BP plans deep cuts to its carbon emissions by 2050, setting one of the oil sector's most ambitious targets, as part of the biggest overhaul in the 111-year old company's history by new chief executive Bernard Looney.
The targets set on Wednesday put BP ahead of rivals Royal Dutch Shell and Total. Although they fall short of commitments by Spanish peer Repsol, BP's operations and output are much larger.
"We need to reinvent BP," Looney said in a statement, adding on Instagram: "Simply put, we have got to change. We want to change. And we will change."
BP did not specify how it intends to reach its target to get carbon emissions from its operations and barrels produced to net-zero by 2050 and halve the carbon intensity of all products it sells, such as diesel or petrol, in the same time frame.
This is not the first time BP has tried to reinvent itself. A pioneering "Beyond Petroleum" plan to build a large renewables business in the early 2000s ended with huge losses.
The world’s top oil and gas companies have come under heavy pressure from investors and climate activists to fall in line with the 2015 Paris climate accord which aims to limit global warming to below 2 degrees Celsius from pre-industrial levels.
"The world’s carbon budget is finite and running out fast; we need a rapid transition to net-zero. We all want energy that is reliable and affordable, but that is no longer enough. It must also be cleaner," he added.
Shares in BP were up 1% at 1157 GMT, slightly higher than the broader European energy sector index after Wednesday's announcement, which confirmed a Reuters report from January. BP's absolute net zero carbon target relates to the entire value chain of every barrel it produces, in equity terms, from the well to the petrol station. Oil field equity is typically split between different owners.
BP produced around 2.64 million barrels of oil equivalent per day in 2019. This is a uniquely structured target for oil majors, which, apart from Repsol, have not set any absolute reduction targets for any of its Scope 3 emissions. The group said this target would reduce its emissions to net-zero from what is currently around 415 million tonnes of carbon dioxide equivalent a year.
BP did not provide any details, but a spokesman said it will develop near-term plans that will be published at a September investor day or earlier. One way a heavy carbon emitter can reach greenhouse gas reduction targets is by buying offset certificates.
U.S. groups such as Exxon, Chevron and ConocoPhillips are far less ambitious with their greenhouse gas-related targets than their European rivals. Intensity-based targets measure the amount of greenhouse gas (GHG) emissions per unit of energy or barrel of oil and gas produced. That means that absolute emissions can rise with growing production, even if the headline intensity metric falls.
Scope 3 emissions vastly exceed greenhouse gases caused by the production of crude oil, natural gas, and refined products, including electricity generation, typically by a factor of about six among oil majors, according to Reuters calculations.
Greenpeace said BP's plan left many questions unanswered. "How will they reach net-zero? Will it be through offsetting? When will they stop wasting billions on drilling for new oil and gas we can't burn?," Charlie Kronick, Oil Advisor from Greenpeace UK, said.
BP said it will set "new expectations" for its relationships with trade organizations and be prepared to quit them if they were not aligned.
Reorganization
In one of its biggest changes, BP will dismantle the traditional model of an oil and gas production, or upstream, unit and refining, trading and marketing, or downstream, unit.
"In order to keep up with rapidly-evolving customer demands and society’s expectations, we need to become more integrated and more focused," Looney said.
A production and operations unit, which includes oil and gas production as well as refining and chemicals, will be led by Gordon Birrell. Customers and products will be led by Emma Delaney, gas and low carbon energy by Dev Sanyal, while innovation and engineering will be led by David Eyton.
(Editing by Louise Heavens and Alexander Smith)
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