Features | February 13, 2020

Net-zero pledges by BP’s new chief raise the stakes for oil majors

Amy Cortese
ImpactAlpha Editor

Amy Cortese

ImpactAlpha, Feb. 13New CEO Bernard Looney kicked off his tenure with bold promises to remake the oil giant for a low-carbon future. Climate change, he said, will require “reimagining energy,” the company’s new mission.

“The world does have a carbon budget, it is finite, and we need a rapid transition to net zero,” he said in a live-streamed inaugural address.

Looney’s core commitment: Net-zero greenhouse gas emissions by 2050 or sooner. That encompasses BP’s operations as well as emissions from the oil and gas it sells – which are roughly equivalent to the total emissions of the U.K.

BP is the first of the oil “majors” to adopt such wide-ranging Scope 3 goals (much smaller Repsol did so last year). The embrace of the low-carbon transition by one of the world’s oldest and largest energy producers represented a major shift: BP’s former CEO Bob Dudley warned against moving “too fast” on climate change.

Climate Finance 2020: Leaders and laggards in the race to net-zero

“Every time a company sets a precedent it sets the bar higher for others to match it,” says Carbon Tracker’s Andrew Grant.

Not all critics were charmed. “There is nothing in this statement to suggest BP will move away from previous plans to increase oil and gas production by 20% over the next 10 years,” tweeted Greta Thunberg. (BP’s strategic plan has called for 5% annual production increases through at least 2021; the company will provide updates on its exploration strategy in September). 

Shrinking oil

BP will increase investment in clean energy as it shrinks its oil and gas production over the next three decades. Fossil fuels will remain in the mix. They will be decarbonized through sequestration or carbon capture technology, a strategy still not mature.

A key litmus test is whether executive pay will be linked to climate goals. Looney said BP would increase the share of its global pay linked to emissions reductions, but did not provide details. 

Transparency and trust

 BP’s event coincided with a report that the 2010 Deepwater Horizon spill – which spewed 210 million gallons of oil in the Gulf of Mexico – was 30% larger than previously estimated.

Looney said BP will curtail lobbying and “reputational” ads and instead advocate for policies, such as carbon pricing, that support a clean energy transition. It will support the Task Force on Climate-related Financial Disclosures, and press its climate views within trade groups – and leave if necessary.

“If you see an example where we say one thing and do another, call us out.” No doubt, his critics will. 

Productive engagement

Looney said his strategy was shaped by a four-month global “listening tour.” “Everywhere I’ve been I’ve come away with the inescapable conclusion that we’ve got to change.” The needs of investors, employees, NGOs and other stakeholders are converging. “It’s not the pressures in London that has brought this about,” he said, a week after he was blocked from BP’s offices by Greenpeace protesters. “It is the dialogue.”