BP scales back pledges to cut oil and gas production
Alongside posting record profits, energy major BP has stated that it is no longer likely to meet a previous pledge to reduce oil and gas production by 40% by 2030 against a 2020 baseline.
Much media attention this morning (7 February) is being directed at BP’s financial results for the fourth quarter of 2022 plus the full year of 2022. The energy major has confirmed record annual profits of $27.7bn, more than double its annual profits in 2021, which stood at $12.8bn.
Given that Shell also posted record profits for 2022 this month, and with Equinor due to post its own profits later this week, many green groups and energy justice campaigners are calling for more robust windfall tax to stop fossil fuel majors from profiting not from their own innovation but from the global spike in gas prices, largely attributable to decreased exports from Russia amid the nation’s war in Ukraine.
BP’s chief executive Bernard Looney issued a statement arguing that some of the firm’s increased profits resulted from stronger upstream plant reliability and lower production costs.
Alongside posting its financial results, BP has published an update to its strategy.
It has confirmed that it will increase by an average of $1bn per year until 2030 investment into energy transition activities. These include electric vehicle charging, bioenergy, green hydrogen, blue hydrogen and renewable electricity.
However, it will also increase investment at the same scale and pace into oil and gas. It has argued that near-term demand for oil and gas is higher than it previously expected and stated that additional fossil fuel earnings can “support investment” in the energy transition.
It has stated that it will focus on “shorter-term, fast-payback projects” with “minimal new infrastructure”. In many cases, it will retain existing oil and gas assets for longer.
With these changes to strategy in mind, BP is rolling back its 2030 targets to cut oil and gas production. It is also targeting less steep reductions in emissions.
Back in the summer of 2020, BP pledged to reduce its oil and gas production by 40% by 2030. It is now anticipating a 25% reduction.
BP also pledged in 2020 to reduce upstream emissions by 35-40% by 2030. It now expects the reduction to be a maximum of 30% and a minimum of 20%.
A case of greenrinsing?
Looney maintains that BP is still “performing while transforming” and that it is “helping [to] provide the energy the world needs today and – at the same time – investing with discipline into [its] transition and the energy transition”.
Environmental groups will doubtless disagree. Greenpeace UK’s chief scientists Doug Parr has Tweeted: “In amongst colossal profits, BP cuts back 2030 climate ambition by about a third. Any suggestion these high profits are being channelled into clean energy is claptrap.”
Last month a report from Planet Tracker outlined how greenwashing – the exaggeration of environmental claims by businesses – is becoming more sophisticated. The report warned of a trend towards “greenringing” – where companies chop and change their sustainability targets before they have been achieved.
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