BP Aims to be Net Zero by 2050
BP’s new CEO Bernard Looney has announced the company's new ambition to become a net zero company by 2050 or sooner, and to help the world get to net zero.
The structure of BP’s organization – and of much of the industry – has been broadly the same for more than a century, split into separate organizations – upstream, downstream, and other businesses. To deliver its new ambition and aims, BP will now undergo a fundamental reorganisation. BP will now fundamentally reorganize and form four business groups: Production & Operations; Customers & Products; Gas & Low Carbon Energy and Innovation & Engineering.
The ambition is supported by 10 aims:
Five aims to get BP to net zero:
1. Net zero across BP’s operations on an absolute basis by 2050 or sooner.
2. Net zero on carbon in BP’s oil and gas production on an absolute basis by 2050 or sooner.
3. 50 percent cut in the carbon intensity of products BP sells by 2050 or sooner.
4. Install methane measurement at all BP’s major oil and gas processing sites by 2023 and reduce methane intensity of operations by 50 percent.
5. Increase the proportion of investment into non-oil and gas businesses over time.
Five aims to help the world get to net zero:
6. More active advocacy for policies that support net zero, including carbon pricing.
7. Further incentivize BP’s workforce to deliver aims and mobilize them to advocate for net zero.
8. Set new expectations for relationships with trade associations.
9. Aim to be recognized as a leader for transparency of reporting, including supporting the recommendations of the Task Force on Climate-related Financial Disclosures.
10. Launch a new team to help countries, cities and large companies decarbonize.
Looney said: “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. To deliver that, trillions of dollars will need to be invested in replumbing and rewiring the world’s energy system. It will require nothing short of reimagining energy as we know it.
“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 new ambition to be a net zero company by 2050 or sooner covers the greenhouse gas emissions from its operations worldwide, currently 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.
“This is what we mean by making BP net zero,” said Looney. “It directly addresses all the carbon we get out of the ground as well as all the greenhouse gases we emit from our operations. These will be absolute reductions, which is what the world needs. If this were to happen to every barrel of oil and gas produced, the emissions problem for our sector would be solved. But of course, the world is not that simple. The whole energy system has to be transformed and everyone has a contribution to make – producers and sellers of energy, policy makers and everyone who uses energy.”
A Major Turnaround
Luke Parker, vice president, corporate analysis, at Wood Mackenzie said: “BP joins Shell, Total, Equinor and Repsol in making a major commitment to reduce its net carbon footprint. This marks a major turnaround in BP’s position. Just 12 months ago former CEO Bob Dudley said the company could not be held accountable for how people use its products. Looney is taking the company in a very different direction.”
Parker added: “It’s an ambition, rather than a target, but the commitment appears to be unconditional. In terms of scale of commitment, this puts BP towards the top of the pack, along with Repsol and Equinor. This will see BP’s business completely transformed over the coming decades: renewables and carbon abatement will get very big, legacy oil and gas will eventually get smaller. But the transition to 2050 is a multi-decade transition - not something that will happen in the next year or so.”
Production & Operations will be led by Gordon Birrell and will be BP’s new operational center, bringing its operations together, focused on driving safety, efficiency and value growth.
Customers & Products will be headed by Emma Delaney and will focus on customers as the driving force for the energy products and services of the future, and on customer experience and expansion in rapidly changing markets.
Gas & Low Carbon Energy will be led by Dev Sanyal and will unite energy teams currently dispersed around BP to create focused low carbon solutions. It will also pursue opportunities in decarbonisation including hydrogen and carbon capture and storage technologies.
Innovation & Engineering will be headed by David Eyton and will bring added momentum to BP’s venturing and Launchpad investments and act as a catalyst for creating value from disruptive opportunities. It will also house BP’s engineering discipline and safety and operational risk team.
Strategy & Sustainability will be headed by Giulia Chierchia, who is joining BP from McKinsey, and 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 & Solutions will be led by William Lin and 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 & Shipping will be led by Carol Howle and will build on BP’s existing deep expertise in its existing business to more effectively help BP capture new commercial opportunities and add value.
Four teams will serve as enablers of business delivery:
Finance headed by Murray Auchincloss.
Legal headed by Eric Nitcher.
People & Culture headed by Kerry Dryburgh.
Communications & Advocacy headed by Geoff Morrell.
BP intends to host a capital markets day in September at which the leadership team will set out more information on BP’s strategy and near-term plans.