Yesterday, BP announced that it has made major losses due to the Covid-19 pandemic and that, for the first time in a decade, it will be cutting its dividend. At the same time, the fossil fuel giant announced a series of “aims” for the next 10 years which were framed as steps towards achieving its ambition of becoming “net zero” by 2050.
Some of those aims – such as reducing its oil and gas production and increasing investment in renewables – do initially sound like a positive step forward. Many have cautiously welcomed BP’s announcement, which appears to go further towards reducing its climate impacts than most other oil giants so far.
But let’s not pop the champagne corks just yet.
This is an oil company which has been responsible for decades of greenwash, delay and denial. Its new CEO has spent his career in the company so far overseeing massive drilling projects. It’s because of the actions of companies like BP that we are now having to take urgent action to avoid the worst climate breakdown scenarios. For that reason, we must be careful not to be too readily won over by BP, or to lavish praise on this multi-billion-dollar oil company before it’s actually started doing what the climate science demands.
Instead, we need to look at the devil in the detail and hold BP to account…
1. BP says it will “increase low carbon investment to around $5 billion a year” by 2030. But where will that money actually go?
For decades, BP’s investments in anything remotely low carbon have lingered at just a few percent of its overall spending – what’s known as its “capital expenditure” or “capex”. Between 2010-18, its spending on what it calls low carbon energy was little over 2%, with only around 1% being spent on actual renewables like solar and wind. As emissions were increasing, BP was doing next to nothing. If its capital expenditure is at similar levels in 2030, that would mean around two thirds of BP’s investments would remain in fossil fuels, around $10 billion a year.
And what BP calls “low carbon” actually includes a whole range of things besides renewables, like bioenergy and carbon capture technologies which still remain unproven at scale and will do little to effectively address growing emissions. On Monday, Unearthed also revealed how some of BP’s investments that have been labelled “low carbon” are anything but. That said, BP’s plan to massively scale up its renewable generating capacity to around 50GW in 2030 is laudable. But it cannot compensate for the fact that, at the same time, the company will still be pouring two thirds of its investments into oil and gas.
BP needs to answer:
Where will it spend that $5 billion? On genuine renewables or on unproven technologies for mitigating emissions? How will this compensate for years of vanishingly small spending on renewable energy?
2. BP is saying publicly that it will “reduce oil and gas production by over 40%”. But is that really true?
If you look at the details behind this aim, BP says that its upstream oil and gas production “is expected to reduce from 2.6 million barrels of oil equivalent a day (mmboe/d) in 2019 to around 1.5 mmboe/d”. But in BP’s Annual Report for 2019 it says that the company’s oil and gas production in 2019 was actually 3.8 mmboe/d.
For the purposes of its “net zero” ambition, BP’s calculation of the oil and gas it produces does not include production resulting from its 19.75% share in the Russian state oil company Rosneft. That stake in Rosneft actually accounts for around a third of BP’s production. So, a quick bit of number crunching will tell you that the headline figure of 40% most journalists have been quoting is – in practice – probably much closer to 30% if you take BP’s hidden figures into account.
Also, it shouldn’t be forgotten that Rosneft has a deplorable safety record – its own official data for 2013 documented over 6,000 annual spills and that is likely to be an underestimate. Meanwhile, BP continues to claim that “Safety is the foundation for everything we do at bp, which is why it continues to be our top priority.”
Furthermore, it’s possible that the slump in the oil market caused by the covid-19 pandemic may be forcing production cuts to these kinds of level already. BP may be trying to dress up something that is already happening as climate action, when it is actually beyond the company’s control.
BP needs to answer:
Why is BP not including a third of its oil and gas production, from its share in Rosneft, in its targets? Why has it not been transparent about the actual scale of its fossil fuel production in its latest announcement?
3. By 2030, BP says it will undertake “no exploration in new countries”. This isn’t anywhere near enough.
We know that proven fossil fuel reserves are already more than enough to take the world well beyond 2 degrees of global heating. Despite this, fossil fuel companies such as BP have continued to recklessly search for new reserves of oil and gas for decades.
BP’s aim to undertake “no exploration in new countries” by 2030 might have therefore sounded like a step forward. But BP currently operates in 79 countries around the world. In effect, BP is saying that in 2030 it will still be able to explore for new oil and gas reserves in those countries, identifying and potentially developing reserves that need to stay in the ground.
BP needs to answer:
Why is this aim so weak? When will BP step up and end all new exploration in the countries where it currently operates?
4. BP says it will reduce the carbon intensity of the products it sells by more than 15%. But why is it measuring carbon intensity?
In 2018, BP’s production of oil and gas (without including its stake in Rosneft) was 2.7m barrels of oil equivalent a day. But the oil and gas BP sold reached 8.6 mmboe/d in 2018. Essentially, BP is going to continue bringing to market and profiting from large amounts of hyrdocarbons which will continue to produce large amounts of emissions.
BP has said that it will reduce the carbon intensity of these products by 15%. But under a carbon intensity measure it’s entirely possible for actual emissions to remain the same – or even increase. BP is able to continue selling dangerous amounts of oil and gas but reduce the carbon intensity per barrel by adding some investments in renewables, offsetting schemes and carbon capture to its overall energy mix.
BP needs to answer:
When will BP set a target for the oil and gas it sells based on cutting actual emissions produced and not just carbon intensity?
5. Remember “Beyond Petroleum”?
BP’s aims suggest the possibility of steps in the right direction in the future. But until BP ramps up these aims and delivers on them, it doesn’t deserve our praise. For decades, BP and other oil companies have not been carefully working out how to shift away from their core business in order to protect the climate. Instead, they’ve done the exact opposite, spending millions lobbying against climate action and investing in greenwashing PR campaigns in order to protect their profits. They even backed and helped fund those that spread climate denial and disinformation. The reason BP and others must urgently reduce production and cut emissions now is largely down to the disruptive political role they have played up to this point.
BP did once make tentative investments in low carbon, proudly announcing that it was going “Beyond Petroleum” as part of a major PR campaign where it updated its logo. But behind the greenwash, it quickly went back to what BP knows best: drilling for oil and gas.
That said, we shouldn’t dismiss BP’s announcement of these emissions reduction aims. It’s a clear indication that the company is responding to political, economic and activist pressure, and it has now gone further than many of its competitors. Now, that pressure needs to be maintained until BP tangibly aligns its business with what both the climate science, and climate justice, requires.
Kelly Trout, Senior Research Analyst at Oil Change International, succinctly sums up what we actually need to see from BP:
“BP must still go further than [Monday’s] announcement [in order] to align with the critical 1.5-degree limit [in the Paris Climate Agreement].
BP must take responsibility for Rosneft, for all of the carbon it invests in extracting, to legitimately claim to achieve a 40% reduction by 2030.
BP must also stop investing in any new oil and gas, whilst ensuring a just transition for its workers and the communities affected by its polluting projects.”
Until we see real action by BP to leave new and existing sources of fossil fuels in the ground – and a commitment to transition entirely away from fossil fuels – we must continue to hold the company to account.