businesses over time – and less and less in oil and gas. – BP.com

Nothing in the announcement speaks to any slowing of current exploration and drilling underway.

“BP continues to invest massively in looking for and expanding into new fossil fuel reserves. This keeps them on the wrong side of history,” said Hannah McKinnon, director of the energy transition and futures program at advocacy group Oil Change International. – Rachel Koning Beals, MarketWatch, Oil Giant BP is Latest to Pledge Net Zero Emissions by 2050.

This also isn’t the first time BP (remember “Beyond Petroleum ca 2000?) has virtue signaled about renewables. It would be great if this announcement puts pressure on the rest of the industry to act.

Reactions to BP’s latest announcement from people advocating for change have been mixed. Some investors have hailed the net-zero announcement as groundbreaking, but others have been unimpressed. – Justine Calma, The Verge, BP wants to somehow eliminate its greenhouse gas emissions: will keep pumping oil and gas despite its climate pledge

Regardless of what we learn from BP in September, this all does beg a very simple question: if BP can proclaim they’re going to try to be net zero by 2050, what’s holding you back?

Start today. Pick three actions off our list and then take one small action to help your company implement them.  

Bring your loved ones together this holiday season to give #GiftsToTheFuture. Each day on the way to welcoming the new year, we'll share a little something you can do to help make it (and many years that follow) better for those you love. enough.co/gifts-to-the-future

How you earn, spend, save, and invest can grow climate solutions faster. Let's work on it together?