BP has set a target to become a net zero company by 2050.
BP has set a target to become a net zero company by 2050.
The company has pledged to achieve net zero emissions across BP’s operations; net zero on carbon in BP’s oil and gas production and a 50% cut in the carbon intensity of products BP sells.
It will install methane measurement at all BP’s major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50%.
It will increase the proportion of investment into non-oil and gas businesses over time.
As a company, BP has pledged ‘more active advocacy to support net zero, including carbon pricing’ and to ‘further incentivize BP’s workforce to deliver aims and mobilize them to advocate for net zero’. This will include ‘increasing the percentage of remuneration linked to emissions reductions’.
It will put pressure on trade associations to bring cutting carbon to the top of the agenda and will ‘leave those where alignment cannot be reached’. The company has already followed through on this threat by resigning from American Fuel and Petrochemical Manufacturers, the Western Energy Alliance and the Western States Petroleum Association. However, some environmentalists have criticised BP for not resigning from the larger American Petroleum Institute.
BP said that it aims to be recognized as a leader for ‘transparency of reporting, including supporting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and working constructively with the TCFD and other groups to develop higher standards for transparency of reporting.
Finally, BP will launch a new team to create integrated clean energy and mobility solutions to help countries, cities and large companies to decarbonize.
To deliver the ambition, BP will reorganise into four business groups: Production & Operations; Customers & Products; Gas & Low Carbon Energy; and Innovation & Engineering.
BP’s new CEO Bernard Looney said: ‘We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system.
‘This will certainly be a challenge, but also a tremendous opportunity. It is clear to me, and to our stakeholders, that for BP to play our part and serve our purpose, we have to change. And we want to change – this is the right thing for the world and for BP.’
BP’s currently generates around 55 million tonnes of CO2 equivalent (MteCO2e) a year, and the carbon in the oil and gas that it produces, equivalent currently to around 360 MteCO2e emissions a year – both on an absolute basis. Taken together, delivery of these aims would equate to a reduction in emissions to net zero from what is currently around 415 MteCO2e a year.
‘We expect to invest more in low carbon businesses – and less in oil and gas – over time,’ added Looney. ‘The goal is to invest wisely, into businesses where we can add value, develop at scale, and deliver competitive returns.’
To deliver its new ambition and aims, BP’s existing, largely autonomous business segments – upstream and downstream – will be dismantled and the group reorganised globally into a more focused and more integrated entity, comprising 11 teams. The heads of these teams will make up BP’s new leadership team.
Production and Operations, led by Gordon Birrell, will be BP’s new operational centre. Customers and Products, headed by Emma Delaney, will focus on customers as the driving force for the energy products and services of the future. Gas and Low Carbon Energy, led by Dev Sanyal, will unite energy teams around BP to create low carbon solutions. It will also pursue opportunities in decarbonization and new value chains such as hydrogen and CCUS. Innovation and Engineering, led by David Eyton, will bring added momentum to BP’s venturing and Launchpad investments and act as a catalyst for creating value from disruptive opportunities.
Three integrators will be established to find and maximize opportunities for BP: Strategy and Sustainability, led by Giulia Chierchia, who is joining BP from McKinsey, will ensure that sustainability is embedded at the top of BP and provide a single group-wide approach to strategy and capital allocation. Regions, Cities and Solutions, led by William Lin, will build relationships with regions, cities and large corporations, aiming to develop integrated energy and carbon solutions that can bring emissions down at scale. Trading and Shipping will be led by Carol Howle.
Four teams will serve as enablers of business delivery: Finance, led by Murray Auchincloss; Legal, led by Eric Nitcher; People and Culture, led by Kerry Dryburgh; and Communications and Advocacy, led by Geoff Morrell.
BP intends to host a capital markets day in September at which it will set out more information on BP’s strategy and near-term plans.
